A Catalyst for Collapse
Inflation, FED intervention, Equities vs Commodities and considerations on the mitigation of risk in uncertain times
What are NFTs?
For those of you who've spent your time wandering the roughly trimmed edges of the crypto sphere over the last 2 years, it's highly likely that you're now somewhat familiar with two terms - The Metaverse and NFT's.
To put it simply, the metaverse is the allegedly lovable, gooey centre of the Web3 fondant, while NFT's are the Icing, the cherries, the flour, the sugar, the butter, the raising agent, the eggs, the cake pan and the baker. Basically, NFTs are tokenised, immutable, Non-Fungible Tokens that utilise Smart Contracts (representations of code and data that are typically housed on the Ethereum or Solana blockchains) and can be attached to virtually any digital or real world asset.
For those of you with prior NFT experience, you'll likely be well accustomed with the seemingly limitless applications for NFTs. You may have even bought into the hype and made millions, or perhaps you bought in at the behest of greed and FOMO in which case you’ve probably fallen well out of love with NFTs.
Whatever your investment history, it's hard to overlook the enormous potential that abounds within the NFT space. However, it's clearly not for everyone, so I'll do my best to highlight the pro's and con's of the NFT/Metaverse Era, along with how best to enhance and improve their investment appeal through the use of tokenised Gold and Silver bullion.
A love-hate relationship
For most Metaverse/Web3 pioneers, the use of ultra clunky, largely unintuitive, community platforms such as Discord and Telegram is likely second nature by now. Unfortunately for the rest of us, these platforms are more akin to a second language.
Sadly, the immediate disappointments of the Metaverse Era don't stop there. From the extensive use of strangely informal Web3 terminology (Degens, WAGMI, NGMI, Alpha etc.) to the blatant obsession with self-deprecating degeneracy, there are both lovable and poignant cases to be made for Web3 and NFT culture. Sure, the space also has a number of overwhelming positives. The community really is incredible, and I've yet to be a part of an industry with as much raw optimism, creativity, rapid innovation and talent.
From Music NFTs utilising royalties to help artists retain the bulk of their creative revenues, to Photographic collections, Play 2 Earn games, celebrity collections and OG NFT projects such as BAYC, CryptoSkulls and CryptoPunks. The entire sector has birthed an entirely new era of art, culture, creativity and collaboration.
We're seeing infamous fashion brands like Burberry and Nike collaborating with NFT artists and digital studios to forge what will presumably become iconic metaverse wearables in the not too distant future. Then you have the constant stream of ex-bricks and mortar video game executives leaving behind seven figure salaries to join burgeoning NFT gaming projects that are a literal who's who of the finance, gaming and legacy tech worlds. At this point, it's abundantly clear that NFT technology is here to stay, but one question still remains - "will the sector survive a severe economic crisis?"
The Elephant in the Room
Well one could argue, quite successfully in fact, that the vast majority of investors present in today’s increasingly volatile economic landscape have likely never experienced a time of severe financial crisis let alone a rising interest rate environment. Of course both those things don’t typically go hand in hand, one usually leads to the other, however in this case, the central banks responsible for the supposedly ‘responsible’ dealing and issuance of new capital seem to have completely lost track of all basic monetary and economic principles pertaining to QE (money printing) and its countless, long lasting and severe social and economic consequences. As a result, our banking overlords are now faced with the prospect of having very few tools left in their ‘monetary intervention baskets’ and that is not a good thing for a financial system which is massively expanded from fiat stimulus. The snowball effect has never been more real and regardless of whatever contrivance is offered from our beloved printing press experts, there’s only so much jawboning and political spin that can be spun before the market finally wakes up. At which point, it will be too late. My question is, “will the markets, namely the Crypto and NFT markets, be able to justify the obscene valuations that have infiltrated virtually all crypto assets”.
Are current rates of Crypto and NFT growth sustainable?
