Koia Team
December 29, 2021

What's next for Fractional Ownership, NFTs and Collectibles in 2022?

A new year means a chance to hit the reset button and plan on new paths, investment opportunities or that January gym session we’ve all been promising ourselves. Right after the Christmas dinners and mince pies, of course!

While we won’t predict personal fortunes, or if Succession season 4 comes out, we can look into the investment and alternative asset space.

Wrapping up 2021

There's been highs and lows over the course of 2021, but true to our entrepreneurial spirit we have high aspirations and look at our whisky bottle as half full. While we don’t have a crystal ball, you might be asking what does 2022 have in store?

A BIG question, but something we thought we could take a swing at…

The process took into consideration what has happened in the last 12 months, the latest key data from around the world, some wise owls on our shoulders and pinning down the co-founders until they told us their deepest darkest secrets. (We joke, but some like to play in the Sandbox 👀)

Essentially this is our take on 2022, with some predictions made in each space. So sit back, open the bubbly and let us know what you think the new year will bring us! 🎉

Snapshot:


  • Economy Bounce Or Stagnation?
    Two scenarios could play out, either more monetary tightening by central banks or savers start spending their cash to help drive growth.

    Financial expectations influence the decisions made by individuals and households - such as consumption, saving or debt. Central banks and governments will ultimately drive what happens as they influence how secure people feel with their finances.

  • New Rich Coming Out Of The Pandemic
    Many businesses have locked up shops or even closed down, meanwhile, new entrepreneurs have emerged and the influx of fiscal stimulus has helped fuel consumer spending.

    The number of millionaires will continue to rise and the gap between the rich and poor will, unfortunately, inch deeper. However, access to how the rich invest is opening up and possibilities for everyday people to manage and expand their wealth is growing.

  • Collectibles Continue To Break Records
    2021 has been a fantastic year for alternative assets as we see records broken at auctions and online platforms.

    The growth in this space will continue to grow and we will see much higher valuations of scarce and desirable collectibles.

  • The Rise of Fractionalization
    The JOBS Act in 2012 allowed private companies to issue securities to the public via crowdfunding. Which has helped accelerate the fractional market.

    With new crowdfunding regulation hitting Europe, we predict we’ll see a rise in crowdfunding across the EU, be that for smaller companies to raise capital, or enabling people to invest in alternative assets.

  • Social Investing Will Continue To Grow And Evolve
    The army of retail investors has risen, moving the markets by rallying ‘meme’ stocks such as Gamestop, sending hedge funds to the brink.

    In 2022, we believe social investing will go further than discussing trading ideas online. We’ve seen the first signs of that this year, for instance, ConstitutionDAO & FlamingoDAO, where groups of users pool their crypto and buy collectibles.

  • The Rise And Democratization Of Passion-led Investing
    Many of the worlds wealthiest have always enjoyed splurging on their passions, whether it’s buying expensive watches or art; or owning their own sports teams.

    These types of passion assets have so far been largely inaccessible to the everyday investor. 2022 will change that, with new platforms gaining traction which are paving the way for people to back projects, artists or items they truly love via mechanisms like fractional ownership, security tokens or NFTs.

  • NFTs For Physical Goods
    Global awareness and exciting new use cases for NFTs boomed in 2021, but most projects are still in their infancy.

We expect adoption will gather pace in 2022, as legal and regulatory clarity around putting real-world assets on-chain improve, clunky user interfaces get a makeover and the number of payment options increase.


Economy Bounce or Stagnation?

Diving into some of the potential economic outlook routes, we look at what may lay ahead of us. Recent news has revolved around interest rates, spending, inflation and recovery. But what will 2022 realistically look like?

The two scenarios that could potentially play out are polar opposite. One is a healthy recovery with a few speed bumps, while the other could feel like everything is coming to a standstill.

  1. Economy Stagnation and Inflation.

    At the global level, economic activity has been growing at a slow pace, due to a combination of factors that have hit us in the last few months.  Most prominently the global recovery has been affected by supply bottlenecks and the resurgence of country travel restrictions. Central Banks have been deliberating whether or not rising interest rates is the best option to combat surging inflation around the world.

    Euro-area inflation increased to 3.4% in September and is expected to rise till the end of the year. While inflation is currently at all time highs, we may see it last longer than originally expected. This has mainly been down to a combination of three factors: Energy prices, growing demand for goods and services and VAT cuts such as in Germany.**

  2. Economy Bounce - Savers spend.

    The alternative view is that inflation will sort itself out once supply bottlenecks are cleared up and companies can keep up with growing demand. Meanwhile, we expect to see the labour market and economy will bounce back as most employees get back to production levels at work seen prior to the pandemic – as long as restrictions don’t creep back up.

    The main contribution to this economic growth is the levels of money people have been able to save across Europe & other countries. We’ve seen an increase in savings rates and a surge in household bank deposits during the lockdowns. Prior to the end of 2020, only a small proportion of these savings had been used to repay debt or purchase assets such as equities.

    Analysts and governments expect these factors to contribute to the economic boom:

  • Real consumption is expected to grow to 9.6% by the end of this year – the strongest performance since 1946.


