During the first half of 2021, sales of nonfungible tokens, or NFTs, totaled $2.5 billion. Visa, for example, continues to cast a light on this burgeoning business.
According to a recent whitepaper produced by Visa, the company’s entry into the NFT industry was motivated by a review of the underlying technology and its potential as a “promising medium for fan engagement.”
Nonfungible tokens were cited in the Aug. 23 paper as a key innovation during the pandemic, when severe shelter-in-place regulations restricted live sports, entertainment, and music festivals. Fans are keen to join digital communities centered around their favorite musicians or sports teams, and NFTs are emerging at a moment when they are eager to do so.
Professional sports were particularly heavily struck by the pandemic, with major leagues worldwide losing an estimated $18 billion in income. This reinforces the “need to diversify revenue and focus on technology to reposition organizations for growth prospects and to catch the attention of fans,” according to Visa.
“NFTs appeal to collectors, fans, teams, leagues, and talent,” according to the research. NFTs, in particular, have the potential to be important sources of fan interaction, customer relationship management, and new revenue streams. Collectibles, art, and gaming were the three most common NFT use cases discovered.
The whitepaper was issued in conjunction with Visa’s news that it had paid $150,000 for its first NFT, CryptoPunk 7610. CryptoPunks is a collection of 10,000 unique NFTs kept on the Ethereum network with proof of ownership. According to industry sources, 2,519 CryptoPunk memorabilia were sold in the last 30 days, netting a total of $467.4 million. The highest-grossing sale during that time was CryptoPunk 7252, which sold for 1,600 ETH ($4.5 million).
NFTs are also gaining appeal in other niches outside of the CryptoPunk trend. According to Cointelegraph, total NFT sales are expected to top $900 million in August, setting a new high for the industry. The previous high was set in May, when total NFT sales were $255 million. Crypto markets hit fresh all-time highs in May before undergoing a multi-month downturn.
Given Visa’s increased focus on digital assets, the company’s move into NFTs is unsurprising. In the Asia-Pacific area, the company recently signed an agreement with digital asset platform Zipmex to provide more crypto payment integration. Visa confirmed its commitment to building cryptocurrency payment and fiat on-ramps in January of this year in order to promote the digital asset class.