NFT sales skyrocketed to the moon in 2021. Working from a base of hundreds of millions of dollars in 2020, NFT sales rocketed to $25 billion globally in 2021 as digital artists, musicians, video game enthusiasts, and collectors in general flocked to the blockchain and crypto technology. Some analysts (notably, market prognosticators at Jefferies (JEF 1.74%)) see sales booming to $35 billion in 2022.
A handful of creators and collectors have made some serious dough in the NFT world, and the sudden size of this market is attracting plenty of attention from investors now as well. If you're looking for a way to invest in NFTs but don't know which crypto token, artist, or creator project to start with, Shopify (SHOP 3.91%) stock might be a fantastic place to begin.
Image source: Getty Images.
An up-and-running NFT marketplace you can actually invest in
As is frequently the case with new technology, the NFT field is crowded with options and potential opportunities. A lucky few of them have quickly paid off big time. However, many blockchain projects (on which NFTs are "minted" or created, usually on the Ethereum (ETH -1.82%) blockchain) and actual NFT art and collections will have a low probability of holding their value over time. That doesn't mean you shouldn't buy an NFT. On the contrary, there are reasons why you might want to buy one -- or if you're an artist or creator, mint and sell some of your work as an NFT.
For the uninitiated, though, I always advise them to get started looking for publicly traded companies that have a hand in a burgeoning new industry. At this juncture, NFT stocks are limited. Coinbase Global (COIN 1.65%) is working on an NFT marketplace and has a waiting list to get early access. eBay (EBAY -0.54%) also started allowing NFT sales on its site last year. Amazon's (AMZN 1.34%) cloud segment AWS has some extensions available to help developers build their own marketplace. Top destinations to mint and buy NFTs like OpenSea are private companies right now.
Enter Shopify, the e-commerce software giant used by a couple of million merchants worldwide. Shopify already has its NFT software up and running. On the fourth-quarter 2021 earnings call, Shopify president Harley Finkelstein said developing new ways for small businesses and aspiring entrepreneurs to reach customers is always a top priority and called attention to Shopify's NFT tech.
"In 2022, we will continue to innovate on behalf of our merchants, bringing more exciting opportunities and capabilities to these brands, enhancing their ability to sell in new and creative ways, such as selling NFTs. Selling NFTs on Shopify, which is currently in beta, creates a new way for brands, artists, and creators to engage with their communities by selling their own NFTs across multiple blockchains."
Currently, Shopify's NFT Beta program is available to all U.S.-based Shopify Plus customers (those that subscribe to the $2,000-per-month service spanning all parts of online business management). Shopify's site-building and management software has particular appeal for those who want control of their branding and their customers' NFT journey.
Picks and shovels, or sift through the dirt?
Of course, NFT sales are an insignificant part of Shopify's business right now (since the project is still in beta test mode), and that's likely not going to change anytime soon. Nevertheless, I think this is a great pick-and-shovel investment in NFTs, one with a lot of upside potential over the next decade, without needing to sift through the countless NFT projects out there in search of a very rare gem.
Shopify has a well-established track record of fostering new e-commerce ventures on behalf of its users, and the company is gearing up for another round of heavy investment. Finkelstein dropping the NFT service on the earnings call can be taken as an indication that things are off to a good start for those merchants using it so far.
Perhaps most importantly, should the NFT sales firehose suddenly lose some pressure (seriously, it's possible -- remember, this is still pretty new technology), Shopify stock certainly isn't going to blow up as a result. Think of NFTs as a low-risk but high-reward bet for Shopify at this point. Given how well-entrenched Shopify is into the e-commerce industry's fabric, I think it could work out. If it does succeed, that's fantastic! If Shopify NFTs are a flop, no harm and no foul. You still own shares of one of the best digital commerce businesses around.