For much of the last decade, cryptocurrency and the blockchain have dominated economics discussions, and one of the reasons is that this forward-thinking realm of commerce is rethinking the way humans do business. So it’s no surprise that blockchain enthusiasts have discovered a new way to use the technology to make, catalogue, and sell art, with the most well-known example being the current NFT craze. NFTs are unique assets that cannot be traded like-for-like and are purchased and sold with crypto. As a result, an NFT can be tied to a work of art, and that non-fungible asset can be used to demonstrate the work’s one-of-a-kindness and originality. NFTs have evolved into a major industry with celebrity investors and a lot of promise for future expansion.
Just because something isn’t fungible doesn’t mean it’s worthless. So, how can investors get in on NFTs while they’re still new and do so without risking losing money on duds? Well, like in every market, those who do their homework will prosper. Purchasing an NFT is a hazardous wager on its value increasing. However, unlike trading cards or purchasing a genuine painting, NFTs are still a new business, thus demand is unlikely to be as high. If there is no demand for the NFT you acquire, you risk paying a high price for something that will depreciate or that you will be unable to sell. You could even make your own NFT, but there is no assurance that it will sell, and you risk time & money.
The sale of NFTs is tracked using blockchain technology, which establishes ownership. However, marketplaces and platforms like Open Sea and Rarible are where NFTs are created and kept.
There is no guarantee that you will be able to access the work if these platforms close. This is less secure than having tangible art on a wall or physical trade cards that can’t be taken away.
Because NFTs are not regulated, a high level of trust is required. You must believe that the NFT you are purchasing is a one-of-a-kind work that has not been copied from another source, or you risk facing a copyright claim. Furthermore, if regulators and lawmakers become concerned about the burgeoning sector, platforms may face restrictions on how much collectors can invest. This might cause market values to plummet. When something goes wrong, there is no one to examine your complaint or hold firms accountable because there is no regulator or advocate.
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Also Read: How to Create and Mint Your Own NFT?