Cathie Wood: NFT, DeFi, and digital wallets will become important and huge opportunities

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Odaily Translator | Nian Yin Si Tang

Summary:

Summary:

- Cathie Wood, CEO of Ark Invest, said that digital property rights and DeFi related to NFTs that support the emergence of Web3 "will become extremely important."

- Wood asserts that the long-term value of digital assets will come from their utility - a message that may be difficult for many institutional players to digest.

Cathie Wood, CEO of Ark Invest, said on Tuesday that digital property rights and DeFi related to NFTs that underpin the emergence of Web3 "will become extremely important."

“DeFi has done well and we’ve been impressed with how strong the ecosystem is,” Wood said on CNBC’s “Squawk Box,” adding that the “token revolution is still in its infancy” around NFTs.

NFTs are hugely popular in 2021. People create, collect, and trade NFTs, making millions of dollars, and some of them hope to profit in the future. But experts remain skeptical about whether NFTs are a good investment.Last week, billionaire Bill Gates spoke at a climate conference hosted by tech blog TechCrunchrevisit

Criticism of digital assets in the past has called cryptocurrency projects such as NFTs scams "based on the Bo-fool theory."

Gates sarcastically said, "Obviously, expensive monkey digital images will greatly improve the world (here clearly referring to BAYC, one of the blue-chip NFT projects)." He said that he is neither bullish nor bearish on this asset class. Additionally, Gates defended his digital banking efforts backed by his philanthropic foundation, which he says are "hundreds of times more efficient" than cryptocurrencies.

Previously, Bill Gates said that Bitcoin consumes too much energy, which is not conducive to the ecology of the earth.

The proliferation of NFTs is still a new phenomenon, but a lot of money is already being traded between collectors. For example, NFT collectibles have sold more than $6.2 billion since 2017, while digital artwork has sold more than $1.9 billion, according to NonFungible, which tracks historical non-NFT sales.

“We believe that digital property rights — what NFTs represent — are going to be extremely important.” Wood added that her background in economics allowed her to appreciate the value of property rights in helping people escape poverty.

Creators in the NFT space have long been doing the same thing, and investors like Wood are quick to assert that the long-term value of digital assets will come from their utility. For institutional investors, this may be a difficult message to digest.

Meanwhile, collectible art, such as the well-known blue-chip NFT project Bored Ape Yacht Club (BAYC), has taken center stage in the early NFT space. Over the past few months, however, the value of these NFT collectibles has plummeted. Bored Ape Yacht Club and another blue-chip NFT project, Crypto Punks, have both fallen sharply in price recently.

Some tech giants believe more pain is on the horizon. "If you assume Web3 is 10x overvalued, then It was corrected 5 times, so it actually leaves a lot to be desired."

But Wood's comments suggest she's not deterred by the latest sell-off.

"We believe that if the ecosystem is consolidated, it's not a bad thing. We think digital wallets will be one of the most important outcomes for the industry. They're effectively a bank branch in our pocket," Wood said. These are going to be huge opportunities."

The innovation-focused investor also struggles in 2022, as disruptive technology companies she favors are among the biggest losers this year amid rising interest rates. Its flagship active fund, the Ark Innovation ETF (ARKK ), has fallen 52% so far this year and is down 66% from its February 2021 all-time high.

Still, Wood said her clients are mostly sticking with her, and new money is coming in as investors seek to diversify amid the market downturn. ARKK saw inflows of more than $180 million in June, according to FactSet.

Meanwhile, cryptocurrency investors continue to grapple with aggressive rate hikes and a worsening liquidity crunch that has left major players in financial trouble. The broader crypto space also remains reeling from last month's $60 billion crash of two major tokens (LUNA and UST).

“A lot of people expected the Terra-Luna crash to have a systemic ripple effect, and we did see some of that, but so far, ethereum has held up pretty well,” Wood said of the matter.Earlier this month, Celsius, a crypto lending platform that promised high yields to users who deposit cryptocurrencies, suddenlyAnnouncing a Suspension of Withdrawals

, exacerbating concerns about cryptocurrencies. The ensuing Sanjian Capital incident further spread the panic.On June 27, crypto brokerage Voyager Digital announced thatNotice of Default to Three Arrows Capital

, because it failed to pay the previously disclosed loan of 15,250 BTC and 350 million USDC.