By Elizabeth Howcroft
LONDON (Reuters) – Demand for digital assets is set to grow as online virtual worlds become more popular but investors face some short-term risks, Animoca Brands’ chairman and co-founder Yat Siu said in a Reuters panel on Wednesday.
In blockchain-based virtual world environments, users can buy virtual land and other digital assets such as clothing for avatars in the form of a crypto asset called a non-fungible token (NFT).
NFTs have exploded in popularity in 2021, with crypto enthusiasts speculating on rapidly rising prices. Last week an NFT representing a plot of land in a virtual world sold for $2.4 million.
Asked whether the rapid growth of NFTs and the metaverse represented an asset price bubble, Animoca Brands’ Siu said that there would be “bumps in the road” but that this is true of all of finance, not just NFTs and cryptocurrencies.
Hong Kong-based gaming company Animoca Brands invests in and builds various virtual worlds, including Axie Infinity and The Sandbox, receiving a cut of revenue from transactions made within the games.
“One way to describe the growth of the metaverse is a little bit like the growth of China 30 years ago, in a more limited fashion,” Siu said in a panel on the metaverse at the Reuters Next conference.
“Maybe people didn’t understand it but you could see the growth factors that make China work: population growth, industry growth, all that kind of stuff. The metaverse is the equivalent.”
But, he said, while investors taking a long-term view on the metaverse’s utility will be fine, they also need to be “vigilant” about possible issues.
“Long term good, but short term definitely I think we have to know what we’re doing.”
NFT sales volumes hit $10.7 billion in the third quarter, up more than eightfold from the previous quarter.
To watch the Reuters Next conference please register here https://reutersevents.com/events/next/
(Reporting by Elizabeth Howcroft; additional reporting by Tom Westbrooke; Editing by Kim Coghill)
