Investors who snub NFTs believing them to be a passing fad are fooling themselves.

The new digital asset class is revolutionising the art, fashion, music and sports worlds.

NFTs are one-off digital assets authenticated through blockchain tech, providing owners with certificates of authenticity and ownership. They produce unique, non-interchangeable digital tokens, and can be bought and sold just like any other assets or property, without having a tangible physical form.

We’re seeing an increasing number of established brands joining the NFT market, including the National Basketball Association (NBA) and Sotheby’s auction house.

Just two weeks ago, Sotheby’s held a three-day auction of NFTs by an anonymous artist. Moreover, Christie’s sold a digital artwork in JPEG form by an artist called Beeple, called “Everydays – The First 5000 Days” in March, which turned out to be the third most expensive artwork that has ever been sold by a living artist.

The excitement surrounding NFTs is very real. And traditionalist investors who believe them to be a flash in the pan are fooling themselves.

Although considered a novelty at the moment, the value of digital assets will only rise when you think about the increasingly rapid pace of the digitalisation of our world.

Furthermore, demographics are on the side of NFTs. Especially Millennials and Gen Z who lead digital lives and who will want to take digital representations of luxury brands, music and art into their lives. And now they can.

Another key factor to take into account is the Great Wealth Transfer. It’s estimated that around $68 trillion in wealth will be passed down from baby boomers to their children and other heirs within the next couple of decades.

Also, NFTs are positively changing business models, particularly within the creative industries.

A prime example is artists and musicians can provide enhanced virtual experiences for buyers and collectors, they can prove if the works have been forged and can also include criteria to receive royalties every time their works are re-sold.

However, although NFTs are the hottest new digital asset, it’s crucial that investors remain prudent.

In investing terms, this market is still very much the Wild West. Therefore, I would urge investors to wait until the dust settles.

Nonetheless, those who completely reject NFTs would likely be those who previously dismissed digital currencies such as Bitcoin or online retailers like Amazon.

Nigel Green is CEO and founder of deVere Group, one of the world’s largest independent financial advisory and fintech organisations.

Photo: Microsiervos