Why Kevin O’Leary Believes NFTs Will ‘Only Become More Useful and Valuable’

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Key points

  • Kevin O’Leary tweeted that non-fungible tokens have a bright future.
  • The billionaire investor remains cautious, particularly about the impact of regulation.
  • NFTs are a way to prove ownership of various digital items, such as art, music, photos, and more.

Kevin O’Leary, also known as Mr. Wonderful, recently added a new string to his bow. the shark tank cryptocurrency judge and enthusiast had his image turned into an NFT. NFT, or non-fungible tokensto give them their full name, they were all the rage last year.

Unfortunately, the NFT market it has stopped boiling in recent months, along with many other digital assets. But O’Leary believes this lull won’t last forever. Last month, he tweeted: “As I see it, non-fungible tokens will only get more useful and valuable.”

NFTs are essentially a digital certificate of ownership that is recorded on the blockchain. They can be photos, artwork, music, or game items. Some of the more famous NFTs include Beeple’s “Everydays: The First 5000 Days,” which sold for over $69 million, and Bored Ape Yacht Club’s NFTs, which have become something of a celebrity status symbol. .

Why Mr. Wonderful is bullish on NFTs

O’Leary was originally interested in NFTs due to their potential in the authentication of physical assets. He has a large collection of clocks and modern art, and says that NFTs offer a way to secure pieces when they are found in different cities or are loaned out.

In an interview with the Observer, the billionaire investor said he sees two ways NFTs can affect the art world. One is through the direct sale of images, although he warns that these can be “wildly volatile” in price. The other is through companies that service the world of NFTs, the “picks and shovels” as he calls them.

O’Leary compared the NFT market to the gold rush and noted that it was better to own the tools to support miners than to dig for gold yourself. This belief led O’Leary to invest in NFT.com. Now he not only owns the NFT portrait of him by Udo Spreitzenbarth that we mentioned earlier, but he also owns the art itself. Also, his insurance company can access the NFT.

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It is worth noting that O’Leary is not optimistic about everybody NFT. He thinks we are only at “first inning” and some NFTs will succeed while others will fail. It’s early days for the industry, and he predicts it will be extremely volatile, similar to Amazon in the early days. “Some of them will end up with arrows in their backs and some of them will be fine,” he said.

Why Mr. Wonderful thinks NFT creators should be cautious

Volatility isn’t the only reason O’Leary thinks NFT creators should tread carefully. The other is the way 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 the projects face similar problems, as the SEC has said that many of them could be operating as unregistered securities. Until we get more regulatory clarity, there is a cloud hanging over the entire industry.

As O’Leary explains: “Let’s say you issue an NFT that gives you tickets to the Formula One race in Miami next February and you buy it. Now that’s one of the benefits of owning that NFT. Is it a currency or is it a currency?” commodity or is it a security, like a stock that pays a dividend? Trading in unregistered securities could be problematic. “That’s why I’m very, very cautious about getting involved with NFTs right now,” he adds.

If you are considering buying NFT, it’s important to understand what you’re buying and the risks involved. O’Leary highlights two important ones: the value could be reduced to nothing, and the authorities could redefine how NFTs are classified. The technology is likely to become more useful, but that doesn’t necessarily mean that each individual NFT becomes more valuable. Like the art world, this is a highly unpredictable market and there are no guarantees.