Today, we are introducing you to the Non-Fungible Token (NFT) list of stocks on Stock Card platform. The stuff we all buy and trade are broadly divided into fungible and non-fungible. Fungible things are easily interchangeable. A $10 dollar bill is a $10 dollar bill regardless of how many times it exchanges hands. It's not unique. All $10 bills are similar in value. In contrast, the Mona Lisa painting is quite unique. You can copy it but the original copy is still the original copy. The Mona Lisa is a non-fungible asset whereas a $10 bill is fungible. So far, so good. We put the Mona Lisa in a Musume and guard it with proper security cameras and locks and it maintains its uniqueness. But, what if the Mona Lisa could have been a downloadable art by anyone around the world and became a part of another painting? What if the Mona Lisa was a piece of digital art online? In that case, however unique it is, it would have been difficult to distinguish a copy from the original if anyone could have created a copy of the Mona Lisa and claimed it to be the original. Now think about all the digital things we own. A piece of music, a good article, a great game, or even an interesting video. How can those things stay unique and be valued based on their uniqueness at every corner of the Internet?
The world we live in gets more digital by the day. Take the example of how we purchase and listen to a piece of music. It all started from live performances. Then humans found a way to store the music on cassette tapes, CDs, DVDs. Then came the era of digital downloading the music we like, and now we stream everything. Our favorite YouTubers may use parts of the music and create a new show or a podcast episode. The original piece of music is now exchanging hands and evolving at an unprecedented speed. The world has embraced a new technology named Non-Fungible Token (NFT) to address that specific challenge.
The NFT technology associates the identity of the original creator of a piece of digital content with the content itself, which is non-fungible regardless of how many times it gets reused by other people. In a way, the NTF technology protects the uniqueness and the ownership of digital things in an easy and efficient way.
Why the world is suddenly interested in NFT technology. Digital files, music, and other types of digital content are not new. What is the driver of the global interest in NFTs and how come we have never had NFT technology until now?
In order to associate a digital asset with its original creator and trace the people who have owned that asset since it was created, we need a technology that can trace that chain of ownership in an efficient and cost-effective way. Blockchain infrastructure is the answer. The same blockchain technology that powers cryptocurrencies can be used to create non-fungible tokens and identify the owners and value of a digital asset. That's, of course, a very simplistic and idealistic answer but you get the gist. Since we have blockchain technology we now can have NFT technology too.
Imagine the implications of such a technology for investors like you and us. Anything and everything digital has an original owner that can be traded in exchange for money. As investors, everything that has monetary potential is an exciting investment. We can invest in tokenized digital assets. For example, we can buy a memorable video of a unique basketball shot on the NBA's Toshot marketplace. We can also invest in the companies that enable the NBA's Topshot website to offer its digital assets to NBA fans. As stock market investors, we prefer the latter. That's why we are excited to introduce our most recent list of stocks to our fellow Stock Cardians: the Non-Fungible Token (NFT) list of stocks that allows all of them to participate in the future of digital assets.
Because the NTF technology is in its infancy phase, the landscape is still evolving and growing across a few dimensions. We started our research by identifying markets that can take advantage of this revolutionary way of exchanging things digitally. Music, games, and collectible things, such as unique tweets from a celebrity, are examples of such markets. Then, there are digital marketplaces where people can exchange those unique digital content. Of course, we need the actual software infrastructure that enables such transactions. Those are broadly the subsegments of the NFT landscape as the industry evolves and grows.
One thing you would notice is that the number of publicly traded companies playing in the NTF market isn't too big. As is the case with all other emerging technologies, the innovation starts with smaller, more agile startups. As publicly traded stock market investors, we are at a disadvantage of not having access to those smaller private companies. However, there are still more prominent and established public companies with a lot of cash and an appetite for experimentation taking the lead in moving the NTF technology forward. Those are the companies we have added to the NFT list of stock and we would refresh the list in the weeks and months to come.
A digital pair of shoes
Take Nike (Ticker: NKE). The company already knows that its die-hard customers are interested in creating, owning, and trading uniquely designed limited-edition sneakers. We have spoken about the market for second-hand sneakers in the previous episode of the Daily Roll with our CEO. The savvy folks at Nike HQ have asked themselves if their sneakerheads (a way to call a person interested in owning and collecting several limited-edition sneakers) are interested in the actual sneakers, would they also be interested in a digitized limited-edition sneaker design? If you are not a sneakerhead, you are rolling your eyes and laughing at that notion. But, just like how you and we like to invest and trade stocks, it shouldn't be hard to imagine other people may be interested in buying and trading unique sneakers. Of all people, stock market investors should understand how it feels to buy, hold or exchange a highly desirable item. So, let's not judge?! Okay?! Going back to Nike, the company is experimenting with the idea of tokenizing its sneaker designs and that's how a digital pair of shoes is born.
Just like the Nike example, we looked for other companies that have already dipped their toes into the emerging NFT landscape, and we found and published a list of 36 companies across five subsegments of the NFT market. Have a look at the list and dip your toes in this rapidly evolving and new market.
As is the case with investing in most emerging technologies, we face a few risks. The most important is the "hype" risk. When a new technology emerges, the media, social media, and the participants in the market are excited about the future potential and possibilities. The excitement typically creates unrealistic expectations and disregards the challenges that are in the way of developing commercially viable use-cases of the technology. As a result, the stock prices surge exuberantly, and we run the risk of overpaying for a commercially nonviable business opportunity. Make sure you are aware and consider such risk in your investment plan as you learn about the Non-Fungible Tokens and invest in companies leading or playing a part in shaping its future.