Non-Fungible Tokens (NFTs) are becoming the latest trend in the crypto space. The emerging department in crypto recently has brought in so much money from digital collectibles. Everything from artworks, virtual lands to sports cards, and even tweets have now become non-fungible tokens (NFTs).
x*y=k is one recent NFT created by digital artist Pplpleaser. In 24 hours, the token was sold for $525,000 or 310 ETH. Similarly, Twitter CEO, Jack Dorsey had his first tweet sold for the equivalent of $2.9m (£2.1m) to a Malaysia-based businessman.
The tweet, which said “just setting up my twttr,” was first published on March 21, 2006, and was auctioned off by Mr. Dorsey for charity. The Malaysia-based buyer Sina Estavi compared the purchase to buying a Mona Lisa painting.
Several celebrities have continued to tap the NFT market to generate revenue for their brand and also improve relationships with their fans through this avenue. However, amidst the frenzy, stakeholders in the crypto industry are beginning to warn about the new trend.
How NFT could be a risky thing to invest – BNP Paribas CEO
The CEO of French bank BNP Paribas’, John Egan has described investing in NFTs as gambling where winning is based on luck. He noted that non-Fungible tokens are the riskiest digital asset class. In a recent interview with Bloomberg, Egan noted that while most people are drawn to the NFT space because of the thrills of making so much money and gaining property rights over the digital asset, it is becoming a problem.
One of the issues Egan pointed at was ownership. He described it as a big problem in the NFT space since people are now stealing other people’s works and turning them into NFTs.
However, the Frenchman also spoke highly of NFTs despite acknowledging the risks associated. He expressed optimism that the sector could become a bedrock infrastructure in the virtual economy.
When selling Non-Fungible tokens becomes illegal – SEC
SEC Commissioner, Hester Peirce also called crypto mom while speaking at a Security Token Summit warned the issuers of fractionalized non-fungible tokens and NFT index baskets that they could inadvertently be distributing investment products.
While Peirce stated that “the whole concept of an NFT is supposed to be non-fungible” — meaning that “in general, it’s less likely to be a security.” she noted that “people are being very creative in the type of NFTs they are putting out there.”
Peirce urged NFT issuers to be cautious if they decide to “sell fractional interests” in NFTs or NFT baskets.
“You better be careful that you’re not creating something that’s an investment product — that is a security, she said.