A flying cat with a Pop-Tart body. A golden vest avatar. A 5-word tweet. It’s not your browsing history, but these are NFTs, and they’re worth up to $69 million each. But just what exactly is an NFT?
NFTs are a relatively recent and fascinating phenomenon. They’ve been around since 2014 and are unique digital assets that may be purchased and sold using bitcoin online. NFTs, used to identify ownership of a specific digital item (typically a digital artwork), are upending markets from art to gaming, from events to insurance across the world.
Don’t know where to start? You’re not alone. That’s why we’ve organized it all into an easy-to-understand guide on everything you need to know about NFTs. Let’s get started!
Why Would Anyone Invest in a Non-Fungible Token?
The more you try to comprehend the strange and mystical world of non-fungible tokens, the more you may ask why someone would buy one. Well, there are a few reasons for this.
There’s nothing like a sense of rarity to boost interest in anything. Because NFTs can only exist in the hands of one person, they provide a plethora of scarcity. It encourages potential purchasers to focus on a specific item and worry that someone else will acquire it before them. One example of this is Crypterium’s native utility token.
Consider it like when you see a pair of shoes you want to buy, and the website tells you that there is just “one pair left.” If you’re like most of us, this increases your feeling of scarcity and encourages you to make the purchase—even if it isn’t financially beneficial for you.
NFTs are like baseball cards on the playground, with one difference: they’re for the super-rich. While these cards’ value is only determined by what the market assigns to them, their wild price fluctuations make their collection and trade potential resemble a high-risk gambling game. As a result, it’s simple to compare NFTs to the art market.
NFTs, unlike the art market, allow artists more control because they no longer have to deal with auction houses or galleries to sell their work. Artists may sell their creations directly to customers and keep more money by cutting out the middleman.
Is it Worthwhile to Invest in Non-Fungible Tokens?
The non-fungible tokens appeal to risk-taking investors, allowing them to make big profits—but be aware that this happens rarely. If you’re seeking a more dependable method to put your money into, consider investing in an index fund rather than a Pop-Tart cat GIF, even though they aren’t as flashy.
However, if you want to venture into the realm of non-fungible tokens, you’ll need to create a digital wallet first. It is where you’ll keep your bitcoin and NFTs. You’ll then need to browse OpenSea.io or Rarible for NFTs, choose one you like, then purchase the correct cryptocurrency for it before making your purchase.
Then it’s a waiting game. Because the value of your NFT is determined by how much someone is willing to pay for it, you and your NFTs are at the mercy of the market.
Some NFTs have made extremely excellent investments. However, most projects will not achieve the same level of success, and your investment may go down the drain. NFTs are incredibly volatile, and any money invested in them should reflect your risk tolerance.