Timeless Investing This fintech aims to become the Trade Republic for NFTs
At Timeless, investors can invest in rare sneakers, watches and even dinosaur teeth via NFTs. The number of users is increasing rapidly. But critics warn against risky speculation.
In fact, real assets have become a popular asset class. Particularly rare sneakers, for example, sometimes change hands for six-figure sums. And some Nautilus watches sell for $100,000. The collectibles that Timeless offers on its smartphone app tend to be unaffordable for a single retail investor. The idea of Timeless: Investors do not buy the complete collector's item, but shares for 50 euros each.
Karnath started over a year ago with sneakers and watches. Investors can now find all sorts of curiosities there: in addition to Pokémon cards, an original Alien costume by Lady Gaga and signed lyrics by US rapper Tupac, they can now also invest in the tooth of a Tyrannosaurus Rex.
Investors and celebrities pay millions for NFTs, companies want to make billions in the Metaverse. At the same time, many consider the digital images to be worthless – and the market to be overheated.
"Invest in things you love" is the slogan of Timeless. Investment as an emotional experience. "With us, investors will find investments that they are interested in and that they really care about," says Karnath. And at least user interest seems to confirm the success: within a year, 160,000 users have registered on the platform. For comparison: Trade Republic, one of the largest smartphone brokers in Germany, has around one million users. But Timeless only serves a small system niche. However, so far only about every fifth user has actually invested in Timeless. But that is probably mainly due to the fact that investors have to be quick if they are interested in an investment, Karnath said. The shares are usually sold out within a few minutes.
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Managing Director Karnath observes that user interest in Timeless has increased, particularly since the end of last year. This is probably also due to the fact that the business is based on the new big hype in the investment world: NFTs.
The acronym stands for non-fungible tokens, basically digital certificates of authenticity. Owners of an NFT are noted on the blockchain after purchase. With Timeless, the individual shares are sold as NFTs and the shareholders are then entered on the blockchain as owners.
Also Read: Waste of Money or Next Big Thing? What the NFT hype offers investors
The fintech wants to launch a special feature on the platform in the spring: the NFT of a mutant bored ape – a digital image of a monkey. They are the little brother of the Bored Ape Yacht Club (BAYC), an NFT collection that is particularly popular and expensive. A digital monkey image recently sold for nearly $3 million. The Mutant Bored Apes are even cheaper: Prices are around 50,000 dollars. Karnath sees potential here. For 50 euros per share, investors can soon become co-owners of the monkey NFT at Timeless.
Critics, on the other hand, describe the NFT hype as a big money-destroying machine. Michael Grote from the Frankfurt School of Finance is also skeptical. He sees sneakers and the like less as a real investment and more as a hobby. His verdict on digital artworks is even more devastating: “NFTs are speculation in its purest form.” Unlike equity investments, nothing productive would be created with investor capital. Returns can only be achieved if someone else is willing to spend more money on the digital work of art.
NFT investments: the certainty of burning money?
Even today, most NFTs are not big return generators. NFTs growing in value as much as Bored Ape Yacht Club is the exception rather than the rule. Most investors lose their money because there are no buyers, Grote said. "If you really want to invest in NFTs, then you can be sure that you're burning money," he says, criticizing the new asset class. Timeless boss Karnath naturally sees things differently: "The increases in value over the past year show that this asset class should be taken seriously."
In the summer of last year, Timeless integrated a trading function. Since then, investors have also been able to trade their shares with each other at Timeless. Otherwise, Timeless keeps the assets for several years, so the idea, and then sells them. Investors should then get their capital plus return paid out.
Timeless does not make any return forecasts for its real assets. Such a statement is dubious, so Karnath. The value of some watches, for example, increases by ten percent a year. But that is not certain. However, Timeless investors must hope for high returns to recoup the fees. They have to pay a flat service fee of two percent per share – i.e. one euro per share of 50 euros. Timeless makes a profit with this service fee. It also accrues when investors purchase a collector's item share via trading procedures.
There is also a custody fee. After all, Timeless has to store the sneakers and other collectibles that it has bought. The costs here are between two and six percent – depending on the asset class. Sneakers and watches are relatively cheap to store, while vintage cars are expensive. All in all, investors in Timeless have to reckon with costs of four to eight percent.
Timeless founder Karnath is of course convinced that expensive sneakers and trading cards will increase in value over the next few years. After all, the young generation of investors ascribes a value to collectibles. How long will it stay like this? Investors have to hope that their sneaker shares remain popular for a long time. Hardly anyone collects stamps or telephone cards these days.
More on the topic: Investors and celebrities pay millions for NFTs, companies want to make billions with them in the Metaverse. At the same time, many consider the digital images to be worthless – and the market to be overheated.
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