Cathie WoodL NFTs, Digital wallets, and DeFi will become important, huge opportunities

Cathie Wood, CEO of Ark Invest, stated on Tuesday that intellectual property rights associated to non-fungible tokens (NFTs) and decentralized finance (DeFi), which have fueled the rise of Web3, “are going to become incredibly important.”

In 2021, the popularity of NFTs  — unique digital assets such as artwork and sports trading cards that are authenticated and stored via blockchain technology — skyrocketed. People spend millions of dollars creating, collecting, and trading NFTs in the intention of making big and quick bucks in the future. However, experts remain doubtful that NFTs are a wise investment.

Bill Gates called the crypto and NFT phenomenon as “100% based on greater fool theory,” alluding to the premise that overpriced assets would rise in price when there are enough investors prepared to pay more for them.

Although the boom in NFTs is still relatively recent, large sums of money have already been transferred among collectors. According to NonFungible, which analyzes historical NFT sales data, NFT collectibles have earned over $6.2 billion in sales since 2017, while digital art has generated over $1.9 billion.

“We do believe that digital property rights, which is what NFTs represent, are going to become incredibly important,” Wood said, adding that her economic experience has taught her the importance of property rights in raising people out of poverty. 

She continues by saying,”We’re believers and we think the ecosystem, if it consolidates, is not a bad thing. We do think that digital wallets are going to be one of the most important outcomes here. They are effectively bank branches in our pockets. These are going to be huge opportunities.”

Her disruptive technology darlings have been among the greatest losses this year in the face of rising interest rates, making 2022 a difficult year for the innovation-focused investor. Her flagship active fund, Ark Innovation ETF (ARKK), is down 52% year to date, and down 66% from its all-time high in February 2021.

Nonetheless, Wood claims that her clients are generally sticking with her, and that new funds are flooding in as investors seek diversity in a declining market. According to FactSet, ARKK received more than $180 million in inflows in June.