5 Things to Know Before Investing in NFTs

What are NFTs ?

NFT or Non Fungible Token are blockchain assets, designed not to be equal to any other token. Cryptocurrency like Bitcoin are Fungible Tokens, and can be exchanged for any other token. The easiest example to understand NFT is movie tickets. The ticket is a non fungible token, it’s specific to a particular movie for a specific time. With the purchase of NFT, the buyer acquires rights to the original artwork that the token represents. People and companies are now branching out from the traditional marketplace, using NFTs as mode of operation. Even Artists have changed the way, trading their artwork for NFT in the market.

With time NFTs are going mainstream and constantly growing. NFTs are anything digital including drawing, music, art. Companies use NFT as a mode for the virtual world, art market, domain names and for collectables.

Types of NFTs

● Art
● Music
● Video games
● Collectable items
● Big sports moments
● Memes
● Domain names
● Virtual fashion
● Miscellaneous online items

Why should you Invest in NFTs ?

1. Originality and Authenticity
   The trading of NFTs happens on blockchain, thus verifying the safety of transactions and ensuring and validating Authenticity of the art that the token represents. The art belongs to its respectable official owner, and the owner’s details are easily verifiable. In simple terms, NFTs ensure arts originality, and protect them from duplication.
2. Possession through smart contract
   The tokens are usually bought at an NFT marketplace, wherein the buyer gets ownership and possession of art through smart contract, an enforceable agreement. The process involves computer protocols when employing smart contracts, this can also include a royalty agreement.
3. Additional source of revenue
   NFTs are revenue making, when NFTs or the rights of the item are resold the owner makes a profit. The owner can claim additional revenue everytime the NFT changes hands.The original creator can also decide how many replicas of the token can remain to induce scarcity and increase product value.
4. NFTs Carbon Footprint
   NFTs and cryptocurrencies have come under scrutiny for their impact on the environment. The process of ‘minting’ the token codes on the blockchain requires immense computing power, leading to sustainability issues. Arguments continue about problems in using blockchains that depend on non renewable sources of energy.
5. No long term estimate
   It’s possible to estimate the long-term value of a token. NSTs are work in progress and the value depends entirely on the authenticity of the art, also its aesthetic and sentimental value.

NFTs are just like any other investments so do your research, understand the risks it might include and proceed with caution.