A silver exploration and development company is teaming up with a venture capital firm to launch the world’s first silver-backed non-fungible token (NFT), opening a potential new funding vehicle for junior mining and crypto investors.
Earlier this week, Vancouver-based Viscount Mining Corp (TSX-V:VML, OTCQB:VLMGF) and Lux Partners Ltd announced a “one of a kind” silver forward sales agreement to add up to five million ounces of silver to the Lux Exchange platform.
NFTs, once touted as the hottest new investment vehicle, are digital assets that represent ownership of unique items or pieces of content, such as digital art, music, or video clips. The value of an NFT is derived from the scarcity and uniqueness of the underlying asset.
So a silver-backed NFT is backed by a physical quantity of silver, adding physical backing to the digital asset. The owner of the NFT can redeem it for a specified quantity of physical silver, which is held in reserve by the issuer of the NFT. This provides an additional layer of value to the NFT and may make it more attractive to collectors and investors who are interested in both digital and physical assets.
"New era" for tokenization of physical assets
Lux Capital is known for investing in life science and frontier tech startups. The platform combines blockchain technology and real world asset storage to create a unique investment opportunity.
Marcus Weller, chief revenue officer of Lux Partners Limited, told investors that Lux NFTs “bring liquidity and universal access to the silver market and usher in a new era” for the tokenization of physical assets like silver.
In Viscount’s case, linking the silver to the Lux NFT means investors will have access to a diversified portfolio of precious metals with which to hold and trade on open markets.
Of course, the value of an NFT is subject to market forces and can fluctuate based on supply and demand. That means the value of the underlying physical silver may also impact the value of a silver-backed NFT.
Contact Angela at angela@proactiveinvestors.com
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