NFTs In the Indian Market: How Investable Are Digital Tokens? NFTs have transformed from being an artwork that holds great value as a collectible and become a separate asset class in themselves
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The rapid evolution of the Internet has led to some of the most exciting developments in the digital age, paving the way for the emergence of new forms of assets known as non-fungible tokens (NFTs). NFTs have become increasingly popular in recent times, showcasing unprecedented levels of profitability, reinventing asset ownership and creating cohesion among users from different parts of the world to form virtual communities. In a short period of time, NFTs have transformed from being an artwork that holds great value as a collectible and become a separate asset class in themselves. This is evident from their inclusion into finance, healthcare, entertainment, sports, gaming, fashion, global supply chain and insurance sectors.
Globally, the market for NFTs is valued at $40 billion as of this year. In India, the NFT industry is valued at an estimated $3.3 billion with a cumulative average growth rate of 61.6 per cent, and expected to reach an estimated $27 billion by 2028. Currently 11 NFT companies are headquartered in India, constituting 5.02 per cent of the total NFT companies in the world. In 2021 alone, India added 71 NFT startups to its tally and has 86 active NFT startups today, reflecting a positive response from the entrepreneurial market. NFTs have witnessed widespread adoption from artists, creators, entertainment and sports celebrities, brands, and more due to a diverse range of use cases. NFTs have been leveraged by creators and brands in order to increase awareness and engagement among consumers and enthusiasts, generate new revenue streams, provide access to exclusive events as tickets, and even be used as digital contracts for owning real estate in the metaverse, displaying a diverse range of utility.
Although in its nascent stages, the NFT industry has consistently showcased great potential for investments. A research paper by Mieszko Mazur highlights that bluechip NFT projects can earn up to 130 per cent on their first listing day and yield investment multiples of up to 40 times in the long term, significantly outperforming cryptos such as bitcoin and resembling IPOs in returns. Thus, NFTs present a lucrative investment option for investors in India with the potential to grant favourable returns on investment.
A robust NFT ecosystem is slowly emerging on the horizon as a number of celebrities have launched exclusive NFT collectibles in India. These include the likes of Amitabh Bachchan, Salman Khan, Rajnikanth and famous cricketing stars such as Sunil Gavaskar, Rishabh Pant, Yuvraj Singh, among others.
The greatest application for NFTs, so far, has been in the gaming industry. With the advent of blockchain based gaming and the emergence of Web 3.0, users have been introduced to a variety of new and improved ways of gaming and community building. NFTs allow users to own in-game assets such as avatars, weapons and much more. NFT games also allow gamers to earn through the play-to-earn model, providing yet another opportunity for passive income. NFT gaming is predicted to capture 10-20 per cent of the total market revenue in India in the coming years, with an estimated 500 million users added to its base. However, blockchain gaming remains in early stages, but its potential for growth in the near future is an exciting prospect for NFT enthusiasts world over. With the emergence of the metaverse and the ongoing craze for NFTs in the cricketing world, all in all, the future of NFTs appears bright.