Like any new asset class, the first few years begin life as a roller coaster of emotion and rising and falling capital. Between the never ending stream of new products, constantly evolving services, and rapidly changing regulations, there are very few moments of stability and substance. As much as I stand in awe of the exponential growth of the Crypto sphere, I can’t help but question the vulnerability of such sky high valuations for projects that in many cases, do not offer much more than a white paper, a few thousand Twitter followers with zero engagement and a stereotypical, self-termed sky-high potential that often references something to do with a moon. That’s all fantastic and fun, and plenty of people have made incredible returns playing both sides, yet realistically, I think we all know it can’t go on like this forever. When you have projects with characteristics similar to what I mentioned above, commanding market capitalisations of $50M+, it becomes increasingly clear that this is one hell of a speculative bubble. So now, as if they hadn’t already promised the moon, these same projects and self-styled Crypto pioneers are having a crack at the metaverse and NFTs. This is not to say they won’t succeed. Many will and many more won’t, however my main intention here is to highlight the importance of substance, something the majority of NFT fanatics often overlook.
Yes, there was a time when you could have made millions of dollars buying, selling and creating tokenised digital images of animated apes and everything else under the sun, but that time has most likely passed, and the subsequent glistening sheen of what will become another common place piece of tech genius has noticeably begun to dull. Yet still, every man and his dog seems intent on breaking into the NFT space armed with nothing more than a cool, catchy slogan and some curiously creative imagery. Sure, that’s all well and good, but if NFTs are really going to last in the limelight, then in my humble opinion, they’ll need to be backed by something tangible. Something real or something that inspires in a way that can only be described as priceless. So, with the exception of becoming an overnight creative phenomenon, what can be done to improve the long term sustainable value of NFTs?
What if we backed NFTs with xbullion Gold and Silver tokens?
Now we’re talking. See for as long as people want to believe that they own something valuable, they can. Unfortunately, as times get tough, many investors will be faced with liquidating their plunging assets, and if the same FOMO fuelled liquidity that was present at the time of their initial purchase is no longer there, then I get the feeling that many of the aforementioned Degens (one of the lovable, self-deprecating NFT terms short for degenerates) will no longer be laughing all the way to the moon. Yet if you hypothetically invested in an NFT backed by Gold or Silver, you’d have both an incredible piece of digital art, or perhaps a super rare, generative P2E avatar, alongside the most proven store of tangible wealth known to man. In hindsight, the notion of bridging Gold and Silver bullion with NFT's and art seems a no-brainer. Just think of the possibilities; P2E gaming applications, fashion, jewellery, investment, digital collectibles and most importantly, an asset that actually has verifiable, historically proven value that in times of crisis, continuously outperforms all other assets on the market.
With NFTs backed by xbullion's GOLD and SILVER tokens, you’d not only enhance the investment appeal of your NFT, but you’d also be taking out a very effective hedge against the rampant FOMO and unsustainable hype present in the crypto space. Most importantly, xbullion’s GOLD and SILVER tokens take all the inefficiencies out of physical gold and silver ownership, leaving you with the hard asset and none of the hassle of insurance, security and custody fees.
xbullion articles and headlines are for informational purposes only and are not intended as investment advice, offer or solicitation for the purchase or sale of an investment. All information contained in articles are intended for information, illustration or discussion purposes only and should not be relied on for any investment decisions or regarded as a substitute for the exercise of your own judgement. The opinions expressed in this publication, or through articles on this site, are those of the individual authors writing in their individual capacities only. Any opinions or information provided by another author is separate and external - not those of xbullion and its members as a whole. Any information and views provided herein are subject to change without further notice. While every effort has been made to ensure that the information provided is accurate and obtained and / or compiled from sources considered to be reliable, xbullion does not guarantee the accuracy of information on the website or articles, including information provided by third parties, at any particular time. xbullion cannot be held liable for any loss arising from any use of or reliance on the information contained in articles published on the xbullion website. For more information you can see the full disclaimer here