Nonfungible tokens, popularly known as NFTs are the new hot topic of our generation. You’ve probably heard the news of how lucrative they can be; like Beeple’s art that sold for $68 million, or a cat meme that sold for six figures. Yes, you read that right, a cat meme. However, is the hype worth your while?
What are NFTs and why are they important?
The simplest way to understand an NFT is to think of it as a unique identifier associated with a digital or physical asset. This identity can not be replicated or copied, therefore showing proof of authenticity or ownership. This unique data is stored in the blockchain and can be accessed to verify ownership.
What’s stopping someone from making a copy of a digital asset?
Nothing is stopping anyone, though potential buyers only care about authenticity and proof of ownership. For instance, no one is willing to pay millions of dollars for a fake Mona Lisa painting that any artist can replicate. Yet the original artwork costs over $800 million today (adjusted for inflation). Nonetheless, if a person creates an NFT to sell someone else’s art without their permission, this is considered infringement and can result in a lawsuit.
Why you should think twice before buying NFTs
Before jumping on the hype bandwagon, try to analyze the value of any NFT before making a purchase. Try to assess digital assets the same way you would treat physical ones. Would you randomly go out and buy a 2001 car from the junkyard? Or would you hold back and get something worth your money? The same concept applies to digital assets. Countless individuals are creating random NFTs that have no value whatsoever, and people buy them for crazy prices without considering a long-term selling strategy. When the hype dies, you don’t want to be left with a worthless asset that has no value or demand. Ask yourself, will the next person buy this? (Check out this link to see the most expensive NTFs ever sold)
Tips to get NFT’S that are worth your money
- NFTs sold by famous people and celebrities might be worth buying because of the demand they hold. Whether it’s a music album or art, it helps when it comes from a reputable source.
- Avoid pump and dump schemes or purchasing random assets because of hype. Remember, you’ll only be able to sell if the asset means something to the people. The market will always speak for itself.
- If you identify an NFT that is in high demand, or projects future demand, and in your reach; It might be worth your while. Nevertheless, don’t gamble your life savings in the hope of a hefty return.
How are NTFs changing the world?
Blockchain technology is truly the future. But other than memes and art, are there any world scenarios that NFTs can be helpful?
- Security. NFTs verify ownership and are tamper-resistant as no one can fabricate a token. This makes the whole process of buying and selling efficient and exclusive. This technology will also reduce art piracy for work posted online.
- Real estate
- Identification and databases
- Trading cards and collectibles
- Supply chain and logistics
How to create, purchase and sell NTFs
The Verge has a great article explaining the whole process. Click this link to read more.
