Visa is the newest big company to jump into the NFT frenzy.
The payment processor said Monday it bought a "CryptoPunk," one of thousands of NFT-based digital avatars, for nearly $ 150,000 in Ethereum.
An NFT – which stands for non-fungible token – is a unique digital asset designed to represent ownership of a virtual item. In contrast to Bitcoin and other cryptocurrencies, NFTs cannot be exchanged with other NFTs.
Proponents say this makes NFTs scarce and increases their value. NFTs have often been compared to physical collectibles such as rare trading cards and works of art.
CryptoPunks – one of the most popular non-fungible tokens – will be issued in Times Square on May 12, 2021.
Alexi Rosenfeld | Getty Images
"We believe NFTs will play an important role in the future of retail, social media, entertainment and commerce," Cuy Sheffield, head of crypto at Visa, said in a blog post on Monday.
"To help our customers and partners participate, we need to understand firsthand the infrastructure requirements for a global brand to buy, store, and use an NFT."
Sheffield said CryptoPunks have become a "cultural icon for the crypto community".
"With our CryptoPunk purchase, we're jumping into our feet first," he said. "This is just the beginning of our work in this area."
Anchorage, a federally chartered digital asset bank, made it easier to buy, Visa said.
Big companies are joining the NFT craze
Several large companies have been experimenting with NFTs recently.
Christie & # 39; s has auctioned several NFTs, some worth millions of dollars. The auction house set records in March when a painting by digital artist Beeple sold for $ 69 million.
A number of media publications including CNN, The New York Times and Fortune Magazine have now sold their own NFTs.
However, some critics are skeptical of NFTs. While such tokens represent a digital certificate of ownership, buyers do not own the underlying item and internet users can still view the associated media online. Some people have even stolen other artists' works and sold them as NFTs.
"The buyer of Beeple's $ 69 million NFT artwork 'Everydays – The First 5000 Days' has the unique token," said Adam Rendle, partner at law firm Taylor Wessing, in a blog post.
"However, you have no copyrights or other intellectual property rights to the digital work of art itself. You cannot distribute or otherwise market the displayed object."