What Will Power NFTs? Probably More NFTs.
Visa (V) – Get Visa Inc. Class A Report recently announced that it’s getting into the game for non-fungible tokens (NFTs). The finance company hasn’t really jumped into the deep end. Their $175,000 purchase of a single digital image is better described as “dipping their toes” than “going for a swim.”
Timothy Collins sees it as an interesting move, if not necessarily one that shakes up the market.
He recently wrote on Real Money “Visa jumps into the NFT (non-fungible token) deep end with a purchase of a CryptoPunk. Does this mean NFTs will be a moonshot? No. Does it make Visa an NFT play now? Also, no.”
“That being said, there is a takeaway from this. Corporations are getting involved in the NFT market. Arizona Iced Tea teamed up with the … Bored Ape Yacht Club recently. We could see more corporations turn to NFT for marketing and brand awareness. Essentially, trying to fit in with the 'cool' kids.”
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It’s also a chance, Collins says, to explore perhaps the most important method that will help NFTs gain ground as an investment product. As is true in any market, for every buyer you must also have a seller. If Visa spent $175,000 on a CryptoPunk image, it means that someone out there is $175,000 richer for it. The question is, where will that money go?
Most likely, Collins writes, right back into the NFT market.
“When I meet someone who made their money developing properties, the first thing they talk about after selling a development is what are they going to develop next. A house flipper looks for more houses to flip. A landlord looks for more properties they can rent out.”
“If you made your first big killing trading stocks, you're probably going to stay with trading stocks. We know how hard it is to drag the early winner of crypto away from crypto. Why would NFTs be any different? If you make your first million trading NFTs, you're probably going to stay with that same model as long as possible.”
In other words, says Collins, as more companies begin to take an interest in the NFT space investors should expect this asset class to grow (although not necessarily stabilize). Every time a company buys an NFT, they have made an investor that much wealthier. Every time an NFT investor gets wealthier, the odds are good that they’ll reinvest at least some of that money back in the NFTs that made them money in the first place.
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