In brief
- John Egan, CEO of L'Atelier BNP Paribas, suggests that NFTs are currently like gambling in a casino.
- But he also believes they could provide the bedrock for the virtual economy.
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The NFT boom has seen a lucky few make fortunes overnight—but, according to the CEO of L'Atelier BNP Paribas, buying them is akin to gambling in a casino.
“I think it's probably akin at this stage to going into the casino,” said John Egan, CEO of L’Atelier, in an interview with BNN Bloomberg. “You know you're going to spend money, but maybe you're doing it for the enjoyment, for the experience. If you win, you've got lucky.”
BNP subsidiary L’Atelier, which focuses on identifying trends in emerging markets, released a report in 2020 which highlighted non-fungible tokens (NFTs) as a key area of the emerging virtual economy. Their predictions appear to have been borne out, with the market for NFTs exploding in the second half of 2020 and early 2021.
Recently, renowned digital artist Beeple sold an NFT collection of digital artwork for $69 million, in the third-largest sale by a living artist. Even tweets are being sold for large sums of money. Jack Dorsey, CEO of Twitter and payments company Square, sold his tweet—the first-ever tweet in history—for almost $3 million.
Egan argued that NFTs are an alternative digital emerging asset and that, “I don’t think we could find many more risky categories of assets at this point.” However, he said, they will play a key role in the economy of the future, with the cryptographically-unique tokens providing the “bedrock economic infrastructure within the virtual economy.”
Is the NFT industry a bubble?
NFTs have exploded in recent weeks, but many believe they are a bubble—including one of the biggest beneficiaries of the boom, Beeple. “I absolutely think it’s a bubble, to be quite honest," the artist told Fox News Sunday, likening it to the early days of the Internet. "There was a bubble. And the bubble burst. And it wiped out a lot of crap—but it didn’t wipe out the Internet. And so the technology itself is strong enough where I think it’s going to outlive that."
One potential risk to the long-term feasibility of the NFT industry—as it currently exists—is regulation. Global anti-money laundering watchdog the Financial Action Task Force (FATF) recently released draft guidance that, if adopted, could threaten both NFTs and the emerging decentralized finance (DeFi) space.
In the draft guidance, most DeFi platforms would be considered “Virtual Asset Service Providers” or VASPs, which means they may have to comply with stringent regulations and do their part in combating global financial crime.
According to experts that spoke to Decrypt, NFTs might also find their way under the FATF’s remit, if they can be used to facilitate money laundering and terrorist financing. Given that the art world is rife with money laundering, it’s not hard to imagine that digital artwork in the form of NFTs could soon come under the FATF’s microscope.
Update: This article has been updated to reflect John Egan's position as CEO of L'Atelier BNP Paribas.