News, Views & Truths (22/3/21)

Published on: March 22, 2021

Hello, everyone and welcome to the start of another week.  Last week was brim-full of fantastic investment and financial planning content and this week is no different.  So, let’s kick it off in our usual style; welcome to this week’s News, Views and Truths.

Regular readers will be pleased to learn that I am not going to comment on rising bond yields AGAIN (they are still rising, I am still focussed upon them), but instead, bring something to your attention which is the hot topic in the world of investing.

Non-fungible tokens.

A non-fungible token, or NFT, is a unit of data, held on a digital ledger called a blockchain.  Each NFT can represent a unique digital item and as such can be verified as the original.  There cannot be any forgeries of that original, although, because the item is digital, there can be many, many copies.  Unlimited copies, in fact.

Have I lost you?  Ok, let’s put it this way.  NFTs can be digital art, music files, items in video games or digital trading cards; essentially, anything at all.  Again, access to any copy of the original file is not restricted to the owner of the token, but the owner of the token has the original and that can be verified, as it is held on a blockchain which is a digital ledger.

So why am I talking about this?  In the last few weeks, the auction of NFTs has begun to generate the attention of the market, due to the sums involved.

A video clip created by digital artist Beeple, whose real name is Mike Winkelmann, was sold on from its original buyer for a record $6.6 million this month; the price originally paid for the video was around $67,000.

Elon Musk, Tesla and SpaceX CEO, turned down an offer of $1million to buy one of his tweets.  

Think that’s crazy?  A company called RTFKT Studios sells digital sneakers (trainers over this side of the pond), with prices starting at $1,500, running up to $10,000 a pair.

Digital shoes.  Shoes you cannot wear.

And- hold the bus!  That’s not all.

Contemporary artist Krista Kim recently sold a digital house for 288 Ether Coins, valued at over $500,000 based on the cryptocurrency’s trading price at the time.  

A house.  A digital house, on a computer, that you cannot live in.  Half a million dollars.

So why on earth is this happening?  Well, for starters, some folk have more money than sense.  In a world where the US Government are sending $1,400 stimulus cheques to its population to assist in the pandemic recovery, there is a definite subset of the world’s population who have more wealth than they genuinely know what to do with.  These folks do not bat an eyelid at the thought of buying a pair of digital shoes for thousands of dollars, just so they can own the original.

And then, we move onto a slightly more dystopian answer; the creation of metaverses.

A metaverse is a 3D immersive world where you can experience all of these things, virtually.  You may think that this sounds way too far-fetched and that this will never catch on.  But it is.  And I can tell you from first-hand experience, it’s fascinating.  Here is a picture of me below with my Virtual Reality headset perched upon my bonce.

Will this market take off?  Is this simply another signpost to global wealth inequality?  Could you invest in it in the future?

My view is Yes, to all three.

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