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During the first half of 2021, the nonfungible token (NFT) market recorded $2.5 billion in sales. Companies such as Visa continue to cast a focus on this fast expanding business.
According to a recent whitepaper produced by the global payments giant, Visa’s entry into the NFT industry was motivated by an appraisal of the underlying technology and its ability to serve as a “promising medium for fan engagement.”
The Aug. 23 publication described nonfungible tokens as an important innovation during the pandemic, where strict shelter-in-place orders limited live sports, entertainment and music festivals. Simultaneously, NFTs are growing at a time when fans are keen to join digital communities centred on their favourite musicians or sports teams.
Professional sports were particularly heavily struck by the pandemic, with major leagues worldwide losing an estimated $18 billion in income. This, according to Visa, contributes to the “need to diversify revenue and focus on technology to reposition organisations for growth prospects and to catch the attention of fans.”
In this regard, “NFTs appeal to collectors, fans, teams, leagues, and talent,” according to the article. NFTs, in particular, have the potential to become main sources of fan engagement, customer relationship management, and fresh revenue streams. Collectibles, art, and gaming were the most common NFT use cases discovered.
The whitepaper was issued along with Visa’s revelation that it had purchased its first NFT, CryptoPunk 7610, for $150,000. CryptoPunks is a collection of 10,000 unique NFTs that are stored on the Ethereum network as evidence of ownership. A total of 2,519 CryptoPunk collectibles were sold in the past 30 days, netting a combined $467.4 million, according to industry sources. Over that period, the highest-grossing sale was CryptoPunk 7252, which sold for 1,600 ETH, or $4.5 million.
Aside from the CryptoPunk frenzy, NFTs in other areas are becoming increasingly popular. According to Cointelegraph, total NFT sales are expected to exceed $900 million in August alone, setting a new industry high. The previous high was set in May, when total NFT sales volume surpassed $255 million. In May, cryptocurrency markets reached fresh all-time highs before undergoing a multi-month downturn.
Given the payment company’s expanding emphasis on digital assets, Visa’s entry into NFTs is unsurprising. The company recently signed an agreement with digital asset platform Zipmex, which will provide additional crypto payment integration in the Asia-Pacific area. In January of this year, Visa reaffirmed its commitment to building cryptocurrency payment and fiat on-ramps in a bid to support the digital asset class.