Innovation is key to investment opportunities in NFTs

Prime Sarmiento

Innovation is key to investment opportunities in NFTs

HONG KONG – The growing popularity of non-fungible tokens in recent years is offering new opportunities to those in the art and creative industries who can cater to a new type of collectors, experts said during an online forum on NFTs on Tuesday.

Participants in the China Daily Asia Leadership Roundtable discussed some innovative ideas that are attuned to the evolving consumer market. These include creative licensing, using NFTs for online games, and making digital collectibles based on antique weapons.

The panel discussion, which revolved around the theme “Innovation Investment in NFT – Trends and Opportunities” is part of the two-day Asian Financial Forum. The annual event, which concluded Tuesday, was organized by the Hong Kong Special Administrative Region government and the Hong Kong Trade Development Council.

NFTs refer to unique and non-interchangeable units of data stored on a blockchain. They are often associated with digital files of artworks, video and audio. The NFT market has seen a 10-fold increase between 2018 and 2020. In the past few years most of the publicity surrounding NFTs revolved around its use as a digital representation of artwork.

In 2021, London-based auction house Christie’s sold a digital work of art - Everydays: The First 5000 Days - for a record $69 million. According to Christie’s, the artwork, created by American graphic artist Mike Winkelmann who is known professionally as Beeple, was the third-highest price achieved by a contemporary artist.

Francis Belin, president of Christie’s Asia Pacific, said it was an honor for Christie’s to be the first international auction house to sell an NFT and that it will continue to curate and present the best of art and NFTs to collectors around the world.

“NFT in the art space is definitely here to stay,” Belin said. “The reason why we see its explosion in that category is because technology is here. We have ideas of creativity, and art that has been created not only for design drawings, but also music, video, and the range of creativity that digital as a medium can bring.”

Les Borsai, co-founder and chief strategy officer of the United States-based digital asset management firm Wave Financial, said: “It’s a really great time to be able to create and have that kind of imagination, and I don’t see anything slowing down NFT. Everyone is trying to find their place in the NFT world in areas like sports, music and film, and even traditional art galleries and museums are trying to figure out how NFT fits into their agenda.”

Borsai, who joined the discussion via online video, said while NFTs are usually associated with artworks, he noted that “NFTs are not just about art”. For example, he said NFTs are used to create avatars in online games and American rapper 2 Chainz has produced the animated series The Red Ape Family built on NFTs. Borsai also cited the RTFKT art studio that created virtual sneakers.

Warren Cheng, director of Fine Art Asia, Asia’s leading fine art fair, said traditional players in the art market such as gallerists and art fair organizers are a “bit hesitant and resistant” to NFTs.

“The main obvious obstacle is the use of cryptocurrency,” he said. “It is quite hard for traditional players to open the wallet to get the cryptocurrency. When they do receive, how to convert that into fiat (money) and back into the bank account? That’s always the question I have been asked. I think their resistance to that at core level comes down to, they don’t know where they stand in the whole value chain, and now NFTs are here.”

Cheng said the rise of NFTs represents “a new way of art consumption”. This is because unlike traditional art collectors who usually go to galleries and art fairs to buy artworks, NFT collectors go to online markets like OpenSea where they can buy directly from artists and creators who can mint their artworks in the blockchain.

“If artists or creators can mint NFTs in the blockchains so easily, and the marketplace is so user-friendly, where in the value chain do art fairs or galleries stand? What is their value-add? As a director of the art fair and owner of the gallery myself, I ask that question to my team every day, and I believe our value-add lies in the role we can play, and that is a place where collaboration can happen,” he said.

Cheng is the founder of Wui Po Kok, a Hong Kong-based gallery that specializes in ancient Chinese art. He said his gallery is appealing to this new type of art collector by launching an NFT collectible based on antique weapons.

“What we did was, we chose a piece of antique. It was a dagger from 2,000 years ago. And then we minted NFTs around it. Each NFT (holder) has special rights to the piece of antique (weapon) … the right to view the antique and then the right to bid on the antique if they want to buy it. So essentially, if you are an NFT holder you have access to it,” Cheng said.

He said this NFT collectible allowed his gallery to repackage and sell ancient art. Cheng is also exploring how to offer NFTs through play-to-earn games, noting that “some of the most exciting or the biggest role-playing games, or even movies that we’ve seen, they have the roots based on ancient times, myths or fantasies”.

Contact the writer at prime@chinadailyapac.com