If you haven’t had your fill of madness yet this week, here’s some more…
The guy who kicked former President Trump off Twitter just sold a Tweet for over $2.5 million.
Let me explain.
This week, Twitter CEO Jack Dorsey sold the first-ever tweet (from March 2006) as a non-fungible token (NFT). An NFT is a unique asset that has a digital stamp (certificate) to prove it’s on the blockchain.
What did this valuable tweet say, or what wisdom did it spread?
The tweet was… “just setting up my twttr.”
Yep… that’s all. You can view it here.
If that sounds ridiculous, don’t write off NFTs just yet. In fact, this new market is a great example of why investors should keep an open mind.
NFTs are making big headlines. Two weeks ago, powerhouse auction company Christie’s sold an NFT digital image for $69.3 million.
It’s called “Everydays: The First 5000 days” by artist Mike Winkelmann, aka Beeple.
You can check it out here.
Why would anyone pay anywhere near $70 million for an online image? Keep in mind, anyone can view it… for free… as many times as they like. There’s not much else to it.
But there’s an important lesson here for investors…
Scarcity and authenticity create value.
There can be a market for anything. Why do some people value sports cards, classic cars, autographs, or precious metals? Because there’s a limited supply. They’re valuable as long as people want to own them. And their value is however much someone is willing to pay for ownership.
With this lesson in mind, the NFT craze makes a little more sense.
NFTs are a type of “digital certificate” that prove you own a one-of-a-kind asset. Most are on the ethereum blockchain. They can be viewed by anyone and are easily identifiable.
And blockchain technology eliminates the possibility someone will create replicas or sell counterfeit versions—a major problem in the sports memorabilia and autograph market. The critical element of NFTs is their “non-fungible” quality. It means each token is unique and can’t be replaced with something else.
But the booming market for NFTs still looks a bit crazy.
Celebrities like William Shatner and NFL superstar Rob Gronkowski have already jumped into the space, promoting their own unique collectables and images. In a recent interview, Shatner gave his thoughts on the NFT market, saying, “It’s a phenomenon of rare things being bid up on the internet.”
For a good overview on NFTs, check out this article on Cointelegraph. It includes more examples of NFTs and explains how they can help artists and, in some cases, create passive income for owners.
What’s the point of all this? Should you go out and purchase NFTs?
That’s up to you. The key takeaway here for investors is to be open-minded.
Your first reaction might be to think NFTs are a fad… or simply a way to separate fools from their money. But skeptics say the same thing about expensive art, antiques, or anything with a skyrocketing price. A few years ago, lots of folks said the same things about bitcoin!
Don’t ignore or discredit something because it’s new and doesn’t match your interests. You don’t have to love stocks or fine art or any particular asset. But you can still make a lot of money investing in them.
Remember, there’s a market for everything… which means there’s opportunity in everything.
