The theme this week on the One Minute Retirement Tip podcast is Non-Fungible Tokens (or NFTs)...explained. 

Today, I’m exploring the question: Are NFTs just another fad? Or I guess to put it another way given the sky high selling prices of certain NFTs, is this market a bubble that’s ready to burst? 

In the short-term, it certainly looks like a bubble. When you have art selling as a NFT in the millions of dollars and just getting a unique token in return that proves your ownership, it certainly looks, talks, walks, and smells like a bubble. 

Investor and market commentator Howard Lindzon recently was quoted in the NY Times saying that the attraction of NFTs is driven by a “pent-up cycle where the money has nowhere to go, so it’s doing stupid things”. 

As an investment, NFTs have no income or cash flow, the value is highly subjective and isn’t backed by any real asset of value in most cases. You’re only hope to make money as a NFT investor is to score a deal on a NFT and flip it for a profit. 

Similar to investing in other collectibles or scarce items, the market is driven by another’s willingness to pay a higher price.With the massive growth in popularity of NFTs as well, the market is likely to be flooded with new sellers and people looking to get rich quick, and that is likely to dilute the value of NFTs when there is just so much more of them to go around. 

NFTs may be here to stay, but the appeal is likely to be more of a niche market and very similar to investing in other collectibles and art. Most people who invest in art and collectibles know that they aren’t going to get rich by investing in art. They do it because they enjoy it, but for most art investors, it’s just not profitable. So if you’re into collectibles, art, or antiques, or you have a niche interest in collecting items from a particular person or artist, then NFTs may have their place in your life. 

But if you’re looking at it as a potential investment opportunity, you’re probably a lot more likely to get burned by jumping on the bandwagon now. 

That’s it for today, Thanks for listening! My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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