Sales of non-fungible tokens (NFT) rose sharply in August as investors increasingly put faith in the sector continuing to increase in value.
Sales volumes, as monitored by OpenSea, one of the largest NFT platforms, reached $1.9bn in August. This is an increase of more than ten times when compared to March, when the sales reached $148m.
Going back to January, monthly sales were slightly above $8bn.
The surge was a result of secondary market sales, OpenSea said.
“What we have seen are a few NFT collections popping up in the last few weeks that have been very successful at launch and sold out. That activity has then filtered over to OpenSea where buyers look to flip their NFTs for a higher price,” said Ian Kane, a spokesman for DappRadar, which tracks the market, told Reuters.
DappRadar said there were 32 known NFT sales valued at more than $1m in the past 30 days.
What is an NFT?
NFT, or non-fungible token, is a digital asset with unique properties that cannot be interchanged with something else. They are often thought of as a certificate of ownership for either a virtual or physical asset.
While digital files can be easily copied, NFTs can be “tokenised” to provide a digital certificate of ownership, which can ten be traded.
Similar to Bitcoin or other cryptocurrencies, a record of the ownership is stored on a ledger, or the blockchain.
NFTs can also align with smart contracts, allowing artists to generate revenue from future use of their respective tokens.
Question marks remain over the efficacy of the industry, which many say is a ‘bubble’.
Michael Every, head of financial markets research for Asia-Pacific at Rabobank, described the NFT market as “bubblicious stupidity”.
Every suggested that the vast sums generated in a short period of time are attractive to young people who may otherwise struggle to build wealth, however, he said it was similar to buying a lottery ticket.
He expects the NFT bubble will “absolutely pop”.