With more than $30 million in daily sales and more than $2.5 billion this year, the NFT art and collectible market has carved out quite the space in the digital valuables business.
But with little regulation, new efforts are being made to protect the provenance of digital art and establish systems to properly appraise work and build new connections to the tangible world.
“I think this is probably akin to the (Apple) App Store, the impact of the App Store,” said Richard Li, CEO of 4K, an NFT platform specializing in bringing luxury goods into the digital space. “I think that as long as regulators do not … come down softly on all of this, this will become a de facto operating model for the future of humanity.”
But Li noted there are precious few guardrails at this point — a boon to innovation, but one that opens the door to impropriety, such as fraud through things like NFT duplication. Dan Heyman, founder and CEO of Palm NFT Studio, said the nature of value and NFTs is changing rapidly as well — a trend he sees continuing as use cases and adoption expands.
“I believe, in some period of time, let's call it two years — maybe it’s five years — that 99% of NFTs will be given away for free,” he said. “They will be used as fan engagement and fan activation tools to help connect fans to creators. They won't just be in the digital collectibles space, which is kind of the primary angle at the moment.”
The fast-changing nature of the space is what’s leading companies like 4K, Palm and RECUR to offer insurance and duplication monitoring for creators. Big auction houses like Sotheby’s are exploring creating digital DNA scans to protect the provenance of work under their purview.
But the bigger shift, many say, may be building a bridge from NFTs to tangible products — be it art, real estate or luxury items.
Li’s bet with 4K is that Millennials and Gen-Z, who largely don’t yet have the capital of their predecessors, is that a market will emerge around culturally valuable items, like streetwear.
“I mean, the Millennial dream these days is to not have a roommate, right? Because of the cost,” Li said. “And so I think that investing in these types of cultural assets, and these types of physical assets that you know, are deemed valuable by people, is going to become a very, very, large industry in the future.”