The craze for non-fungible tokens (NFTs) in India is obvious after the fabulous response to auction of megastar Amitabh Bachchan's NFT collection. The collection saw the highest-ever bid of more than ₹7 crore. However, NFTs are not for everyone, say experts. One of the biggest concerns is their legal status in India. "In India, NFTs are traded as cryptocurrencies, and all trading is currently taking place on crypto exchanges. There is no regulatory structure in India for cryptocurrencies, making NFTs considerably riskier," says Himanshu Yadav, Founding Partner, Woodstock Fund. Unfortunately, NFTs don’t have a separate legal framework in India either.
NFTs are crypto assets with a unique certificate of authenticity. This makes them rare and high-value digital assets. BeyondLife.club says artwork associated with an NFT is stored on a decentralised file system and gives the collector ownership of a unique collectible. It is also traceable on the blockchain, an immutable decentralised ledger of information.
There is a notion that NFTs are only a status symbol of the super-rich. This couldn’t be further from truth. NFTs, as an emerging asset, are a handy investment. But Vikas Ahuja, CEO, Crosstower India and Member of BACC (Blockchain and Crypto Assets Council) advises investors to be thorough with their research before investing.
Shivam Thakral, CEO, BuyUcoin, recommends NFTs to people who are collectors and investors who understand art and its value in the long term. "If there is a specific use case of a certain NFT, it can be brought by the general public since they will be getting direct value out of it," he adds.
The NFT market is volatile, says Yadav of Woodstock Fund.
In case of collectible NFTs, liquidity is another big concern. "You might get in easily but when you want to get out, there is a high chance that there will be no buyer if your NFT is overvalued or worthless in buyers' eyes, '' says Thakral of BuyUcoin. Buyers should also verify the true ownership. There have been cases of people trying to sell replicas as originals, says Ahuja of Crosstower India.
Currently, art and collectible NFTs, like the ones launched by the Bollywood actors, are capturing mainstream attention. However, NFTs will be the standard representation for digital assets in the next three-five years, believe experts. "Identity NFTs, legal documents represented as NFTs, tickets as NFTs are a few use cases we are excited about and thus, we see NFTs as an omnipresent technology which will be integrated in everyone’s lives," says Yadav of Woodstock Fund.
Meanwhile, Indians' investment in cryptocurrencies has increased to over $10 billion from $923 million in April last year, shows a recent report by CREBACO, a crypto research and intelligence platform.
As per CoinGecko, a cryptocurrency data aggregator, the global cryptocurrency market cap has breached the $3 trillion mark. The total crypto market cap was $3.09 trillion at 2:35 p.m. on Tuesday. Avinash Shekhar, Co-CEO of ZebPay and member, BACC, says increasing interest by institutional and retail investors in crypto assets, blockchain-based products and services like NFTs are behind these achievements.