Kevin O’Leary is bullish on the future of NFTs, or nonfungible tokens.
“I haven’t bought any yet. I’m waiting to see when the volatility of the pricing changes,” O’Leary, chairman of O’Shares ETFs, told CNBC Make It in April.
But “this has legs. It’s going to work.”
NFTs are unique digital assets that are represented by code recorded on the blockchain, a decentralized digital ledger. Each NFT can be bought and sold, just like physical assets, but the blockchain allows for ownership and validity of each to be tracked.
And that’s “what I love about this,” O’Leary says. “It gives you unique ability to actually track the provenance of a piece of digital art in perpetuity. Only one person owns it and it can’t be disputed and it can’t be counterfeited. That’s really remarkable.”
O’Leary points out that this technology could be useful for all creators, like musicians, for example.
“When you record a track and it gets copied thousands of times, with this technology, the original artists or their estate after they pass will continue to get paid,” he says.
Indeed, due to smart contracts, or collections of code that carry out a set of instructions and run on the blockchain, original creators of NFTs can be paid with royalties as their work is resold across the internet.
As a musician and photographer himself, O’Leary personally connected to this aspect.
“It’s a solution that has plagued artists and people that try and authenticate art for generations,” he says.
“The whole issue goes away using this digital tracing. That’s the best way to think about it. You actually imprint something in it that can never, ever be stolen or copied and you can always trace it back to the originator. I think that’s going to be phenomenal.”
However, there are concerns surrounding NFTs.
Though the technology can benefit creators, some have had their work stolen and listed for sale as NFTs with no credit. Some platforms have tried to address this issue, but it is ongoing.
In addition, for some technical reasons, it is possible that NFTs purchased on certain websites (if the files continue to live there) could disappear if the site goes away.
Separately, there is also controversy regarding the environmental impact of NFTs.
Nonetheless, those who support the technology say it will evolve and improve over time.
And O’Leary predicts that NFTs like the record-breaking piece “Everydays: The First 5000 Days,” which was created by Beeple (aka Mike Winklemann) and sold for over $69 million, will retain value because the “legacy,” he says.
“That piece of art can never be counterfeited. And if it ever trades hands again because of the ability to put it in a [blockchain] ledger, the original artist will get an additional amount of money.
“I think there’s a lot of interest in that.”
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