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Young millionaires in rush to purchase non-fungible tokens

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By Judith Gicobi

Wealthy people have traditionally sought for one-of-a-kind treasures that set them apart from their contemporaries, spending millions on rare art, antiques, classic automobiles, watches, and jewelry.

Last May, a rich American bidder paid $103.4 million (Sh11.8 billion) for Pablo Picasso’s artwork ‘Woman seated by a window (Marie-Therese)’ at Christie’s in New York. The bidding battle, which pitted six people against each other, lasted only 19 minutes.

But, unlike their parents, a new generation of millionaires is increasingly preferring luxury purchases like as the Picasso painting or the $29.3 million (Sh3.3 billion) pink-purple 15.8 carat diamond sold at another Christie’s auction in Hong Kong last year.

They are pushing boundaries by investing in non-fungible tokens (NFTs), which are digital art assets that can’t be duplicated by anybody else.

NFTs are non-replicable digital assets that are encoded on the block chain and represent products such as art, music, films, gaming items, and images.

They acquire their worth from rarity and provenance, much like their real-world counterparts.

It has become trendy to invest in the digital world in Kenya, where 27 percent of the country’s 3,362 dollar millionaires are under 40, resulting in the increased acceptance of cryptocurrency transactions

They are going one step farther than their contemporaries abroad, acquiring NFTs and paying using cryptocurrencies.

According to the Knight Frank wealth report 2022, 6% of Kenya’s dollar millionaires currently own an NFT, while 13% have invested in cryptocurrencies.

While an expensive NFT cannot be hung on a wall, being perceived to own one in the virtual world conveys authority and legitimacy, as well as an air of cool, according to Andrew Shirley, the report’s editor.

As a result, NFTs are becoming increasingly desirable, particularly among the younger generation, who place a premium on image.

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“The big collecting trend that we saw in 2021 is the rise of the NFT, where $25 billion was spent on crypto art globally. People are spending a lot of time in the virtual world, and it makes sense to buy tokens there,” said Mr. Shirley.

Others who are not in this class of purchasers may be able to profit from the NFT frenzy if they have something unique to present for sale in the first place.

Eliud Kipchoge, the current world marathon record holder, entered the NFT in April 2021, packaging two highlight videos from his September 2018 world record run in Berlin and the May 2019 INEOS 1:59 Challenge in Vienna, where he became the first and only individual to run the marathon in less than two hours.

Kipchoge, widely regarded as the greatest runner of all time, sold the two NFTs at an auction organized by the internet platform Momentible for the equivalent of $37,351 (Sh4.3 million).

Mr. Shirley advised that there are dangers to avoid in NFT investment, stating that the standard investment principles apply to the virtual world as well.

Every day, more NFTs are developed, and because one does not have complete visibility of the market, one may wind up purchasing a piece that was mass-produced and erroneously sold as a rare find.

Counterfeits and forgeries are marketed as originals in the NFT area, just as they are in any other art marketplace.

The fact that the block chain area is uncontrolled hasn’t helped matters, so prospective art buyers should adhere to certified markets and, if feasible, seek validation from the authentic creator before spending money on a work.

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