Kevin O’Leary explains why he thinks NFTs will become bigger than bitcoin

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“Shark Tank” investor Kevin O’Leary is a big believer in non-fungible tokens — he even thinks they have a shot at becoming bigger than bitcoin.

O’Leary, the chairman of O’Shares Investment Advisers, said his belief in NFTs stems from the idea that can they prove ownership of real-world items, such as designer watches or flash cars, digitally rather than with paper records.

NFTs are one-of-a-kind crypto tokens that serve to track the provenance and authenticity of rare virtual collectible items such as art and sports memorabilia. There have also been efforts to bring NFTs to physical assets.

“You’re going to see a lot of movement in terms of doing authentication and insurance policies and real estate transfer taxes all online over the next few years, making NFTs a much bigger, more fluid market potentially than just bitcoin alone,” O’Leary told CNBC’s “Capital Connection” Wednesday.

“We’ll see what happens but I’m making that bet and I’m investing on both sides of that equation.”

Barely anyone had heard of NFTs in 2020, but they became a huge phenomenon the following year. More than $20 billion worth of the tokens changed hands throughout 2021, according to some estimates. The trend gained particular public attention after a collage by the digital artist Beeple, whose real name is Mike Winkelmann, was sold for a record $69 million.

However, there are concerns about the sustainability of the market. Some have compared it to the initial coin offering frenzy of 2017, which saw several investors get defrauded by betting on start-ups through unregulated token sales. Meanwhile, there have been a number of scams and instances of stolen art, raising red flags for some traders.

Change of heart

Regulation

O’Leary stressed the importance of ensuring crypto becomes regulated. Regulators in the U.S. and elsewhere are racing to catch up with developments in the market to prevent potential money laundering and protect consumers from financial harm.

“Different geographies have different policy regarding crypto,” O’Leary said. “You have to go and find jurisdictions that are more progressive.”

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