Should You Be Investing in NFTs?
Updated: May 4, 2022
You may have heard of NFTs if you’ve been actively paying attention to recent financial trends. What precisely are NFTs, one might wonder? What is it built on? Is it the current best investment in the market or should you pass up on NFTs? and the final question Should you be investing in NFTs?
What is NFT?
NFT began in 2017 with Cyberpunks and has since grown in popularity. NFT stands for a non-fungible token in its literal sense. It refers to a unique ownership token that cannot be copied or substituted.
What is the aim of NFTs though? It has recently risen to new heights, particularly in the art department, since people want to own a piece of unique art that no one else can duplicate or possess, and the only thing that is required is certification, which is available on the blockchain. Alongside art, other NFTs are music, virtual avatars, game skins, designer sneakers, other collectibles, and video clips, that again can be bought directly from the artist without the problems of middlemen or piracy.
NFT and Blockchain
Blockchain is a system that keeps records of transactions made in cryptocurrency through a network built by multiple computers around the world. It’s a decentralized public ledger that runs on a computer network. It’s also the fundamental platform for NFT, as NFTs are securely stored in Blockchain. It also makes certain that the asset is unique given the facet that the creator of NFT is always distinguished.
Your NFTs can be stored in 3 ways. First, along with the NFT token on the same blockchain. Second, on a different decentralized blockchain. And thirdly it can be saved on a private or centralized server decided by the artist of that particular NFT.
How To Invest in NFT?
To invest in an NFT, you will need an NFT wallet which is a cryptocurrency wallet that supports the blockchain system. It needs to support the currency you buy the NFT with. Since there are ample amounts of wallets that you can choose from, it is essential to know what each wallet brings to the table and which suits your needs best. Most transactions happen with an Ethereum wallet as it originally started on the Ethereum blockchain (ETH).
NFT: Boon To Artists.
NFTs are a great way for artists to earn without venues, galleries or auction houses. There is no cut in their earnings due to direct selling to the investor. They even receive royalties if their art is sold further to a new owner. Even celebrities like Eminem and Snoop Dogg have invested in NFTs recently. In the same way that the top bidder in an auction gets the most expensive item, the highest bidder on the NFT gets this digital art. It could be a piece of digital or physical art. In terms of psychology, it’s similar to possessing a collector or unusual item. The only change is that it’s now on the blockchain, which is a newer, bigger, and better-managed platform.
Should You Be Investing in NFT?
So who’s keeping the NFTs occupied? These are primarily people who wish to own unique items for the sake of status or personal collection, as well as art appreciators who want to assist artists in making a living. Vignesh Sundaresan owns the most expensive NFT deal to date, having paid 69.3 million dollars for “Everydays: The First 5000 Days.” NFTs with steadily rising prices are in high demand.
It does, however, come with a number of risks as we do not have any past history to relate it to. Also, having no supporting data for histocial returns on investment in NFTs it can be said it comes with an uncertain future. If people suddenly stop paying for a certain NFT, the price of that NFT can decrease. The price of an NFT is based on demand rather than physical or technical indicators. It all relies on the people’s mindsets and the current trend. As a result, one must be extremely cautious about why and how much they invest and should only do so after gaining sufficient knowledge on the subject.