Is It Safe To Invest In NFT?

Non-fungible tokens, or NFTs, have recently gained prominence as the digital assets have captured the attention of celebrities and fetched sale prices in the millions of dollars. While NFTs are digital assets, they are fundamentally different from bitcoin and other cryptocurrencies. Click here to find out what are NFTs for.

what are NFTs for

Cryptocurrencies are fungible tokens, which means they can be exchanged for one another. Non-fungible tokens are one-of-a-kind assets that only exist for one owner at a time. NTFs, like bitcoin and other cryptocurrencies, are purchased, sold, and stored using blockchain technology. When you purchase an NFT, you usually keep it in an online account or cryptocurrency wallet. Because it is a digital asset, it cannot be carried in your pocket unless you have a hardware wallet. 

 

The majority of people do not require NFTs in their portfolios. NFTs, like cryptocurrencies, are relatively new and extremely risky. However, unlike bitcoin and other popular cryptocurrency tokens, your NFT might not have a consistent market of buyers.

 

The Securities and Exchange Commission (SEC) issued a statement in 2017 warning investors about the risks of cryptocurrencies, initial coin offerings (ICOs), and the burgeoning digital-asset space. NFTs use the same technology but are arguably riskier.

 

The popularity of NFTs has skyrocketed. You may be wondering if you should get in on the hype after some investors made millions from NFTs.

what are NFTs for

The buyer of the $69 million artwork at auction, Vignesh Sundaresan, believes NFTs are a legitimate store of value and represent a shift in how the world views art and collectible assets. Sundaresan told CNBC that NFTs would become a new commodity class that connects buyers and sellers around the world.

 

However, the NFT he purchased may be nothing more than a digital image that anyone can copy, paired with a unique asset address. As a result, many people are sceptical of the utility of NTFs. After all, people used to believe that Beanie Babies and tulips could command exorbitant prices. Those fads faded. Only time will tell whether NFTs will be worth more than a Picasso or a pet rock.

 

NFTs are being questioned by some in the cryptocurrency industry. In a Twitter thread, litecoin creator Charlie Lee claims that the ability to duplicate the underlying asset negates the value of owning the NFT.

 

He also wonders what will happen to the value of the NBA Top Shot Moments if the website goes down, pointing out that physical baseball cards retain their value long after the manufacturers or leagues have gone out of business.

what are NFTs for
Wallet with coins icon. 3d simple render illustration on pastel background. Isolated object with soft shadows

You have several options for getting started with NFTs. You can buy, list, and sell specific assets on various NFT platforms. You may need an account on the platform or another type of accepted cryptocurrency wallet depending on the platform. Those who find this process perplexing and complicated should avoid NFTs. However, if you’re fairly tech-savvy or already have some experience with blockchain-based assets, the process should be relatively simple. 

 

In the NFT space, fortunes have been made. There is no guarantee that this trend will continue, but the current hype and excitement surrounding digital assets has led to sky-high prices. If you are considering purchasing an NFT, consider your risk tolerance and how much money you are willing to lose.