Historically, buyers of non-fungible tokens (NFTs) have largely been crypto-native individuals and collectors.
More recently, NFTs have built up an impressive roster of owners, including LaMelo Ball, Josh Hart, Tyrese Haliburton, Logan Paul, Jay-Z and Steve Aoki.
However, Visa came along this week and completely changed the game, marking a turning point for NFTs and Ethereum, when it bought CryptoPunk #7610.
And it was done for more than just street cred for the 63-year-old company.
The payment giant is also backing NFTs to “play an important role in the future of retail, social media, entertainment, and commerce.”
An NFT is a unique digital token on a blockchain that establishes ownership of a virtual item.
And Visa needed “first hand” knowledge of how it all worked to service its users. Hence the purchase.
It’s an all-around shrewd move by Visa.
Trailblazing With a Historically Significant NFT is Good Marketing
Cryptocurrencies have captured the mindshare of millennials. According to a CNBC survey, nearly half of millennial millionaires have at least 25% of their wealth in cryptocurrencies.
From a branding perspective, this is an ideal way for Visa to be relatable and relevant to a growing class of wealthy people.
Visa’s announcement tweet generated 28,400 likes and 14,400 retweets as of the time of this writing. This compares to its other posts which typically see less than 10 retweets and 10–20 likes.
Engagement of such levels is probably worth the price tag it paid for the CryptoPunk, a drop in the ocean relative to its 2020 marketing spend of around USD 1 billion.
In any case, it bought a punk near the floor price (cheapest available for sale) for USD 150,000 or 49.5 ether (a cryptocurrency of the Ethereum network).
Released in 2017 and produced by Larva Labs, CryptoPunks is one of the first NFT projects featuring a pixelated profile picture.
There are 10,000 CryptoPunks editions with various attributes and traits. Most punks are owned by crypto natives and used as profile pictures to signify “OG status”.
Rarer CryptoPunks have multimillion-dollar price tags – one has sold for USD 12 million in a Sotheby’s auction.
Bodes Well for NFTs and Ether Prices
Visa’s endorsement of NFTs should prompt other large corporations to follow suit and reconsider their digital asset strategy.
In fact, Visa’s announcement has already moved prices – the floor price of a CryptoPunk is now USD 240,000 (77.5 eth), or 60% higher than the Visa transaction.
This brings punks’ floor price to an eye popping 13,000% gain versus December 2020.
Bored Ape Yacht Club, another popular NFT project, also rose 470x from USD 240 (0.08 eth) from April 2020 to USD 112,000 now.
While prices have already gone parabolic, corporate money with large marketing budgets entering the space changes the demand outlook for NFTs.
In contrast, the supply of CryptoPunks and Bored Apes will stay fixed at 10,000 forever, suggesting the already high prices could rise even higher.
After all, NFTs are only just at the cusp of mainstream consciousness.
Finally, while decentralized finance (DeFi) has been Ethereum’s main use case, NFTs are also starting to emerge as an important use case.
Most NFTs live on Ethereum and buyers pay in ether for both transaction costs and the NFT itself. So demand for ether will rise in tandem with demand for NFTs.
In short, with one move Visa has emerged with more street cred and is sitting on appreciating assets.