Dave Nadig, Financial Futurist at VettaFi, recently discussed all things nonfungible — or at least all tokens nonfungible— and why they matter for ETF investors with Cinthia Murphy, director of research at ETF Think Tank.
The two dive right in, with Murphy explaining that ETF Think Tank has embarked on a journey into the world of NFTs to understand the potential they offer.
“At the moment, I would say I see NFTs as a very narrow capability built into initially the Ethereum blockchain that we’re still trying to figure out what to do with,” Nadig said.
While NFTs have their more niche appeal for some (i.e., bragging rights), Nadig sees genuine potential intrinsic value in the membership aspect with exclusive services that could be attached to particular NFTs. Whether the NFT has secondary value or not, Nadig believes there is value in exploring and playing around in the space to better understand what it is and how individual components function.
“The most interesting thing to do for me with an NFT is crack it open and see where everything points to, see how it’s put together. That’s where I think all the cool stuff is going to happen, what you do with these things in the future,” Nadig said.
NFTs bring up interesting questions around the idea of asset ownership, Murphy said, questions that are worth digging into, particularly regarding the technology potentials that NFTs present for the financial ecosystem, according to Nadig.
“There’s a big difference between the NFT speculative market of the now and NFTs as the technology of the future,” Nadig explained.
Linked Exposure
For all the complexity and redundancies that can occur in the financial world with ballooning assets and the like, those issues are 100-fold within crypto, with digital assets staked in a long chain of leverage and tokens and exposures that is all linked. It’s why when something unravels within crypto, it does so rapidly and exponentially.
“One of the cool things about NFTs, frankly, is that it’s very difficult to create an ecosystem where that happens because the NFT only ever exists by itself. That’s the whole point, it is just the nonfungible token,” Nadig explained.
Crypto and the variety of digital assets within crypto have bridge-building potential between traditional finance and the new frontier of finance that is increasingly digital; Nadig believes that some of the greatest innovation comes from where these kinds of bridges occur and that revolutionary concepts can emerge.
“I think everything interesting that’s going to happen in the next five years in crypto is really going to be about where we create those bridges,” Nadig said.
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