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An illustration picture taken in London on Dec. 30, 2021, shows a NFT created by Nigerian digital artist FreddieJacobArt named "Oghenerukevwe" on Opensea NFT marketplace, displayed on a smartphone and Binance NFT marketplace displayed on a computer screen.JUSTIN TALLIS/AFP/Getty Images

Non-fungible tokens (NFTs) might be attracting investors around the world, but fewer of them are in Canada.

Just 5.6 per cent of Canadian internet users own an NFT, ranking the nation 15th among 20 countries, according to a survey Toronto-based released in November.

The low ownership rate could be because almost two-thirds of the 1,200 Canadians surveyed didn’t know what an NFT was. It’s a digital asset representing something unique, such as a piece of art that its creator has “signed” electronically. An NFT is stored on a blockchain, making it possible to check its provenance, guaranteeing its authenticity.

The most famous and highest-valued NFT was Mike Winkelmann’s “Everydays – The First 5000 Days,” a digital-only artwork encoded into an NFT that sold for almost US$70-million at Christie’s last year. However, NFTs stretch beyond art.

These digital ownership tokens are also unlocking new opportunities for well-known people eager to sign their names electronically to past works, creating instant electronic collectibles.

Earlier this year, Twitter Inc. founder Jack Dorsey sold an NFT of his first-ever tweet for more than US$2.9-million. Tim Berners-Lee, founder of the world wide web, subsequently, sold an NFT containing its initial source code, a video of him writing it, and a poster and letter from him. The US$5.4-million sale price didn’t imply ownership of the web. It was a mere collectible.

Big-ticket art and collectible NFTs are bought and sold at auction much like regular physical items.

Investors wanting to buy one must create a digital wallet that supports the blockchain technology typically used for NFTs along with the cryptocurrency to pay for it. A common wallet for this purpose is MetaMask.

Risks, avatars, and real estate

Investors in NFT artworks and collectibles must know what they’re doing in this early-stage, frontier-style market, warns Dan Wasyluk, founder and chief executive officer of Toronto-based blockchain software company Blockchain Foundry Inc.

He recently worked with the family of hockey legend Dale Hawerchuk to create a set of digital NFTs commemorating key moments in the hockey player’s games. The NFTs – digital videos of computer-generated Hawerchuk statues – all sold for hundreds over the $1,000 asking price at auction.

Mr. Wasyluk says there are risks for investors who don’t understand the world of new digital art or collectibles.

“There’s a lot of diligence that they have to go through in order to understand what they’re investing in,” he says.

Other types of NFTs sell through a range of online marketplaces, such as OpenSea. These include limited-edition digital avatars from creators like Canadian company Larva Labs’ CryptoPunks and the Bored Ape Yacht Club.

“They’re starting to see celebrity appeal,” says Andrew Agopsowicz of these avatars. Mr. Agopsowicz is a former Royal Bank of Canada economist who recently became a researcher at, a subsidiary of the Mark Cuban-backed nft42. Some avatars are more valuable than others based on the rarity of their characteristics, giving them more status.

“It becomes your digital presence,” he says.

A more recent development is NFT-based property in metaverses, which are online virtual reality worlds that visitors can visit digitally. One of these, Decentraland, is selling off parcels of digital real estate, the value of which has risen rapidly. Toronto-based cryptocurrency investment company recently bought some for US$2.4-million.

“We can rent out that land to people and we’re talking to several large brands right now,” says Andrew Kiguel, the firm’s co-founder and CEO.

He adds that the company can enhance land value by creating digital shops and galleries on it that those brands can then use to showcase their products and hold virtual events.

“They’ll pay us to set up a building for them,” he says.

Investing indirectly in NFTs

There’s a low barrier to entry for NFT investments as long as non-technical investors can get past the initial stages of installing a wallet and buying cryptocurrency.

For those with a computer and little market knowledge, that could be a dangerous thing.

Investors too nervous to buy an NFT could settle for the stocks of companies that invest in NFTs, says Cameron Chell, founder and chairman of CurrencyWorks, a blockchain technology company that works with corporate clients to create NFT marketplaces for collectibles in areas including music and movies.

He likens the current flurry of investment activity to the dot-com boom, when doomed startups with no revenue fetched ridiculous valuations.

“While there’s speculation in the NFT space, there’s as much speculation in the equity markets,” he says, adding that people should only invest in NFT-based companies in which they see promising revenue traction.

For those who want even more diversity in this nascent space, NFT exchange-traded funds (ETFs) are emerging.

Defiance Digital Revolution ETF NFTZ-A, which launched in December, tracks companies earning at least 50 per cent of their revenue from blockchain, cryptocurrency, and NFT activities.

There’s a lot of potential money to be made in the NFT world, but it’s a fast-moving space with little regulation and a proliferation of products and ventures. That may be why traditionally conservative Canadians are holding back and watching for a clearer investment direction.

But that might not last for long, though. Another 6.2 per cent of internet users in Canada plan to buy NFTs, according to the survey.

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