nOn-fungible tokens (NFTs) have grown in popularity this year. Digital works of art have sold for millions of dollars and investors have wagered on NFT stocks. Another industry with significant long-term potential is cannabis, which is still illegal in most parts of the world.
Both sectors have some attractive growth potential. But which is safer and which is the better investment in the New Year?
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The case for NFTs
The NFT market has the potential to get huge as almost anything is digitized, be it a tweet, a baseball card, or a piece of art. JPMorgan Chase These digital works of art are estimated to generate $ 2 billion in sales each month – five times the $ 400 million they made in early 2021.
The Top Bank said, “By creating marketplaces for illiquid assets such as digital art, collectibles, music, games, and other assets, the NFT universe will certainly continue to grow strongly in the years to come as it solves the problem of injection Liquidity in naturally illiquid assets such as collectibles. ” Cointelegraph estimates that NFT sales could hit a record $ 17.7 billion in 2021.
As NFTs become more mainstream, they are becoming more liquid, making them easier to buy and sell. There are many marketplaces, with OpenSea being one of the most popular for buying and selling digital items. You can also create your own NFTs to sell on these platforms.
There aren’t a lot of NFT stocks out and about, but one new exchange-traded fund, the In spite of Digital Revolution ETF (NYSEMKT: NFTZ), started this month and focuses on blockchain, crypto and NFTs.
The case for cannabis
Like NFTs, with their volatile fluctuations in value, cannabis stocks are by no means a risk-free investment. Marijuana is still federally illegal in the U.S., and that makes it difficult for companies to raise money to fund their growth. Multi-state operators cannot trade on the major exchanges and access to banking services is a challenge. Despite these obstacles, the sector was able to grow. The cannabis industry is much more developed than the NFT market, so there are many more options for investors to get involved in.
Investors can buy stocks in a top cannabis producer, such as Real cannabis, which will not only generate more than $ 1 billion in revenue for the next year, but is also profitable. And as the industry continues to grow, as more states and countries allow the use of marijuana, there is more room for Trulieve and other cannabis producers to expand their operations. Analysts at Markets and Markets estimate that the global cannabis market could be valued at more than $ 90 billion by 2026 and grow at an average annual rate of 28% by then.
And if investing in a producer is too risky for you, you can buy shares in a high-dividend real estate fund, such as Innovative industrial real estatethat only rents space to pot companies. There are also pick-and-shovel games like Agrify and GrowGeneration the marijuana producers provide the tools and solutions they need to grow their crops.
Which one is better?
NFTs are highly speculative in nature and it can be difficult to tell how much a digital item is worth. Physical paintings are hard enough to evaluate, let alone digital versions. Cannabis offers the more stable investment option because you can invest in companies that are already making money and profits, and it’s easier to see how and why the business is growing in value. There are significantly more risks and uncertainties associated with NFTs. You might get lucky and make a profit buying and selling an NFT, but the safer option for 2022 is hands down to investing in the cannabis sector.
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JPMorgan Chase is an affiliate of The Ascent, a Motley Fool company. David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends GrowGeneration Corp, Innovative Industrial Properties, and Trulieve Cannabis Corp. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.