NFTs have taken the spotlight when it comes to interesting cryptocurrency investments, but what are NFTs? Are they a good investment? And are they safe?
What Are NFTs?
NFT is an acronym for Non-Fungible-Tokens. Essentially non-fungible means something of value like a car or a house that are not readily interchangeable, while fungible would be something like a singular US dollar that can be easily converted to quarters or dimes.
In essence, a non-fungible token is one of a kind. Through the blockchain network, what was otherwise an easily duplicated digital item has now become scarce, by offering a distinct way to prove the ownership and originality of said NFT. Let’s make an example with the Mona Lisa to further clear up the situation. One can easily purchase a Mona Lisa replica painting, just like one can easily replicate or make a digital copy of an NFT except for one crucial detail… the contract itself!
The NFT will be registered on the blockchain with just one verified owner and although just like the Mona Lisa there can be millions of copies, there’s a quick and easy way to distinguish a fake from an original.
The most talked about element with NFT, for the time being, is digital art, but NFTs are more than just digital art, in fact, music, videos and even real estate are considered NFTs.
Are NFTs A Good & Safe Investment?
NFTs are indeed legit, unfortunately, like anything found online scammers do exist. Before purchasing an NFT you should do some research and stick to the reliable NFT marketplaces this in turn should help steer you clear of any scammers.
Are They Safe Investments?
NFTs are susceptible to increases as well as decreases in value. It’s hard to say which NFTs will flourish and which will flop and some NFT projects are simply for charity. NFTs could be a safe investment but there are factors to consider, such as, who is the artist behind the works and how many art pieces exist or are to be created?
These two questions will help you clarify if said NFT is likely to increase in value or not, although not a guarantee it can help. Due to the nature of non-fungible tokens, any form of digital file can be stored and sold as an NFT.
If you’re looking for safe investments you’ll want to look for NFTs by established artists or NFTs which provide utility.
What Can Be Done With NFTs?
Now that we have cleared up what NFTs are and how they’re currently being used on the blockchain it’s time to discuss what individuals can actually do with these NFTs.
Depending on the type of non-fungible token purchased there are a few things one can do.
If it’s a digital piece of art one can purchase NFT displays that even have the tech to make the art look like it was done on canvas. Similarly one can purchase alternate takes of a specific song or album. For the most part, a lot of individuals tend to purchase and hold specific NFTs to later “mint” or flip it for a profit.
NFTs have a lot of potential to help cut out the middlemen in the creative arts industry. They offer artists and creators the ability to sell their creations while also holding copyrights, essentially artists can even make the contract in ways that have them making a cut from resales too!
Conclusion
While social media algorithms come under scrutiny once more artists continue to explore the NFT space with new and creative ways to use the blockchain and tokenization.
