The market for nonfungible tokens, or NFTs, saw sales of $2.5 billion in the first half of 2021. Visa and other companies continue to cast a focus on this fast-growing business.
Visa’s entry into the NFT industry was motivated by an appraisal of the underlying technology and its potential to serve as a “promising medium for fan engagement,” according to a recently published whitepaper by the global payments giant.
Nonfungible tokens were hailed as a significant innovation during the epidemic when severe shelter-in-place regulations restricted live sports, entertainment, and music festivals. Simultaneously, NFTs are gaining traction at a time when people are ready to join digital communities dedicated to their favorite musicians or sports teams.
Professional sports were particularly heavily struck by the pandemic, with an estimated $18 billion in income lost across the world’s main leagues. Visa notes that this reinforces the “need to diversify revenue streams and focus on technology in order to reposition businesses for growth prospects and to catch fans’ attention.”
In this regard, the research stated, “NFTs appeal to collectors, fans, teams, leagues, and talent.” NFTs, in particular, can serve as major vehicles for fan interaction, customer relationship management, and the development of new revenue streams. Collectibles, art, and gaming were highlighted as the primary NFT application cases.
The whitepaper was published concurrently with Visa’s revelation that it had purchased its first NFT, the CryptoPunk 7610, for $150,000. CryptoPunks is a collection of 10,000 distinct NFTs that are kept on the Ethereum network with proof of ownership. According to industry sources, a total of 2,519 CryptoPunk collectibles were sold in the last 30 days, garnering a combined $467.4 million. The highest-grossing sale during that time period was CryptoPunk 7252, which sold for 1,600 ETH, or $4.5 million.
Apart from the CryptoPunk mania, NFTs are gaining traction in other genres. According to Cointelegraph, total NFT sales are expected to exceed $900 million in August alone, setting a new industry record. The previous high was set in May when total NFT sales were $255 million. May marked the month when cryptocurrency markets set fresh all-time highs before undergoing a multi-month downturn.
Visa’s entry into non-fungible tokens is unsurprising, considering the payment company’s expanding emphasis on digital assets. Recently, the company announced a partnership with digital asset platform Zipmex to expand crypto payment integration in the Asia-Pacific area. Visa confirmed its commitment to developing cryptocurrency payment and fiat on-ramps in January of this year in order to assist the digital asset class.
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