NFTs or, the non-fungible tokens, are the newest boon of the Cryptocurrency market. They’re quite trendy, come with a brand-new concept, and are thought to be an excellent investment.
But should you really put your hard-earned money into them?
Are there any cons associated?
Should you be worried about anything?
In this blog, I’m going to offer as much information as I can about an NFT investment to help you with everything. However, before we move with it, let’s learn about…
What is an NFT?
A non-fungible token, or NFT, usually serves two different purposes –
- As an uncopyable version of a physical asset, NFT can offer an investor an opportunity to own something unique. It’s all about getting a sense of ownership with an NFT.
- An NFT project will have its own value, which may increase or decrease depending on the asset’s importance. So, you can sell it later for a profit.
Consider an NFT as a type of collectible – something that’s owned by you and you only. It can’t be stolen or used by someone else, as you are the person who’s programmed to use it.
What are Their Benefits, Though?
An NFT investment can be beneficial in more than one aspect. These may include –
1: Improved Market Efficiency.
Converting a physical product into a digital one has an incredible potential to boost the status of a supply chain, increase security, and reduce intermediaries.
For example, thanks to NFTs, an artist can create something on their own and sell it without an intermediary. The transaction procedure of the same will be quite simplified too.
2: Excellent Security.
Like Cryptocurrency, the NFTs are also created and processed by using blockchain technology. Hence, it currently poses as preserved information that can’t be deleted, altered, or hacked.
Every NFT recorded on a blockchain-based ecosystem has an independent chain of ownership and authenticity. Therefore, it can’t get stolen or mishandled by anyone.
3: Almost Anyone Can Invest.
Investing in a tokenized product or asset is accessible to almost everyone. And when it’s been tokenized or converted into an NFT, it can be transferred much more easily.
If you want, you can use an application like crypto genius to improve the security and efficacy of the transfer even more. Go to their website to get more information about them.
Can It be Risky?
While the NFT market has its own song, it can also be depicted as somewhat risky. Here are a few things that you need to keep an eye on in this aspect.
1: Not an Asset Class.
Most people commonly – and erroneously – consider NFTs to be a specific asset class. But that is not true. It’s a technological way of indicating your ownership of a digital art piece.
General mistaken hype and misinformation surrounding NFTs can inflate the value of such an asset and make it volatile. The same thing will happen with it, just like the Crypto market.
2: Owning Ether Might be a Play.
In general, an NFT sale will mostly be performed on an Ethereum-based platform. Therefore, it will be important for you to hold a little bit of Ether if you want to buy something there.
Yes, you can certainly purchase an NFT by using USD or Sterling Pounds. Nevertheless, when it comes to buying from an Ethereum-oriented platform, you have to use Ether.
As mentioned before, almost each and every NFT available out there is currently supported and utilized on the Ethereum platform. And to create the aforementioned token, one must use ETH’ ‘proof of work,’ an energy-intensive operating protocol.
Therefore, the generation procedure of an NFT can take quite a lot of energy and time to finish up. For example, the production of a single NFT needs the same power as a small home uses in one and a half days of time. That’s quite a lot, truth be told.
The Bottom Line!
Like a coin, NFTs have a bad side and a good side as well. Thus, if you are considering making an investment, it might be better to think about everything first. Hopefully, we could offer quite a lot of information through this article. But if you still have some confusion, don’t forget to let us know through the comment section below.