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The market for digital collectibles is booming — but that doesn’t mean they’re a safe investment.
A digital …
Subscriber Account active since The market for digital collectibles is booming — but that doesn’t mean they’re a safe investment. A digital artist known as Beeple sold a piece for an eye-watering $69 million through Christie’s on Thursday. Twitter founder and CEO Jack Dorsey is auctioning off his very first tweet, and bidding has reached $2.5 million. And NBA Top Shot, a marketplace for officially licensed basketball highlight clips, has seen more than a quarter-billion dollars change hands over the last 30 days, minting multimillionaires along the way. For the uninitiated, these assets are all examples of non-fungible tokens, or NFTs, which use the same blockchain technology that underpins cryptocurrencies like bitcoin to keep track of ownership and create scarcity. Essentially, purchasing an NFT means you have access to the same file anybody else can view or download, but you’re also granted something like a digital deed of ownership to it. And although NFTs have been around for years, the market for them has exploded into a bonafide frenzy in recent months as mainstream companies and investors have piled in. But for all the hype surrounding them, digital collectibles — like cryptocurrencies, stocks, or any other asset prone to speculation — come with significant risks that people would do well to understand before diving in, experts told Insider. For Nadya Ivanovna, COO of L’Atelier BNP Paribas, an emerging-market research firm that put out a report on NFTs in February, the technology’s greatest strength is also one of its major weaknesses. Anyone on the internet can create an NFT out of literally anything, which means there are a lot of “really bad” tokens out there, Ivanonva said in an interview. It takes a trained eye to weed out what’s worth collecting or investing in. “That applies to the physical art market as well — it’s usually a space for the knowledgeable. Same thing with NFT art,” Ivanovna said. And although Ivanonva sees the NFT market eventually maturing and continuing its course into the mainstream, she recognizes a handful of additional risks and uncertainties new collectors should consider about the budding space.
