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Is It Smart to Invest in NFTs?

Are you considering NFT investing after hearing stories of people who say they are making passive income from the digital token?

NFT statistics show a significant rise in the trend as they grabbed headlines in 2021. Currently, there are between 15,000 to 50,000 NFT sales each week. And as an average outsider, you may find NFT quite confusing. But the big question is, “Is investing in NFTs a smart decision?

Well, that’s why this guide has been created to help you make the best decision about NFT.
So, let’s dive in.

What is an NFT?

NFT means non-fungible token. And it is a digital asset that signifies actual objects like music, videos, art, and in-game items acquired and traded online. They are encoded generally using similar software as several cryptocurrencies.

Cryptocurrencies are digital currencies that can be circulated, saved, or traded without setting up a personal or business bank account. But you can store them on digital programs such as mobile apps or hardware.

“Fungible” is an economic term used to signify an asset or good that can be exchanged for another. An example is the dollar bill that can be swapped for another of equal value.

So, non-fungible is the exact opposite. It simply means something that can’t be swapped for something with the same value. For instance, you can hardly swap art for another since their value is highly subjective—and the need for NFTs.

A non-fungible token reveals an exclusive right to certain digital assets—tweets, music, a piece of art, or an in-game subscription. As an NFT, there may be fluctuations in its market value which can change from the initial price you purchased it. NFTs have created new ecosystems that support the trading of such assets.

Since 2014, they have been steadily traded online using cryptocurrency. An NFT marketplace is the place where anyone can engage in NFT trading, meaning, to trade digital artwork as a relatively unique digital asset and this has been a massive plus to the cryptocurrency industry.

How Do NFTs Work?

Unlike cryptocurrency, most NFTs content is linked to the source of the asset, wherever it is stored, from the blockchain instead of being stored there. So, anyone interested will follow the link to find out about the product.

In essence, the original owner of the content relies on their own server to prevent sustaining the activity without altering anything.

Is It Smart to Invest in NFTs?
Copyright: Photo by Dylan Calluy on Unsplash

Why Investors Consider NFTs

While you deliberate on why NFTs should be your next investment move, here are a few reasons people are considering it.

1. Scarcity and Uniqueness

The value increases when there is a rarity of options to consider. Think of NFT as searching around for a particular pair of sneakers, only to find a single pair left in a store.

NFTs can only have a single owner. Hence this belief is accompanied by a sense of scarcity by the bucketload, which encourages probable buyers to concentrate on a particular piece with concerns that their choice of NFT may be exclusively owned by someone else.

Additionally, NFTs can’t be forged. And it holds a better chance of retaining its value since most sellers will only have a handful of items that can’t be found anywhere else — making it a solid platform for investment.

2. Safety and Security

How secure a product is is a massive factor in determining if it will attract investors. The blockchain’s pattern of functionality retains its market value, and there’s no cause for worry over missing data that can affect its value.

3. NFTs Marketplace is Decentralized

The decentralized nature of the NFT marketplace allows creators to earn directly from their efforts. Hence, the middle-man factor doesn’t occur to alter the process.

In addition, as the NFT is passed on, the original continues to earn commissions. This decentralized system distinguishes the NFT market from others.

4. Reselling Benefits

Investors consider NFTs largely because the assets there are resellable for quick returns. And since they are not available everywhere else, the returns will be considered when you invest in the right NFT.

Is Investing in NFTs a Smart Decision?

As an NFTs investor, you’ll find opportunities to make huge profits from your investments. However, this doesn’t always occur.

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You’ll need to create a digital wallet where you can store NFTs and cryptocurrencies. After that, you’ll need to look for platforms with NFTs where you can purchase your preferred assets with the right cryptocurrency. You’ll need to wait for the highest bid to earn profits.

The Motley Fool adds that people with an eye for music, art, and other creatives and who enjoy curating and dabbling in NFTs will find it worth it. However, consider the piece’s uniqueness, asset creator, and asset history before making a final purchase.

Conclusion

NFTs are great for any good risk-takers who want to invest in a unique and uncommon idea. And with a perfect decision, you’ll often get huge returns from the efforts.

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