Technology is evolving rapidly with an ever-increasing shift to the digital world in recent years. NFTs have emerged as one of the hottest new trends, with investors all around the world vying to snap them up.
Non-fungible tokens, or NFTs for short, have actually been available since 2014 but didn’t really capture the public’s imagination until 2020.
The rise of cryptocurrency has helped the popularity of NFTs; with both using similar technology, the general public has been far more receptive to considering a less tangible type of investment.
But what are NFTs, and do they make a good investment? Here’s a look at NFTs in detail.
NFTS: The Basics
Collins Dictionary announced that its 2021 Word of the Year is NFTs – the perfect example of just how on-trend these items are.
With a unique identifying code, NFTs are one of a kind and have become extremely popular in the world of art, entertainment and creativity.
Whether it’s a piece of artwork, a video clip or even a colour, NFTs provide the buyer with ownership of the item. In some cases, the item will already have been seen by millions, but NFTs aren’t about reducing the audience: they allow an individual to claim authentic ownership.
NFTs use the same type ofthat is found in crypto, which is one reason why it’s very common to buy NFTs using crypto rather than traditional money.
Once purchased, the buyer owns the item, a fact that can be checked and validated at any time by the built-in authentication.
What Can Be Sold as an NFT?
There are strong links between NFTs and artwork, but they aren’t the only thing that the technology is being used for.
The wide application of NFTs can be seen inthat features just some of the items which can be embedded in NFT tech.
Sporting clips, skins for video games, desirable avatars, music, GIFs, collectables – there’s no end to what NFTs can be used as a mechanism for.
Think of it as a digital collection, in the same way that you might collect a room of paintings or the copyright to your favourite songs.
Although there’s a real prestige in owning any of these items, the reason why NFTs are so popular is that they can be resold. And this is where you need to consider whether your NFT purchase will deliver what you want…
Are NFTs a Worthwhile Investment?
Some NFTs are changing hands for millions of pounds, so there’s unquestionably a big appetite for them right now. But before you start joining the crowd and splashing the cash, it’s worth considering whether NFTs will have an appeal that lasts.
The creation of NFTs means that artists can monetise their work in a way that would have been difficult before. But due to their relatively new arrival on the investment scheme, no one can offer any promises about their performance in the long term.
Demand will determine whether the NFT you purchase makes a. If you don’t pick wisely, you could end up struggling to sell, or being forced to sell at a loss.
The general consensus for NFTs is not to invest too much money in them right now unless a piece is particularly meaningful. There’s no price for sentimental value, but if you’re only considering them for their resale potential, don’t put all your eggs into one basket just yet.