When should NFTs be your asset class choice over others?
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Financial instruments for investing and growing one’s money have always been limited to stocks, real estate, cash and gold, to name a few. Such instruments are collectively known as asset classes, a group of financial instruments with similar characteristics and behavior in the market. But with technological advances come new ways to invest. And non-fungible tokens, built on the blockchain backbone, have emerged as one of the latest hot asset classes. But is NFT for everyone?
During a panel discussion on ‘NFTs as an asset class’ at the Web3 and Tech and Innovation Summit 2023 held by Entrepreneur India, industry leaders shared their thoughts on the utility as an asset class.
Digital collectibles are one of the most notable forms of NFTs. For an NFT to qualify as an asset class, it must do more than just function as a digital collectible. “Assets have a value, and many of the NFTs have to have a value, which is not a digital form. If the asset does not have a value, then there is no point in buying that NFT, according to me. Now, how does this value come in? The value can come through all kinds of tools behind the NFT in question, or it can have multiple uses, says Bhavesh Thakkar, CEO & Co-Founder, DIMO, XDSea NFT Marketplace, DIMO studio & RoRo wallet.
Two of the most important use cases exist in the form of phygital benefits and unlocking content. NFTs have popularly seen more utility in the segments such as art and collectibles, sports memorabilia, events, games and virtual real estate. Buying an NFT should not only be based on the digital aspect, but also on the other offerings.
But is buying an NFT for thousands of dollars worth it? “If you have a Bored Ape Yacht Club (NFT), that’s the power of community that we’re trying to capture. Now imagine you’re flying in the Emirates, and you have a special club preference because you have BAYC. You’re elite now, and that is what you get paid for. This is actually a new form of loyalty programs, concierge and clubbing and meeting people,” says Pushkar Vohra, CEO of Pandora Finance. Vijay Dhanasekaran, Founder and Chief Blockchain Consultant, Blocknetics echoes the sentiment and shares, “I think it’s about the exclusivity you get.”
While NFTs are a hot topic globally, their long-term relevance will depend on their broad phygital offering and not just their existence on a blockchain.
