NFTs and the Economy

As technology continues to advance, we see a rise in creative ways of displaying wealth. In these past few months, we have seen an explosion in popularity - and confusion - around “NFTs”. NFTs, or non-fungible tokens, are a type of digital asset. NFTs exist on a blockchain that serves as a public registry that anyone can access to verify the ownership of the NFT and its legitimacy. Each NFT purchased has a unique digital signature. The NFT can be viewed by anyone, but the one who purchases it has the status of the owner.

NFTs have gained attention through the unique digital objects that they can be sold as. These digital objects include images, videos, music, text, and even tweets. Its most popular image is the ‘Bored Ape,’ drawn by artist Seneca, which has been purchased by many celebrities this past year (image above).

NFTs are usually bought in cryptocurrencies or in dollars, which are recorded through the blockchain. Due to its surge in popularity in 2021, the demand for NFTs increased, leading to a rise of $10.7 billion in sales in late 2021. In October 2021 alone, there were $2.6 billion in sales. NFT sales totaled roughly $25 billion in 2021 compared to $94.9 million in 2020.

The value of NFTs is expected to continue to rise over time. But, due to NFTs dependence on the cryptocurrency market, falls in the market could have negative impacts on their future value.

The rise in digital assets may be good for the economy. As companies further explore the digital universe, we should expect a growth in job opportunities as well as investments into these companies. However, the future remains uncertain.