Since its birth, blockchain technology has revolutionized various industries. Most people think of it as synonymous with cryptocurrency, but blockchain technology is much more than that.
One of the latest trends in blockchain technology is the digital presentation of art and collections. Unlike in the past, when you purchased physical paintings and sculptures, you can now purchase art in the form of your own digital tokens, known as NFTs.
To date, various of his NFTs have sold for millions of dollars. As blockchain technology expands, there are predictions that it will become a big part of the future of digital assets. To capitalize on the potential boom, we need to understand all about NFTs.
What are NFTs?
NFT stands for Non-Fungible Token. A fungible asset can be exchanged for another item without depreciating in value. So what is a non-fungible token, One NFT only exists for one owner at a time. NFTs are also digital asset representations of real-world objects such as art, videos, music, and in-game items. You can also buy genuine collectibles in the form of NFTs, but there are very few at this time. Purchasing an NFT gives you ownership of the item and possibly copyright information, but not all NFTs do.
NFTs are typically traded online via cryptocurrencies. It also works with the same underlying cryptocurrency code. Once you purchase NFTs, store them in your wallet just like any other cryptocurrency. The beauty of NFTs is all in their uniqueness. Each item sold as an NFT has its own signature. No matter how many times the music or video is shared or viewed, the owner retains their own creation.
How do NFTs work?
Traditional works of art derive value from their uniqueness. Unique works of art tend to be very valuable compared to other readily available items. This can be a challenge in a digital world where digital assets can be viewed by anyone, provided that the owner retains full ownership. However, NFTs are all about tokenizing artwork and creating a digital proof of ownership that enables the sale and purchase of unique items.
On the blockchain, all transactions related to NFTs are recorded on a public ledger. Anyone can easily access the ledger and check the ownership history of the item.
NFTs primarily work on the Ethereum platform. However, you can find them on other crypto platforms as long as they support smart contracts. These other chains include Solana, AVAX, Tezos, and VeChain.
NFTs have become an investment opportunity. As with physical art, it’s not ownership that counts, it’s the ability to get the maximum amount when sold. If he sells the NFT for a higher price than it was purchased for, it’s worth the investment.
Are NFTs worth investing in?
With the explosion of NFTs, a variety of art and digital assets are generating millions of dollars in digital marketplace revenue. For example, Twitter CEO Jack Dorsey sold his first tweet in the form of an NFT for over $2.9 million. Several other articles have raised significant amounts of money.
Only one concern remains. Are these items worth the investment? Because NFTs work like any other physical work of art, so does their value. Therefore, caution should be exercised when considering investing in NFTs. First, you should perform due diligence to ascertain the value of the digital art you are purchasing and your ability to increase its value.
Just like when buying a classic car, you never know if you’re investing in a worthy masterpiece or a complete lemon, so what creates the value of the NFT purchased is your duty of care. With NFTs not yet on the market, proper research is becoming increasingly important. There are claims that the NFT bubble will eventually burst, leading to losses.
Various innovative ideas have all seen bubbles before. As such, it does not prevent investment in NFTs. For example, the dot-com bubble turned various companies like Amazon into the multi-billion dollar companies they are today, while others weren’t at the time. Even Amazon’s stock has bounced back to its current price of over $3,000 after dropping from a high of $100 to $5. The 2017 cryptocurrency boom is another example. Bitcoin rose and traded to a high of around $20,000. But then it fell to about $3,000 by the end of 2018.
NFTs may also exhibit similar growth patterns. When the NFT bubble bursts, most commodities will fall in value. However, some of the most useful ones recover over time. So to understand the value of NFTs, don’t look at their current value. Instead, understand your use cases and long-term growth opportunities.
Like any market, the value of NFTs depends on supply and demand. The lower the demand and the higher the supply, the lower the value. Due to limited supply, the value of NFTs was increasing. However, as copycat projects proliferate, we may begin to see buyer fatigue and declining demand.
As it is a new form of investment, returns from NFTs are not guaranteed. Therefore, the best thing you can do is limit your risk of loss. Don’t invest in what’s hot right now. Instead, look for a variety of assets to spread your risk. Most of them can fail, but you can still have some luck.
Another way to look at NFTs is to explore your own interests and hobbies rather than look at them as an investment. Any profit in the process is a bonus. However, failure doesn’t matter. Also, anyone who is willing to lose should only bet money on NFTs.
How to invest in NFTs
Now that you know if NFTs are worth investing in, you can proceed. Unlike cryptocurrencies, NFTs are not publicly traded on exchanges. They are highly diverse, with different value drivers, and traded less frequently. Jumping into investing as a beginner is not easy.
Here are some considerations when investing in NFTs:
Before investing in NFTs, we must first understand that this is a new market. There is no market analysis to predict future price movements. While it may be tempting to rely on predictions based on cryptocurrencies, market predictions are unreliable as the crypto market is also volatile.
vulnerable to fraud.
NFT prides itself on security, but it is not immune to fraud. For example, on Opensea, there are many scammers trying to sell fake NFTs of popular projects at low prices. These fakes are inherently worthless. Scammers often bundle their real NFT projects among numerous fake projects to mislead investors. Therefore, it is important to ensure that your contract address is correct before making any purchases.
Another scam issue is that tokens can be hacked from wallets. Some of his shady NFTs contain code that asks for wallet permission, and once approved, funds can flow out of the wallet. When granting permissions to wallets, be careful of the access you grant.
Copy protection issue
There are some NFTs that give plays full copyright and commercial rights, but this is not yet reflected in law. This raises copyright issues. You should own the copyright, but legally, you don’t. This is expected to change, but it is now a legal requirement in many jurisdictions.
Aside from the possibility of hacking, you should understand the security of any item you purchase. The ledger only stores links to articles. Next, we need to ensure that our products are protected from unauthorized access, tampering, and theft. We recommend checking if the NFT is associated with the image stored in IPFS.
How I WENT FROM BEING BROKE AND IN DEBT TO MAKING OVER $5,000 SELLING NFTS AS A TOTAL BEGINNER