Today we look at the essential differences between non fungible tokens and a crypto exchange traded fund: in short, we are looking at NFT vs ETF and the ways they differ, the ways they are alike, and how they work together in major cryptocurrency ecosystems.
Why is it crucial to understand how these two work? It’s quite simple: NFTs are slowly but surely redefining our concepts of ownership, value, and property, as well as their application. NFT trading has generated over $6 billion dollar in volume just in January 2022, according to The Block Data Dashboard. Their impact on markets and society cannot be ignored anymore. On the other hand, digital currency exchange traded fund (ETFs) are innovative tools that link the stock market with crypto currencies. Today, digital currency ETFs make investing in Bitcoin, Ethereum, and other altcoins as simple as buying common equities. There are currently a number of crypto currency-themed ETFs available, and the number is growing.
And now comes the big question: what about an ETF for NFTs? Well, they are starting to pop up. Currently defiance ETFs (NFTZ ETF) is the only exchange traded fund that allows investing in the digital revolution with NFTs, Blockchain technology and the NFT marketplace. Trading NFTs is already a fixed income option for many – now, investing in cryptoand in its non fungible token options might become even more simple and impactful thanks to the appearance of a global system of NFT ETF.
At the core of blockchain technology – and of digital currency and non fungible token tools – is the belief in decentralized finance, that is, the belief that any financial transaction can be secured by cryptographic without the meddlesome and often problematic supervision of third parties. The role of national banks and international institutions as arbiters of global finance is thus replaced for a completely decentralized, shared digital ledger which is transparent and immutable once its components – “blocks” – are mined into the blockchain. Anyone can set up a digital wallet and make a transaction with digital currency with another party, with the system being safely anchored to smart contracts processes. Many blockchains arose in the last decade – the most famous of which being the Bitcoin blockchain and the Ethereum blockchain, where most of NFTs reside.
We said NFTs change our conception of ownership – but in what way? Non fungible tokens are, in the simplest definition possible, a tokenized asset that can take many forms – digital artwork, music, social media posts, etc – and that represents a proof-of-ownership while being different from the underlying asset. NFTs are thus a digital collectible similar to a trading card set that acquires value because of their scarcity and ‘rarity’, the degree of uniqueness intrinsic to each NFT artwork. Each investor might chose to buy NFTs for its own personal gain, trading NFTs to make more money, or even make use of their characteristics – for example, many NFTs double as club memberships or digital real estate tickets in the expanding Metaverse.
With the rise of NFT ETF, moreover, we might see more investment in the non fungible token market and NFT platformsprouting that would disseminate even more interest in crypto and NFT art.The value of the digital currency market would skyrocket as more and more people, including any artist or creator wishing to sell their art online directly and increase their fanbase, flock to new cryptocurrency ecosystems. Multiple Blockchain ETFs already show how people are willing to put more and more money on developing and trusting blockchain technology. Digital art in tokenized form might be the next big thing, and as such, NFT ETF could transform this landscape. In the end, the NFT market is open to countless influences and innovative perspectives. Any digital asset can be a potential NFT, so the applications are endless. The only limit might be just how much you have saved in your crypto wallet.