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Home NFTs Laugh at Sunak’s NFT, But Big Banks Are Serious

Laugh at Sunak’s NFT, But Big Banks Are Serious


You probably know someone who has one or two commemorative coins on display in porcelain ornaments and family photos. Probably half a dollar ($ 100 worth) of silver at the 1925 Stone Mountain Memorial, or a five-pound silver coin for Her Majesty’s 95th birthday. ..

But the same thing, but what about digital? UK Finance Minister Rishi Sunak has asked Royal Mint to come up with the idea of ​​a non-fungible token (NFT) to show that the UK is sensitive to digital assets.

Maybe young people will want to buy Minecraft and Fortnite skins, or state-sponsored digital goods to add to virtual Nike sneakers and Gucci bags to show off in the Metaverse. It all sounds pretty ridiculous to me, but what do I know?

NFT ideas can be uniquely traded to digital things such as images, the “first edition” of music, and Bored Ape Yacht Club membership, using the cryptographic blockchain technology behind Bitcoin. Creating a claim.

These really took off in the last few years when people spent a lot of time at home, online, and piercing their pockets with money. Digital art is booming, with approximately 17 million images and other collections between April 2021 and March 2022, according to a report on Metaverse money last week by Citigroup analysts. Over $ 18 billion has been spent. It all happened after the OMG moment when Beeple’s work was sold for $ 69 million at Christie’s auction house.

But art is only half that. You can use NFTs to grant property rights to the entire Metaverse. All predictions about the potential value of digital things are aerial guesses. The truth is the amount of money that has already been spent and invested. Last year, venture capital funding for NFT startups surged to $ 4.8 billion from nothing in the previous year, according to Citigroup.

So what does Royal Mint NFT commemorate? Royal events are popular among the old crowds, but it’s probably not the theme that the target market fantasizes about. The subject can be anything. Mentha produces thousands of coins (made of real ones) for collectors interested in dinosaurs, Stephen Hawking, Wallace & Gromit, or Brexit.

But why are snacks doing this? He has seen a vision of flickering tax revenues in the future. He wants to make the UK a global hub for crypto asset technology.

Britain has a habit of jumping into a financial pandemic. George Osborne, Minister of Finance from 2010 to 2016, created a big fanfare to make London a global hub for RMB-denominated bonds outside China. In 2016, London welcomed the first RMB government bonds sold abroad. Since then, well … According to the London Stock Exchange Group, 18 issuers have listed more than 100 bonds worth RMB 32 billion, about $ 5 billion, but not so many.

There is a lot of hype around crypto, and Bitcoin and its rivals are still very unstable and speculative playthings. However, large institutions are researching and experimenting with all aspects of this technology. Often because of something boring like payment processing. For example, JPMorgan Chase and Company has JPM Coin, which aims to make cross-border payments faster and cheaper.

Banks are preparing a day to use blockchain technology to “tokenize” all types of financial assets and make them easier to trade. Regulatory authorities are required to set reliable basic rules.

Gary Gensler, Chairman of the Securities and Exchange Commission, is mobilizing support and working with the Securities and Exchange Commission to promote it. Market makers, custodians, and other participants will consider how to define and separate roles as needed.

I have a huge question that hasn’t been answered yet. In the case of NFTs, the collectors who buy it do not necessarily own what they paid for. Usually they have a record of web addresses that can display metadata that indicates that they own something. The same is true for the first editions of Harry Potter and Oliver Twist, but the author may retain their original ownership. Maybe a wise person can forge the version of NFT that you think you own.

Perhaps the computer power needed to mine everything crypto-related is so energy intensive that it cannot be performed for normal use. But to be clear, big banks and investors are preparing to abuse it in ways that seem to make a profit. It may be nothing, or anything may be a stepping stone to all monetization.

Royal Mint NFT is a ridiculous political marketing. However, governments and regulatory agencies need to do everything possible to gain a deeper understanding of this technology and prepare for all the methods that may be used in the coming decades.

More from Bloomberg’s opinion:

• Pushing to Russian cryptocurrencies is a big setback: Izabella Kaminska

• Expensive crypto hacks are becoming part of Web3 life: Parmy Olson

• Fintech is everywhere in India. Banks need a counterattack: Andy Mukherjee

This column does not necessarily reflect the views of the editorial board or Bloomberg LP and its owners.

Paul J. Davies is a Bloomberg Opinion columnist covering banking and finance. He previously worked for The Wall Street Journal and the Financial Times.

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