NFT Investments PLC (LON:NFT) is not one for hanging around, with the company having quickly established itself to capitalise on, as the name suggests, non-fungible tokens (NFTs), the latest innovation to come out of the cryptocurrency and blockchain industry.
NFTs are tokens that allow unique items, such as works of art, to be registered and traded on a blockchain. Existing NFTs, including the first-ever Tweet, have already been sold at auction for eye-watering amounts running into the tens of millions of dollars.
However, for most mainstream investors, even wrapping their heads around the concept of NFTs may prove difficult, let alone figuring out how to invest in them.
It is at the crossover between ordinary investors and the new NFT market that the company aims to position itself.
According to Johnathan Bixby, the company’s executive chairman, “everyone is talking about NFTs, but no one is actually doing it”. He told Proactive a similar trend existed around Bitcoin investments until recently when an explosion in the crypto’s value sent cash flooding into the market.
He said that NFT Investments is designed to accomplish with NFTs what one of his previous ventures, London-listed crypto miner Argo Blockchain PLC (LON:ARB) did for crypto mining, in such that it will offer investors and more secure and regulated proxy to gain exposure to this new market.
“NFTs are quite technical…so we want to be a proxy for the NFT market. We allow investors to take their fiat money and put it into a regulated, audited company. The problem is there is currently too much friction in this market and if we can take some of that away more people will be able to get into the market and democratise it, allowing more people to win.”
“Anyone can invest into our stock and play the NFT market. It’s as simple as that”, he said.
The company is already seeing the fruits of its approach with investors, with its initial public offering (IPO) on the Aquis Exchange in mid-April more than trebling its original £10mln fundraising target to rake in £35mln ahead of the float.
In terms of investment strategy, Bixby said that the firm is pursuing a portfolio approach targeting three different areas of the sector to achieve returns. The first area is NFTs themselves, where the company is aiming to aggressively pursue creators and digital artists that have large social media followings which in turn are likely to increase the value of NFTs on the market. NFT Investments will take a data-driven investment approach that will see the company home in on up-and-coming talent in the digital art world and purchase NTFs created by this group. There is a strong correlation between the social following of a digital artist and the value of their NFTs.
The second avenue is the infrastructure and frameworks needed to create and maintain NFTs, notably blockchains and their related tokens, NFT galleries and real-world assets that are critical for the sector to function such as computer server farms. Approximately a third of NFT Investments’ funds will be invested in the infrastructure underpinning NFTs, and as with Argo Blockchain, NFT Investments’ efforts will be centred around building sustainable and efficient means of powering blockchain technology.
The third element is the monetisation of creators, with the company aiming to partner up with celebrities and other artisans in the long term to create and profit off new NFTs through royalty deals. Human nature will drive interest
Looking to the NFT market itself, Bixby said that while the products themselves may seem complex, the reason for their popularity is very simple. It’s human nature.
“We [humans] have been collectors of all sorts of things since the dawn of time…we buy things as symbols of our disposable income and wealth”, he said, adding that the reason NFTs are so important is that they take the physical concept of provenance (i.e. ownership of a valuable object) and bring it into the digital space, and thus drawing in those same ‘collector’ instincts.
“This technology has opened up the ability for us to signal digitally…That is literally game-changing”, Bixby said.
He added that with many digital natives who spend most of their time online likely to prefer digital payments and decentralised finance technology to their physical counterparts, it makes sense that this will also create a market for digital collectables such as NFTs.
Kinks will iron out as market matures
One of the criticisms that have been levelled at NFTs amid their rising popularity is that in contrast to physical collectables, which exist in the real world, many NFTs such as tweets and digital artwork can be copied identically and viewed online for free. Some may say these factors defeat the entire point of collectables, which often derive their value from scarcity and restricted access.
However, Bixby told Proactive that as more people become digitally savvy, they will realise that ownership will be clearly defined through both publicity and through the blockchain, which will be able to retain an unalterable record of who owns which NFT.
“It [ownership] is transparent on the blockchain…and I believe we will get to a point where NFT marketplaces will authenticate NFTs as you buy them….it then becomes a question of how the market values the work itself.”
He said that this already happens with other online purchases on ecommerce sites such as Amazon, where customers will purchase products trusting the provider to send the correct item.
“I think the social proofing will solve any trust issues. Today it is Wild West but it is not always going to be that way…they [the NFT provider’s] business models are based on trust, so they have to solve these issues”, Bixby added.
Big plans ahead
Following its record-breaking fundraising on the Aquis Exchange and its plans to list on the OTC market in the US, Bixby said that the firm is going to pursue all three prongs of its investment strategy immediately.
He added that a big positive during the firm’s listing and IPO was backing from what he described as “big institutional money”, suggesting there is strong interest at the top end of the finance sector in the growth of NFTs.
But for now, he said the company plans to stick to its core objectives and that news is likely to be coming thick and fast over the coming months. The company recently announced its maiden investment by acquiring a stake in AEON, a developer of cutting-edge technology for the luxury fashion industry that is pioneering the use of NFTs to verify products and combat counterfeiting.
“We’ve got a lot of money to deploy into the market…so there’s going to be plenty to write home about”, he said.