The Non-fungible Token (NFT) craze has just got a new dose of vindication with Visa’s purchase of an NFT for $150,000 worth of Ethereum. If this sounds like a nonsensical jumble of words – you are not alone! NFTs are a nascent asset class, with each token representing ownership of a unique portion of a digital content item such as a photo, video, audio file, or even a New York Times Article.
The NFT purchased by VISA is a CryptoPunk, or a collectible digital avatar that is one of the first NFTs ever created. Visa claims the item represents unique interest to followers of NFT culture and intends to add it to its corporate collection of payments memorabilia. Visa CEO said that it intends to continue acquiring NFTs into its collection to support the work of digital artists. While it is difficult to imagine how the digital avatar will be displayed alongside physical items such as Visa’s first credit cards and the cufflinks worn by its ex-CEO Dee Hock, Visa’s purchase represents a symbolic step for the adoption of NFTs into the mainstream.
So far, the asset class has been the domain of enthusiasts and traded mostly on specialized platforms that are not known for their user-friendliness. Visa’s move signals the willingness of corporations to engage with the medium and perhaps is a harbinger of more widespread adoption that is soon to come. This would likely involve making NFT marketplaces more intuitive to retail investors, as well as use of the technology by creators with a wide appeal.
Enthusiasts claim that NFTs represent great potential for revolutionizing the way artists generate revenue for their work and are emboldened by the recent explosive growth of the market. The first half of 2021 saw a record $2.5 billion in NFT sales, up from just $13.7 million for the comparable period in 2020. If this momentum holds up, we may soon very well find ourselves choosing between a trip to the MOMA or a one-click visit to the Visa Museum NFT Collection.
More on this topic in the article published by Yahoo Finance.
Overview by Sam Klebanov, Research Analyst at Mercator Advisory Group