[Real Investment] "Who Knew My Selfie Could Make Money"... A New Investment Market Has Opened

Rapid Growth of Domestic NFT Market... Surge in Issuance and Sales
19 Trillion KRW Transactions Last Year, 200-Fold Increase
Presidential Candidates Also Use NFT Political Donations

[Asia Economy Reporter Ji Yeon-jin] Indonesian university student Sultan Gustaf Al Ghozali (22) became a millionaire earlier this year by selling hundreds of his selfies. From 2017 until last year, Ghozali took a selfie every day and created NFTs under the name "Ghozali Everyday," uploading them to the NFT trading platform OpenSea. His expressionless face gained popularity through social media (SNS), resulting in all 993 NFTs being sold. Initially priced at around $3 each, Ghozali's selfie NFTs were traded at 0.247 ETH (Ethereum, approximately $806 at the time of sale) per piece, earning a total of 371 ETH. At that time, this amounted to about $1.18 million, which is over 1.4 billion Korean won.

Interest in Non-Fungible Tokens (NFTs) is heating up. From major IT companies including game companies to famous celebrities, office workers, and students, many are seeking new investment opportunities in NFTs. NFTs represent ownership of unique items, documents, or characters in the world, divided into tokens?essentially, "digital ownership." Using blockchain technology in the process of dividing and trading these tokens makes forgery or alteration impossible, and enables payment and investment, attracting attention as a new investment avenue similar to Bitcoin.

◆ NFT Market Grows 200 Times in One Year = According to Kyobo Securities on the 3rd, a total of 14,741,599 NFTs were issued by last month, with 13,184,481 sold, resulting in 27,926,080 NFTs traded worth $16.2 billion (19 trillion Korean won). There are 2,257,621 wallets holding NFTs issued on the Ethereum blockchain. Last year, NFT transaction volume was about $14 billion (17 trillion Korean won), a 200-fold increase compared to 2020. The explosive growth of the public experiencing the utility of the metaverse due to COVID-19 led to the formation of a new asset market as intangible assets began to be measured in currency.

NFTs originated in 2013 as part of the "asset registration technology," a technical branch in the blockchain field. After Ethereum's development in 2015, NFTs rapidly emerged as a key part of blockchain between 2017 and 2018, and NFT projects accelerated amid the cryptocurrency market boom. Notably, CryptoPunks, issued in 2017, are considered the first NFTs, consisting of 10,000 unique 8-bit images combining different personalities, outfits, hairstyles, and accessories. These NFTs have recently sold for high prices due to their rarity and symbolism. In October last year, CryptoPunk #9998 was traded for $532 million (640 billion Korean won).

In South Korea, NFT issuance and investment are also expanding. An NFT containing the record of the only human victory against AI in the Go match between Lee Sedol and AlphaGo was auctioned for 60 ETH (approximately 250.2 million Korean won at the time). Seoul Auction Blue, a traditional Korean art auction house, sold Jang Kwal's work "Mirage Cat 3" at an Upbit NFT auction for about 250 million Korean won. In the recent presidential election, political donations were also collected via NFTs. Lee Jae-myung, the Democratic Party candidate, launched the "Lee Jae-myung Fund" using NFTs, raising 35 billion Korean won in election funds, while Yoon Seok-youl, the People Power Party candidate, issued an NFT of a guestbook with his handwritten signature at the Korea Startup Forum event. However, this NFT was not sold considering election laws.

The NFT market experienced rapid growth last year, peaking around July and August, and has been quickly cooling off since the end of the year. Lim Dong-min, a researcher at Kyobo Securities, said, "It was like a rocket launched into space for a short time and then quickly returning to Earth, undergoing a rapid cycle."

◆ Still in Its Infancy... Unlimited Potential = There are marketplaces where NFTs are issued and traded. The process by which creators make and upload NFTs on marketplaces is called minting. During minting, creators can set royalties. These royalties allow the original creator to receive a portion of the sales price each time the NFT is sold from the first buyer to the second buyer, and so on. If trading is active after minting, creators can earn significant income. The most representative marketplace is OpenSea, and domestically, Kakao's subsidiary GroundX operates "Klaytn." Additionally, domestic cryptocurrency exchanges and game companies are rushing to develop NFT marketplaces.

To buy and sell NFTs on marketplaces, an electronic wallet is required. Ethereum-based cryptocurrencies are mainly used, and Ethereum is a currency, but to use cryptocurrencies like NFTs, one must create a "wallet." MetaMask and TrustWallet serve this function. Like opening a bank account to deposit and withdraw money, these are a kind of cryptocurrency account. By purchasing cryptocurrency at an exchange or buying cryptocurrency with cash through blockchain remittance services and transferring it to the wallet, cryptocurrency is deposited into the account, enabling NFT transactions.

The financial investment industry views NFTs as still in an early stage where investment value quantification and recovery are uncertain, but expects them to become core assets of the next-generation technological revolution following the internet. Han Jong-mok, a researcher at Mirae Asset Securities, said, "The growth potential of NFTs and their related industries is abundant, but it is still a nascent stage where it is difficult to determine the exact way to utilize NFTs for business." He added, "NFTs represent the ecosystem, economic infrastructure, and foundation of the economy within the metaverse world, so I do not think they will be a temporary fad."