Growing NFT interest hints at long-term adoption
As the financial sector zeroes in on the non-fungible token trend, what might seem like a short-term build-up, shows strong potential for future adoption by financial institutions...
Digital asset trading remains under the spotlight as NFTs—non-fungible tokens—are taking the financial sector by surprise. The record-setting $69.3 million sale of Beeple’s digital artwork and the world’s first purchasable NFT house are the latest examples of the ongoing hype—but is it a trend that is going to stick around?
NFTs are blockchain-based records that represent pieces of digital media like art, videos, music, games, text and other. The code within an NFT identifies the uniqueness of it as well as the history of its ownership, this way proving the item’s authenticity and putting a value on it.
Some might see NFTs as another bubble, predicting it’s oncoming rapture, but Vytautas Zabulis, CEO of H-Finance, a company which offers 100% regulator compliant digital asset trading for financial institutions and Fintech companies, believes NFTs have unique potential for long-term adoption.
“Yes, the NFT bubble will eventually pop, but the broader impact it’ll make will remain,” stresses Mr. Zabulis. “Just like any new technology, which is changing the way we live right now or in the future—similarly what we’ve seen with other digital assets like Bitcoin—as the initial hype evaporates, the prices level out and wider adoption begins, though the process can be lengthy.”
A few weeks back, NBA Top Shot, a blockchain-based trading card system, generated over $230 million in gross sales, helping to make the idea of an NFT more popular for the masses. Mr. Zabulis sees this as a key moment—NFTs have changed the whole concept of how some unique digital assets are sold and traded. Art is another example impacted by the NFT trend—cutting out the central platforms from the selling infrastructure, it allows artists themselves to sell their works, track sale records and always get a share of profits.
“NFTs could essentially eliminate such platforms like eBay, Facebook or Spotify, by creating a direct economic relationship between the digital asset creator and the buyer. What we see now is just the infant stage of what could become a new trade market, eventually mingling with traditional finance. For the time being, NFTs are a part of the decentralised finance (DeFi) movement, where an NFT could be compared to a financial instrument, since NFTs could be mortgaged, loaned, sold or bought in parts, acting as a derivative,” comments Mr. Zabulis “We are thinking of integrating NFT trading platforms into H-Finance’s API to make it accessible for crypto trading clients. There is certainly a lot of interest and buzz in this early adoption stage.”
While it is too early to really say how exactly NFTs will develop further down the line, the impact of the enthusiasm around the latest digital asset trend might be something to keep an eye on as it continues to show the versatility and adaptability of blockchain technology.