In recent times, non-fungible tokens (NFTs) have gained tremendous popularity worldwide. From sports stars to singers, actors and brands, everyone has jumped on the NFT wagon, and the excitement around the asset class is palpable. Sectors like art, virtual real estate, sports, cinema and gaming have seen the most action and people have invested and traded in NFTs to the tune of billions of dollars. NFTs have grown to become a $41 billion-market in 2021. The market is set to expand to $80 billion by 2025. The fact that NFTs run on a blockchain network and cannot be exchanged makes them unique and valuable as an asset.
Last year, The Economist made an NFT for its cover story on NFTs and metaverse, titled Down The Rabbit Hole and sold it for 99.9 Ether on an NFT auction site. This is equivalent to about $420,000. Sure, the proceeds were donated to a charity, but what’s interesting is that even though the cover story was available in JPEG, PDF or even as a physical copy, the rights to the cover were with the magazine, which verified it on a blockchain and it fetched the price that it did. The new owner can now rightfully claim that he or she owns the magazine cover, and they can now sell it if they feel like it.
To understand the rising popularity of both NFTs and Metaverse, one needs to understand how they are related. Metaverse, a shared virtual space, allows users to create, sell and trade items in the form of NFTs. Companies like Meta (Facebook) and Microsoft envision a metaverse of their own shortly. In fact, Facebook changing its name to Meta signals that the company is betting on the concept in a big way.
Gaming, too, has had an important role to play in the popularity of NFTs. Tokens like Smooth Love Potion, Sand and Enjin, among others, are prevalent in-game currency in several games. This has jacked up their values, and these tokens are now traded on exchanges and have a real-world value.
Closer home, in India, NFTs are seeing increasing adaptability. Homegrown NFT marketplaces are booming, and we have seen many celebrities and sports stars like Amitabh Bachchan, Kamal Haasan and Dinesh Karthik being the first movers in the space with their collectibles getting good response from the market. The collectibles by these celebrities are not just seen as an investment but are also traded on the market.
In India, movies and cricket are the two main draws for NFTs, though the Indian gaming industry offers an up-and-coming prospect. There are around 450 million gamers in India, which is a setup for the perfect market of NFTs.
Even after the government announced in the Budget that NFT as digital assets would be taxed 30 per cent, their allure has not diminished. The declaration has not made enough of a dent in how investors and traders deal in NFTs or how bullish they are about the market. That being said, India still has a long way to go and there is still much ground to cover. Even though we see independent artists launching NFTs regularly, there remains much catching up to do when compared globally. The future is bright, and NFT as an asset class has a long way to go in India.
(The author is Group CEO and Co-Founder of Vistas Media Capital and Fantico)
