NFTs, short for non-fungible tokens, are unique digital objects that take the form of data on a blockchain. NFTs are also generally freely tradable online, and their high value stems from their scarcity. Essentially, NFTs act as a right to ownership of visual art, albeit digital. Recently, NFTs experienced a surge in demand and price. Many people are now seriously considering investing in NFTs and cashing in on the huge profits.
But, hold on! Here’s what you need to know about investing in them.
1. What Kind of NFTs Are There?
First and foremost, you should be aware that there are several different types of NFTs.
Some are not on the blockchain, though. These are known as “intrinsic tokens.” They’re primarily used in e-commerce, particularly in the gaming sector.
Then there’s the BAT, the Ethereum-based token used by the Brave Browser. The “basic attention token” is a sort of currency that users earn by viewing ads and paying attention to content. Like many other cryptocurrencies, its value directly depends on the number of people using the platform.
Other NFTs can be used for games. These are known as “non-fungible token assets.” The most famous one is probably CryptoKitties, a game in which users buy, collect, breed, and trade digital cats.
In fact, it’s the most profitable non-fungible token game in the world right now.
2. NFT Advantages and Disadvantages
One of the advantages of NFTs is that they are especially useful in games and virtual reality programs. These assets are easy to deploy and can be done so in a matter of minutes. A creator can develop the asset and put it up for sale immediately. For instance, you can hire someone to design an asset, or do it yourself and immediately put it up for sale. This token can then easily be traded with other individuals.
On the flip side, one of the most prominent disadvantages of NFTs is that they can be challenging to buy. Buying an NFT is kind of like purchasing a license to use digital content. Considering the fact that there are thousands of NFTs to sort through, it’s easy to get overwhelmed when trying to find the one you want.
In addition, there is the fact that NFTs are not bound by supply and demand. For example, the very popular CryptoKitties has no objective way of pricing the in-game cats. There’s no way of knowing how much a CryptoKitty is “worth” unless you create one yourself.
Of course, this also allows for a higher profit margin for NFT game creators.
3. Should You Invest in NFTs?
In short, we recommend that you only invest in NFTs if you’re interested in gaming or want to get in on the early stages of an up and coming industry.
However, if you’re looking for an excellent way to earn crypto, we recommend that you consider investing in high-quality ICOs instead.
The crypto market is pretty volatile—in fact, it’s incredibly volatile. While an NFT may serve as a way for you to earn money, you need to remember that this is not always a reliable way to make money in the long term. As always, having a diverse investment portfolio is the best hedge against market swings.
Investing in NFTs is risky—but we’re not saying that you should avoid investing in NFTs. That’s because any form of investment carries a certain level of risk. Regardless of whether your money is in the stock market or in NFTs. Nevertheless, the rule of thumb is to only invest the amount of money that you’re willing to lose. With how things are going, we recommend that you give NFTs a shot should you be interested in them. Keep in mind that there are many types of NFTs out there, so spend time doing your research to see what fits your needs perfectly.
DotYeti offers unlimited graphic designs for a flat monthly fee, without any hidden charges. Our plans are scalable, flexible and affordable. In fact, we’re also the world’s first unlimited graphic design service that offers an NFT category! So if you are looking to build your own NFT collection, reach out to us today.