NFTs are now a pillar of the digital economy, and bitcoin could be trouble for gold, report says
- NFTs play a key role in a digitalised society and show crypto can change the world, a report by eToro and The Tie says.
- Bitcoin could destabilise gold within ten years, but is unlikely to replace the dollar according to the report.
- NFTs and the global economy were the main influences in crypto in the first quarter, the report said.
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NFTs are a pillar of the digital economy and could fundamentally impact our society, a report published by online broker eToro and The Tie says. At the same time, bitcoin has the potential to destabilise the bullion market and become "digital gold" over the next ten years.
The report assessed the main influences on the crypto space in the first quarter of 2021, and found non-fungible tokens - or NFTs - and the state of the global economy, especially potential hyperinflation, were the dominant themes. In the last quarter of 2020, bitcoin had been the main factor.
Whether a damaging inflation spiral could develop is not clear, the report said. But it argues that factors such as increased money supply, the rally in shares, and the potential for asset bubbles are cause for concern.
For bitcoin, this means that it is unlikely to replace the dollar any time soon, but it does have the potential to disrupt other established assets, the report said.
"However, perhaps Bitcoin could destabilise gold in the next decade or so and be a modernised 'hard asset,' our digital gold for the new era," it said.
For this to happen, investors would have to start prioritising digital assets over physical ones and bitcoin would need to see its realised market value rise by 50% every year out to 2030, the report said.
"While these predictions seem far-fetched, it is incredible that bitcoin has even 2% of gold's market cap after just ten years as a financial asset, when just a year ago, $50,000 seemed like a pipe dream," the report said.
The NFT-mania of the last quarter shows how impactful crypto can be and that it has the potential to change the world, according to the report. NFTs themselves could also substantially impact society as more of everyday life moves online.
NFTs are unique digital assets such as images, or videos, that are based on blockchain technology. They surged in popularity this year, selling for record prices of more than $69 million in the case of one piece of digital artwork.
"As society becomes increasingly digital, there's a need to cement ownership of digital work created and shared on the internet. NFTs solve the problems that exist within this space such as proof of ownership, uniqueness of digital assets, and scarcity," the report says.
They are especially important to content creators who share their work online and are faced with digital platforms that profit from it, for example through advertising, which takes away from their earnings as creators.
"NFTs power a new creator economy where creators don't hand ownership of their content over to the platforms they use to publicize it," the report said.