To some people, NFT is such an elusive concept. Some conservative investors are especially wary of this investment product. They do not fully understand how NFT works to put down their fund for it. It is understandable because people generally do not want to invest in anything too risky. So, are NFTs a good investment?
What is an NFT
The term NFT is actually a short acronym for non-fungible token. This token can be in the form of many things, from digital arts and unique domains to something like a tweet. Non-fungible is interpreted as 'cannot be replaced', meaning that there is no token similar to one another.
However, since many NFT products are digital, things become more complicated. People can easily copy digital products like images or music. Nonetheless, to a real nft collector, an original product is definitely a source of pride. There are plenty of copies, but there is only one original owner of the product.
The ownership is proven by the presence of a smart contract. This contract contains a lot of information related to the NFT product. It enables the transaction of the NFT item, sets royalty given to the creator, and allows interaction in the metaverse.
Are NFT Still Popular?
A lot of people feel doubtful about NFT due to its digital trait. It seems to be a trend that will die down eventually. To answer the question of "are NFTs a good investment?", knowing whether many people remain interested in them is crucial. A depressed market can jeopardize your investment portfolio.
The non-fungible token itself was introduced to the public in 2014. However, its popularity was not earned until 2021. In that year, suddenly, everyone seemed to talk about NFT. We need to thank the selling and buying of digital arts through NFT for pulling this elusive concept down to earth. Until today, the popularity is still big.
Here are some reasons that make the popularity of NFT still big over the past year:
- The number of people using cryptocurrency continues to increase, and oftentimes they will also explore the NFTs.
- It helps creators monetize their works and reach a broader audience while still maintaining some sense of ownership.
- Many public figures are promoting NFTs on social media and other public platforms.
- There are marketplaces accommodating NFT transactions, which makes it easier for sellers and buyers.
There is an expectation that NFT will be able to change the way people utilize the internet. The changes include:
1. Digital artwork collectibles
It means that artists are able to sell their artworks safely and directly to their buyers. Despite passing the ownership of their artworks to the buyers, the artists can still retain credit for them. It is a great chance to promote one's work and attract more buyers. Some platforms even allow creators to still earn royalties from their works.
2. The metaverse buzz
For now, the metaverse is yet to be fully taken off. There are still some kinks that developers must work on before this system can be used by the public. Nonetheless, the excitement over this immersive system is already very high. Many people purchase NFTs for this reason.
3. Gaming to earn
In the past, gaming was a leisure activity. It was solely done as a means to have fun. However, the rise of NFT is going to change this mindset. Some game items are sold as NFT. It means that people can earn money from gaming. In the future, we can expect more people to earn money from this career path.
Related Article: What is NFT in Gaming? Here Are Things You Need to Know
4. Decentralized fundraising
Fundraising should never be difficult. However, due to the bureaucracy of conventional banks, sometimes raising funds for a good cause becomes complicated. The cryptosystem enables people to do fundraising in a transparent manner. The process will become more streamlined.
Invest Into NFT
Are NFTs a good investment? Should you start putting down your fund to purchase some cute artworks that you see online? To break down the discussion, let's start with the following points:
1. Are NFTs a Good Investment?
At the moment, it is difficult to confidently declare that NFT is a good kind of investment. Many finance experts have stated that the market is still on the way to maturity. It has not reached its primetime yet. There are some risks that you need to be aware of before investing:
- Many preparations must be made since the investor needs to have a crypto wallet compatible with the Ethereum blockchain and then connect it with an NFT marketplace.
- Although the cryptosystem tries to reduce scamming incidents, there are many scamming cases that happen to new users.
- The intrinsic value of some NFT products is generally low for people who are not art enthusiasts or gamers because they have no use for those items.
2. How Much Does it Cost to Invest in NFT
Once you have asked yourself, "Are NFTs a good investment?" and still think they are, you can start planning your action. Of course, you should still be wary of the aforementioned risks in NFT investment. That way, you can take precautions to avoid them. The first thing that people usually ask about NFT investment is how much it costs. Not every NFT product is as expensive as the ones you see in the media. The expensive ones might cost millions of dollars, but you can definitely purchase an NFT for about $10.
The price depends on many factors, such as the marketplace and the creator. Still, for that small purchase, there is an extra fee that you have to pay to get that smart contract. You should not only think the displayed price is all you need to pay to get the NFT product of your dream.
In the discourse of NFT, you should not spend money beyond what you are comfortable spending. There is still volatility in the market. Moreover, it is advised to purchase items that you actually care about rather than being interested in them for the investment value.
Experts are still unable to give a unison answer to "Are NFTs a good investment?". Some people think it is a temporary fad, while others have good faith that it will be long-lasting. If you want to invest in it, creating a boundary is very important.