Is NFT a Good Investment?
Blockchain technology, the same technology that powers cryptocurrencies such as Bitcoin and Ethereum, has recently given birth to a new trend. Collectors and investors are now spending thousands or millions of dollars to buy digital collectibles known as NFTs. If you are a cryptocurrency enthusiast, you must have heard about NFTs. The NFT craze has left many people thinking of investing in NFTs.
So, should you buy NFT?
NFTs (Non-Fungible Tokens) are digital assets that run on the blockchain network and they can come in different forms. Examples of digital artworks that can be represented as NFTs include memes, music, videos, pictures, and tweets. Yes, you can change your tweets into NFTs and sell them to make money.
One of the most important characteristics of NFTs is that they are non-fungible. This means that an NFT cannot be replaced with another NFT. This is different from fungible assets such as Bitcoin. You can replace a Bitcoin with another Bitcoin without losing or gaining value. The idea behind NFTs is to create digital artwork that can only be owned by one person at a time and cannot be replaced.
So, is NFT a good investment?
Well, to know whether to venture into NFTs or not, it is worth knowing the pros and cons of NFT.
With so much craze in the NFT industry, you could be asking yourself:
Is NFT worth it?
Below are some of the NFT pros to help you make a sound decision on whether investing in NFTs is a viable opportunity:
#1: Value growth
One of the main benefits of buying NFTs is value growth. Just like with other forms of investments, there is always the potential for value growth whenever you buy NFTs.
For example, CryptoPunk #3100 had a value of $2,127 on July 6, 2017. The artwork owner refused to sell the NFT until March 2021, even after receiving many offers.
The collector finally earned more than $7.5 million in returns after selling the NFT. Thus, buying low and selling high is one of the ways of investing in NFTs.
#2: Ownership of a unique asset
NFTs are non-fungible digital collectibles which means that they can’t be replaced. There is a special feeling when one owns a one-of-a-kind piece, may it be a piece of furniture, a painting, an audio clip, a digital image, or any other digital asset. Thus, some investors buy NFTs to get bragging rights.
Currently, there is a lot of attention and excitement surrounding blockchain technology. Most people believe that the blockchain will change consumer behavior significantly just like the internet did.
This is very exciting and buying an NFT is one of the ways to take an active role in the new technological evolution.
#4: Data record
With the above NFT pros, should you buy NFT?
If you have not reached a yes or no answer, this is another reason why should consider investing in NFTs.
Since NFTs run on the blockchain, there is always a clear ownership record for all NFTs. Your digital asset can’t be stolen or its authenticity questioned.
Some believe that NFTs will evolve as a popular technology for managing digital collectibles and controlling sensitive data and records.
Cons of NFT
There is no doubt that NFTs are interesting. However, there are some challenges associated with NFTs that bar some investors from investing in NFTs. The following are some of the major cons of NFT:
#1: Physical art cannot be digitized
The reasons for owning physical art are very different from the reasons for owning digital art. It’s impossible to digitize physical art. There is something about seeing a physical asset such as a piece of painting with your eyes that NFTs cannot provide.
#2: Uncertain value
NFTs can be confusing assets, even to experts. Nowadays, NFT copyright is a hot topic as it is not clear to investors what one owns after buying an NFT. When you buy an NFT, you don’t buy the copyright to the art.
It will still be possible for people to find copies of the art for which you have bought the NFT on the internet, and copy and paste them on social media platforms, essentially sharing and showing off what you could have paid millions of dollars for.
When you buy an NFT, you simply own a record that says that you are the owner of the original token behind the asset.
So, is NFT worth it?
The answer to this question will depend on the NFT collector.
Buy why should you buy NFT if you don’t own the copyright?
There are many reasons why investors buy NFTS. Some do it as a way of investing since the “buy low, sell high” principle also applies to NFTs. Others do it as a way of supporting their favorite artists.
Those are the pros and cons of NFT.