  • US households will use about 13% of the $2.3tn in excess savings accumulated since the pandemic’s onset to smooth their expenses, supporting 5.1% consumer spending growth.


  • EU estimates that consumers could spend up to 45% of their excess savings over the next 18 months.

  • Output is expected to exceed its pre-pandemic level by the end of the year in the EU. This is supported by consumer spending, especially on entertainment, dining, travel and transportation to help exceed expectations.  


(Source **)


Prediction: Monetary policy such as printing money or raising interest rates, temporary or not, will be crucial factors for the economic outlook in 2022. Decisions made by governments and central banks will ultimately tip the scale to go one way or the other.

If we see consumers keeping more money in their pocket and deciding to prepare for potential interest rate hikes, this would ultimately slow down any recovery as experts predicted.

Whereas with increased spending and low-interest rates, we are more likely to see elevated levels of household expectations. Given that financial expectations influence the decisions made by individuals and households - such as consumption, saving or debt it can have a huge impact on the wider economy.

As for alternative assets, the continued demand has caused scarcity, especially in the luxury market. The resulting price rises create even more competition for desired collectibles as more people look into allocating funds into assets rather than traditional ones. This could result in higher prices and records being broken for rare and desired alternative assets.

The (new) Rich Coming Out Of The Pandemic


While many businesses have locked up shops or even closed down due to restrictions in countries. We’ve entered this paradoxical world as new entrepreneurial businesses have launched at the height of the pandemic.

Asset price inflation continues to increase wealth inequality, with the ‘new’ rich benefiting over the course of the last two years. The influx of financial stimulus within the markets has created all-time highs on stock markets and fuelled consumer spending.

This year alone has seen millions become millionaires during the pandemic. Recovering stock markets and soaring house prices helped boost people's wealth. Credit Suisse research found the number of millionaires had increased by 5.2 million individuals, to a total of 56.1 million globally.**

Diving further into the 1-10% of the world, the world's richest saw their wealth climb 27.5%. A report from Swiss bank UBS further showed that Billionaires have seen their fortunes hit record highs, their wealth climbing to $10.2trn (£7.9trn) from April to July this year.**

Prediction: The rise of millionaires will continue to grow and the gap between the rich and poor will, unfortunately, inch deeper. This is expected to grow over the next 5 years, with more millionaires being added to the growing list. 


The good news? Access to how the rich invest is opening up and possibilities for everyday people to manage and expand their wealth is on the rise. What’s more, with the number of millionaires growing, demand for high-value collectibles will continue to grow as the new ‘rich’ will seek alternative assets to store value or simply buy these luxury goods to enjoy. As a result, there’s a strong chance that prices will continue to increase.

One way to invest like the 1% or the rich is to diversify your investments with alternative assets, check out joinkoia.com to start.

Collectibles Continue To Break Records 📈

Desired collectible items have smashed all records and prior estimates and price highs, and most of that has come in the last few months. With people wanting to spend their disposable income or seeking opportunities for new investment ideas, collectibles have become a hit in 2021.

Alternative asset classes have generally outperformed traditional markets this year, even as markets have been hitting all-time highs. The increase in interest over the last 12 months has seen a spike in people buying, selling and trading passion assets. Here are just a few which beat records:

  • Pokémon: Trading Card Game Shadowless Base Set Charizard Sells For Over $300,000 [Forbes.com]


  • 1909 Honus Wagner card broke records back to back. The card came to auction in May 2021, which sold for $3.75 million (£2.75m). Just three months later, another copy was sold via Robert Edward Auctions for $6.6 million (£4.8m), making it the most expensive sports card in the world.


  • Gaming: Another record for gaming collectibles this year with a retro Super Mario Bros. game going to auction. The Nintendo sold for $2 million. (Nytimes.com)


Prediction: With collectible items exploding in 2021, we will see more unique and even rare collectibles spring into the market. Users are growing in the collectible space, with niche communities popping up. Mixed with investors looking to invest in items expected to appreciate in price, this will fuel more record-breaking auction prices.

We predict these assets to reach new heights in 2022:

- Lego
- Pokemon Cards
- Vintage Cars: Ferrari
- Watches: Rolex
- Whisky

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The Rise Of Fractionalization


How did Fractionalization come about?
 

Fractionalization might seem like a totally new concept, but it finds its roots in 2012. As part of the Jobs Act, President Obama created a new legal structure that has helped accelerate the fractional market.

The Jumpstart Our Business Startups Act (JOBS Act) was intended to expand and ease methods of capital raising. It allowed private companies to issue securities to the public via crowdfunding. Whereas it started mostly with startup crowdfunding, what happened next is we saw a wave of companies starting to securitize physical assets, by placing them into a company and allowing investors to invest in the company.


Accelerate to 2021 and we've seen the rise of crowdfunding for smaller companies to raise capital. Access to invest in alternative assets such as platform’s like Koia is allowing people to invest in items people already love and have some knowledge in. With more companies starting to leverage crowdfunding and fractionalization, the markets will enter a new age of investing.


