Alternative Investments in the Fintech Era: The Risk and Return of Non-fungible Token (NFT)
80 Pages Posted: 1 Sep 2021 Last revised: 26 Jun 2023
Date Written: August 30, 2021
Abstract
Our study highlights the NFT rarity as a key determinant of price premium in the cross-section. Moreover, well-connected investors, who establish their central positions in the NFT network through early adoption and active trading, enjoy pricing advantages. We also find that experienced investors pay lower prices for NFTs. As an investment class, NFTs exhibit a high-return and high-risk profile when compared to traditional assets, especially in a low-interest-rate environment, and outperform most other alternative assets, such as luxury goods, private equity, and artwork. Overall, we provide novel and comprehensive analyses of NFTs, a digital alternative investment in the Fintech era.
Keywords: Non-Fungible Tokens, Rarity, Alternative investments, Risk and return, Fintech, Blockchain
JEL Classification: C43, D44, G11, G12, Z11
Suggested Citation: Suggested Citation