In these past years, non-fungible tokens or NFTs and other digital assets have gained popularity among individuals across the globe including many celebrities and artists. These can be bought, sold, and held with the use of blockchain technology.
What are NFTs?
Since digital assets are a relatively new concept to grasp, it’s no surprise that a lot are still questioning what exactly are NFTs and what makes them special. Compared to cryptocurrencies that are fungible and can therefore be exchanged, NFTs are unique assets that are indivisible and owned by only one person at a given time.
Thanks to blockchain, NFTs can be verified as it makes it possible to track the creator and authenticate the assets without the need for a third party. There would be no chance to remove or destroy them as well. These collectibles are considered as value-holding investments as they can appreciate in value especially if their use becomes more popular.
Why do people invest in NFTs?
One of the reasons why the value of NFTs increases is because there are used in blockchain games such as CryptoKitties and Axie Infinity that are becoming more popular. Therefore, with the projection that certain games will also be popular, people invest in NFTs that could one day be worth a significant sum of money. Though, of course, ample research is necessary in order not to blindly buy NFTs which would only be a doomed undertaking.
Another consideration is the market situation, contributing to the value of NFTs since the law of supply and demand also applies in the digital realm. The more scarce NFTs are with increasing demand from the public, the higher the value that they have which will essentially impact market dynamics. Though, unlike crypto tokens such as bitcoin, a consistent market of buyers is not guaranteed so don’t expect that it is purely similar to selling cryptocurrency. NFTs work because they tokenize digital art and offer a digital certificate to the would-be owner, making the said art as valuable as traditional art which cannot be duplicated.
What to consider when planning to invest in NFTs?
While collectors become immutable owners who can acquire monetary benefits, artists will be able to earn more as they directly approach buyers, eliminating the need for an auction house or gallery which also takes a cut. Now, there are certainly a couple of things to consider when investing in NFTs. There is your risk appetite since their market value fluctuates like cryptocurrency. Know how much you are only willing to pay without the fear of losing that amount. You should also take into account if you’re at ease with the idea of others potentially being able to view your NFT even when you get to own it since it’s in the digital realm. Simply put, you won’t have total control over its distribution.
View NFT investment as something that works as a unique connection between you and the creator, and not as plainly buying content online. This kind of connection is not possible with other digital art forms so investing would be worth it for you especially when you’re an art enthusiast. It’s just important to remember that there would always be the uncertainty of whether they’ll sustain their value over time.
It is also worth noting that the NFT market is continuously growing especially now that blockchain games become popular by the day. More people who are not necessarily games are using it as play-to-earn games that utilize NFTs are also being embraced by developing countries who need other income opportunities. Though, again, the popularity of blockchain games doesn’t automatically mean more value for NFTs. It would be constant evaluation as to whether it would be best to invest in it at a certain time. Meanwhile, other people invest just because it’s fun to stake at the potential for profitability of the unique nature of their preferred NFTs. There’s the excitement that the whole process offers while holding onto something that no one else in the world can call theirs.
Where to buy NFTs?
If you’re up for the ride, you can start checking out different NFT platforms that allow you to buy and sell specific assets. Ready a cryptocurrency wallet that you can use on these platforms to keep cryptocurrencies in it so you will be eligible for trading. Otherwise, you just need to follow their instructions which will most likely ask you to create an account there. Some popular NFT marketplaces include Nifty Gateway, Rarible, and OpenSea among others. Keep in mind to assess your finances before anything else and only wager the money you would be fine losing. As you can also trade NFTs on curated platforms, you have to look into their reliability and trustworthiness. It would also help to deal in them under expert assistance especially if you’re new to it.
NFTs sure offer many interesting windows of opportunity for profit but must be dealt with caution. It can be said that they represent a shift in the perception of art and collectibles while breaking barriers for connecting buyers and sellers worldwide. Thus, investing in NFTs is more of buying an experience rather than buying a digital item. Think carefully about whether you’re willing to shell out money for something with an unpredictable value. Good luck!