NFTs were all the rage the previous few years. Companies like Bored Ape Yacht Club and Crypto Punks sold their images for thousands. Even institutions like Visa bought a Crypto Punk NFT. Graphic designer, Beeple, sold an artwork for a whopping $69 million. Artists and meme makers were finally able to profit off their work. 

Then the market crashed by $12 billion in 2022. People who had been saying all along that NFTs were useless laughed. 

But is there still a good use for NFTs? Some people have suggested they could mirror the current purpose of stocks. 

NFTs, or non-fungible tokens, are unique digital content that uses blockchain to certify ownership and originality. They can be transferred by owners, making them purchasable and sellable.

NFTs have some similarity to stocks. Their digital nature means they can be highly liquid, bought and sold at the click of a button. “Non-fungible” means that the asset is unique.

Stocks can also be sold and traded. The difference is that a stock represents ownership in a company. Each stock is called a share. You get voting rights with shares, and if you own a lot of them, you can control the company. 

Companies sell shares to investors to raise funds. Buyers are usually some combo of hedge funds, conglomerates and retail investors. 

However, the average non-wealthy investor can only buy shares in a company after it goes public—and most companies don’t. It’s hard because they have to be approved by the Securities and Exchange Commission, which is a long, expensive process.

Private companies, on the other hand, are generally not open to average investors—only accredited ones. In order to become accredited, an investor has to have income exceeding $200,000 a year or have a net worth exceeding $1 million. These rules prevent most normal people from getting a piece of valuable private companies.

Moreover, even for accredited investors, the process of buying shares can be difficult. It often requires changing corporate bylaws, which can be legally burdensome.

NFTs could disrupt all this. It’s easy for anyone, even with few technical skills, to create an NFT. Then they can sell them on a marketplace like OpenSea. 

NFTs would not only be a way for large private companies to go “public” and issue shares in a way that circumnavigates the typical IPO process. But it would also be a way to do this for small companies that don’t normally lure investors.

For example, someone with a food cart is unlikely to get investment from anywhere and they have to borrow money to start and grow the business. But if the owner sold NFTs, then anyone could go online and buy shares. If the cart is successful, the value of each NFT share will increase and could even pay dividends. 

This same “NFT as shares” model could just as well be applied to a local coffee shop, restaurant or organic farm. It would create a radically new way to invest—how often do everyday residents of a city seed fund such things?—amounting to the “IPOing of everything”. 

One Youtuber who goes by Megan.CPA has drawn this connection between issuance of NFTs and IPOs, and believes there is now immense legal gray area. 

“When [are NFTs a] crossover from crowdsourcing, venture capital? I have a feeling that this is going to become a hot topic in the near-future. And regulations are going to start dropping down on these NFT collection launches because the sums of money are so large.”

However, absent those regulations, NFTs might be a more streamlined way of crowdfunding and share-distribution than traditional methods. Right now they’re mostly used for digital art, causing people to dismiss them as glorified JPGs of apes. But people envision using them and the accompanying blockchain technology for many purposes, from more transparent elections to smarter contracts. Add “IPOs for even the smallest of businesses” to that possible list of uses.  

This article featured additional reporting from Market Urbanism Report content staffer Rebecca Lau.