Prediction: 

With new crowdfunding regulation hitting Europe, we predict we’ll see a rise in crowdfunding across the EU, be that for smaller companies to raise capital, or enabling people to invest in alternative assets. We will see mass adoption of fractionalized assets through more traditional set-ups but also through those built on blockchain technology which may involve fully-decentralized networks. We’ll see use cases across a wide range of sectors be that real estate, traditional funds, stocks, fine art, or collectibles.

With more platforms entering the space to help people invest in fractionalized items, it won't be any surprise that this will ultimately create more liquidity in the space and create an increased demand for the most desired collectibles. Whether that’s rare collectible cards, luxury bags or fine art.

Social Investing Will Continue To Grow and Evolve

This year retail investors made headlines discussing their trades and investing en masse in “meme” stocks like GameStop, increasing its share price 30x. The army of retail investors moved the market and drove hedge funds to the brink.

A lot of the actions got coordinated via Reddit’s /wallstreetbets and over Discord servers. In a similar vein, whenever Elon Musk tweets about $DOGE prices skyrocket, and social networks like Public are betting the trend will continue and retail investors will be looking for a space to connect with each other and discuss investing ideas. 


Prediction

In 2022, we believe social investing will go further than discussing trading ideas online. We’ve seen the first signs of that this year, with for instance ConstitutionDAO, where users self-organized and crowdfunded $47million in ethereum to bid on one of the earliest versions of the US constitution.

Another example is FlamingoDAO, where groups of users pool their crypto and buy NFTs. We believe this space will keep evolving and developing rapidly over the next year, with collectors and investors group-bidding on all types of physical and digital items and for these propositions to become accessible for crypto-natives and newbies alike. 


The Rise And Democratization Of Passion-led Investing 

Many of the worlds wealthiest have always enjoyed splurging on their passions, whether it’s buying expensive watches or art; or owning their own sports teams. These types of passion assets have so far been largely inaccessible to the everyday investor due to their high price point. With new platforms like Koia entering the game and fractionalizing assets, they are becoming more accessible.


The trend goes beyond the sphere of physical assets or collectibles. Several platforms have sprung up where fans can back their favorite artists or creators, by buying fan tokens which are used by the artist to for example create new work. In many cases, the main use of the token is for token holders to get certain benefits (e.g. access to exclusive content), but in other cases, users buy into the coin in hopes of prices going up.


Prediction:

People have always liked spending money on things they love and backing projects they believe in, with early examples including the likes of Kickstarter and Indiegogo. However, with tokens offering new incentives and giving backers the potential to generate financial returns, we will continue to see growth in the space. In the realm of collectables too, we’ll start to see brands, creators and athletes list and fractionalize their physical items directly or via marketplaces making their valuable possessions accessible to a wider audience and allowing the creator to build stronger ties with their community.


NFTs For Physical Goods


A while ago, we wrote an article on the use of NFTs in the physical world. We believe this is an area that is still in its infancy. NFTs can be linked to a physical asset and act as a proof of ownership and authenticity; the underlying asset can be stored by a trusted provider and the NFT can be continuously traded and ownership can be changed without any friction or costs to re-authenticate the item each time it changes hands. This would enable the collectibles market to become a lot more liquid, lower trading costs and fight fraud. In the long term, it could work for any transaction including larger ones such as land or real estate.


Prediction:

We’ve seen some early projects of NFTs being linked to real-world assets, but it has not yet become mainstream. We predict that due to the potential benefits of NFTs in this use case, we’ll see more and more use cases and user adoption. Key in that development are strong on-ramp solutions that help users new to crypto convert their fiat currencies into cryptocurrencies to, for example, buy NFTs.

With various on-ramp solutions having raised massive funding rounds in 2021, this development is inevitable. Another necessary key development, which might take longer to follow suit but will come is an improved legal framework of how NFTs can be securely tied into “real-world” contract law, especially in complex transactions like real estate or company shares, which involve government land or share registers.

Happy New Year!


Whether this will all play out or not, time will tell. What we are certain about is the online meta space will continue to flourish, as more people explore opportunities to be part of or create in the digital world.

Another strong prediction is everyday people will take more control of their personal wealth into the palm of their hands. The added benefits of crowdfunding and low entry points for digital investing will enable people to not only educate themselves but take more control of their investments.

As our personal Koia community grows, we are confident that the alternative asset industry keeps on growing with it as more people connect their passions and love for collectibles.



Sources

Economy Bounce or Stagnation
- www.oxfordeconomics.com

Report 2021 - US | Here comes record-breaking consumer spending growth
- http://blog.oxfordeconomics.com/content/here-comes-record-breaking-consumer-spending-growth
- www.ecb.europa.eu/

The (new) Rich
www.bbc.co.uk/news/business-54446285


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At Koia, we allow you to buy, trade and collect fractions of iconic assets, starting from $60. Our experts make sure to source and buy the best assets, and we take care of authentication, storage and insurance. All of the benefits, with none of the hassle.

The articles and information made available on Koia are provided for information and educational purposes only and do not constitute financial advice. You are advised to consult with an independent financial advisor for advice on your specific circumstances.