Research Outline

Non-Fungible Tokens as an Asset for Investment


To understand the NFT market, the key players, value proposition and how to think about NFTs relative to other cyptocurrencies.

Early Findings

Non-Fungible Tokens (NFTs) — The Market
  • The NFT market tripled in 2020. The total value of transactions increased to more than $250m, a year-on-year increase of 299%.
  • Global brand's interest in NFTs are one of the main reasons behind the growth. Fashion and luxury brands such as Nike, Louis Vuitton, Breitling, and sports brands such as Formula 1 and the NBA have been actively creating NFT-based consumer goods and services.
  • Virtual worlds are the most popular market segment (25%). The largest sale to date, has been a set of plots of virtual land, which went for $1.5 million on blockchain game Axie Infinity.
  • The Arts segment is experiencing rapid growth. In 2020, NFT art sales grew by 2,800%. Reports have described the technology as 'the future of the art market' and noted it's predicted influence.
  • L’Atelier, part of French international banking group BNP Paribas documented cases where some individuals are earning six-figure salaries in the 'Virtual Economy' of gaming platforms like Fortnite, and virtual worlds such as Decentraland.
  • Rarible (RARI) - enables users to easily create a digital collectible (without needing any specific technical knowledge) and sell it on their marketplace. RARI experienced strong growth in early 2021, up 1400% from the start of January to mid-February, a price increase from $1.62 to $24.29
  • Terra Virtua (TVK) - a digital collectible ecosystem, providing users with a sensory experience, taking digital collectibles into a multi platform VR and AR world.
  • Enjin (ENJ) - a gaming community platform, with over 20 million users. Built a suite of blockchain products that enable users to easily manage, explore, distribute, and integrate blockchain assets.
  • Dragon the CryptoKitty continues to be one of the most expensive NFTs in the space, valued at 600 ETH.
  • Alien #2089 sold for 605 ETH in January 2021. This is one of the first NFTs created, and part of the CryptoPunk collection. Overall, there are 10,000 different CryptoPunks and only nine Alien CryptoPunks.
  • May 2019 saw the unique “1-1-1” race car from F1 Delta Time sell for 415.9 ETH. An NBA Ttopshot digital collectible card of basketball star LeBron James sold for $100,000.
Comparisons to other cryptocurrencies
  • Some industry insiders are concerned about the long-term viability of NFTs, citing concerns centered on the inability of NFTs to stimulate real-world volume, unlike other crypto assets. Comparing weekly trade volume, the NFT market recently stood at $8.2m, compared to bitcoin futures, which surpassed $500 billion during January 2021.
  • Protocols such as NFTfi and Rocket allow NFTs to be used as collateral for peer-to-peer loans, enabling holders to treat their digital collectibles like any other asset to be monetized.
Trends and Other Important topics
  • Research conducted in December 2020 found that NFTs was attracting interest from those engaging in cybercriminal activity, due to what it deems to be 'easily exploitable protocols and unaudited smart contracts'.