- Kevin O’Leary tweeted that non-fungible tokens have a bright future.
- The billionaire investor remains cautious, especially on the impact of regulations.
- NFTs are a means of proving ownership of various digital assets such as art, music, photos, etc.
Kevin O’Leary, aka Mr. Wonderful, recently added a new string to his bow. The shark tank judge and crypto enthusiast had his photo turned into an NFT. NFTs – or non-fungible tokens, to give them their full name – were all the rage last year.
Unfortunately, the NFT market has exploded in recent months, alongside many other digital assets. But O’Leary thinks this lull won’t last forever. Last month, he tweeted: “In my view, non-fungible tokens will only become more useful and valuable.
NFTs are essentially a digital property certificate recorded on the blockchain. These can be photos, artwork, music, or in-game items. Some of the most famous NFTs include Beeple’s “Everydays: The First 5000 Days” which sold over 69 million, and the Bored Ape Yacht Club NFTs, which have become a celebrity status symbol.
Why Mr. Wonderful is optimistic about NFTs
O’Leary initially became interested in NFTs because of their potential in authenticating physical assets. He has a large collection of watches and modern art, and says NFTs offer a way to insure pieces when located in different cities or on loan.
In an interview with The Observer, the billionaire investor said he saw two ways NFTs could affect the art world. One is to sell images directly, although he warns that these can be “extremely volatile” in terms of price. The other is through companies that service the NFT world – the “pickaxes and shovels”, as he calls them.
O’Leary compared the NFT market to the gold rush and pointed out that owning the tools to support miners is better than digging for gold yourself. This belief led O’Leary to invest in NFT.com. Not only does he now own the NFT portrait of him by Udo Spreitzenbarth that we mentioned above, but he also owns the art himself. In addition, his insurance company can access the NFT.
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It should be noted that O’Leary is not optimistic about everything NFT. He thinks we are only at the “first run” and that some NFTs will succeed while others will fail. The industry is still in its infancy and he predicts that it will be extremely volatile, like Amazon in its early days. “Some of them will end up with arrows in their backs and some will be fine,” he said.
Why Mr. Wonderful Thinks NFT Creators Should Be Careful
Volatility isn’t the only reason O’Leary thinks NFT creators should tread lightly. The other is how we define NFTs. If authorities decide that NFTs are securities rather than commodities, there are strict rules on how they can be traded in the US and what information traders must report. Cryptocurrency projects face similar issues, as the SEC has said many of them could operate as unregistered securities. Until we get more regulatory clarity, a cloud hangs over the entire industry.
As O’Leary explains: “Suppose you issue an NFT that gives you tickets to the Formula 1 race in Miami next February, and you buy it. Now, this is one of the useful benefits of owning this NFT. Is it a currency or is it a commodity or is it a security, like a stock that pays a dividend? » Trading in non-registered securities could be problematic. “That’s why I’m very, very cautious about getting involved in NFTs right now,” he adds.
If you’re considering buying NFTs, it’s important to understand what you’re buying and the risks that might come with it. O’Leary points to two important ones: the value could fall to zero and the authorities could redefine the categorization of NFTs. The technology will likely become more useful, but that doesn’t necessarily mean that each individual NFT will become more valuable. Like the art world, this is a highly unpredictable market and there are no guarantees.