Continuous News of Companies Entering the NFT Business
Need to Separate the Wheat from the Chaff... Growing Pains Expected in the Process of Institutional Integration
As the scope of application for Non-Fungible Tokens (NFTs) begins to expand, related stocks are surging. While the public's interest is growing and more companies are entering the NFT business, experts point out that investments should be made after considering the risks involved.
As of 1:29 PM on the 3rd, AfreecaTV recorded a price of 208,600 KRW, down 2.39% (5,100 KRW) from the previous day. Although it dipped slightly on this day, it had risen for three consecutive trading days since the 29th of last month, continuously hitting record highs. Recently, AfreecaTV announced plans to launch an NFT marketplace in November, which contributed to the stock price increase. NFTs refer to cryptocurrencies that record ownership of digital assets with scarcity using blockchain technology.
Other companies besides AfreecaTV are also rushing to try the NFT business. The day before, Danal Fintech announced plans to launch an NFT platform service in the future. Danal Fintech is a company that has previously dealt with cryptocurrencies such as Paycoin. Even companies far from cryptocurrencies have declared entry into the NFT business. Following game companies like NCSoft and Gamevil, entertainment companies such as JYP (JYP Ent.) and HYBE have also announced plans to handle NFTs.
NFT-related stocks are noticeably rising. The company that has drawn the most attention is Wemade. Wemade successfully integrated NFTs into the ecosystem of its flagship game "Mir4," resulting in a 283.37% surge since September. Consequently, its KOSDAQ market capitalization ranking jumped from 106th at the end of last year to 6th place in a short time. The day before, Chorokbaem Media also rose 20.88% this month after being grouped as an NFT-related stock.
The rise in NFT-related stocks stems from the growth of the NFT market. Initially, the application of NFTs was limited to artworks, but recently it has expanded to metaverse, games, celebrities, real estate, and more. According to NFT analysis platform NonFungible.com, NFT transaction volume in the first half of this year reached $1.26 billion (approximately 1.4875 trillion KRW), a 30-fold increase compared to the same period last year.
However, the success of these businesses remains uncertain. In Wemade’s case, tokenizing game characters as NFTs satisfied the demand of users who previously bought and sold game characters. But since BJ (Broadcast Jockey) videos are already freely accessible, the demand for NFTs produced by AfreecaTV may not be significant. Furthermore, as NFT platforms are proliferating rapidly, it is necessary to distinguish the valuable from the less promising. Domestic cryptocurrency exchange Korbit already operates an NFT marketplace, and Korean users can also trade on overseas NFT platforms like OpenSea.
There are also concerns about investing in NFT-related stocks because they have not yet been incorporated into the regulatory framework. In September, the Korea Internet & Security Agency pointed out that due to the lack of information exchange between the physical trading market and the NFT trading market, securing the reliability of NFTs is difficult. If NFTs are incorporated into the regulatory system in the future and risks such as taxation arise, a sharp decline in NFT-related stocks is expected to be inevitable.
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