They say a picture is worth 1,000 words, but these days, a picture can be worth thousands of dollars. NFTs (short for “Non-Fungible Tokens”) are like digital trading cards. Each one features some unique piece of digital art, with some selling for as much as $69 million.
Millennials have been at the forefront of the “crypto” craze for some time. According to a 2021 survey, 40% of millennials have invested in cryptocurrency.
Why are millennials so invested in NFTs? What does that mean for the future of investing?
What Are NFTs?
A cryptocurrency is a form of digital currency, unregulated by any central authority. Instead, users trade cryptocurrencies using a network of computers known as a “blockchain.”
NFTs differ from other forms of cryptocurrency in that each one is unique. While every Bitcoin is the same, each NFT features a one-of-a-kind image, like a piece of virtual art.
This uniqueness means that every NFT is a collector’s item, adding to its allure and value.
Why Millennials Love NFTs
Millennials don’t exactly have a history of investing. Born between 1981 and 1996, many of these young adults came of age during the scandals of the early 2000s.
Despite this, millennials have gravitated toward NFTs. In November of 2021, NFT marketplace OpenSea exceeded $10 billion in total volume.
Financial experts point to several driving factors:
It’s not for nothing that many NFTs support sustainability initiatives. For example, proceeds from Ellen Degeneres’ World Central Kitchens NFTs support a food bank. The NFT project Blazed Cat supports mental health initiatives.
Data shows that 95% of millennials want their investments to make a difference. NFTs represent the latest form of “impact investing,” where money isn’t the only goal.
Despite these noble aims, it’s impossible to deny the siren song of huge gains. For example, if you bought CryptoPunk #8348 in 2017, your bill was $456. Today, the same NFT is worth an estimated $171 million.
These rapid gains are hard to ignore, especially for those who struggle with student debt or unemployment. NFTs represent another form of investing that promises greater gains than traditional stocks.
Finally, there’s a novelty to NFTs. After all, each one is a one-of-a-kind collector’s item.
Cooper Turley, age 26, spent $10,000 in NFTs last year to use as gifts. He believes that “NFTs as gifts will have novelty for the next few years.” Whether as gifts or personal investments, the relative newness of NFTs adds to their trendy appeal.
Moving Toward Web3.0
NFTs are not without risk. Digital currency can leave investors vulnerable to hacking. One investor recently lost $2.7 million to a hacker who gained control of their “bored ape” NFT collection.
Still, the enthusiasm of millennial investors is likely to continue with Generation Z and beyond. As Web3.0 ramps up, we’ll see an increased reliance on blockchain networks. NFTs are here to stay.
This article is for information, illustrative and entertainment purposes only and does not purport to show actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular investment action.