NFTs, or non-fungible tokens, are set to become a crucial part of the tech investment megatrend of the next decade.

This is despite declines in recent days of around 80% within the NFT market, from a peak of $102 million in NFT transactions in one day at the beginning of last month.

NFTs are digital collectibles encoded onto a blockchain – the technology that underpins cryptocurrencies – that create a unique digital watermark proving ownership and the digital rights to that collectible.

Over the past few months, several major fashion brands, global sports franchises and household name artists and musicians have launched NFTS.

Indeed, in April, auction house Christie’s sold “Everydays” the First 5000 Days,” a digital artwork in JPEG form by an artist known as Beeple, for US$69.3 million – the third-most-expensive work ever sold by a living artist.

The short-term drop in NFT transactions in recent weeks isn’t a surprise. The market is still so new, and most investors still don’t know about or fully understand it.

That said, technology will undoubtedly be the decade’s investment megatrend. And I believe that NFTs will become a vital part of this for four main reasons.

First, our daily lives are more and more driven by technology, something that is speeding up all the time.

Second, it’s all about demographics. With the younger so-called ‘digital natives’ having grown up under the influence of the internet and other technology, demand will certainly increase for tech-orientated products such as digital investments.

Third, investment and interest in cryptocurrencies is constantly increasing – which is how NFTs are purchased.

Fourth, NFTs are positively adapting business models, especially in the creative industries, which are growing in economic, cultural and social importance throughout Asia.

Just one example of NFT usage is artists and musicians can provide augmented virtual experiences for collectors and buyers, they can prove their works aren’t counterfeits and can include criteria to gain royalties every time their works are resold in the future.

Naturally, the NFT market is not without its cynics.

Many traditionalist commentators have snubbed NFTs as a fad. However, I would say these people would have probably rebuffed the internet back in the 1990s and ecommerce giants such as Amazon as mere hype in the 2000s.

The principal factor is that millennials, particularly Gen Z, lead digital lives and it’s a natural progression to want to take digital representations of luxury brands, music and art into these worlds. And this has value.

Nevertheless, although the dominance of NFTs’ dominance will continue to increase over the coming decade, the market is still very new and highly speculative.

Therefore, the risks are high, and investors must take extreme caution.

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