The burning questions on collectors' and creators' lips, “are NFTs a good investment, are they a passing phase, or are they really worth creating?”
The truth is, before 2021, hardly anyone knew what non-fungible tokens (NFTs) meant. Now, folks like Paris Hilton and Jimmy Fallon use it in everyday speech. In fact, SNL even made a skit about NFTs that was then minted into an NFT!
In this article, we take a look at the value of NFTs, share some pros and cons and explore why you should consider creating them to bolster your income as an artist or start a collection to diversify your portfolio.
Pros
Cons
The explosion of interest in NFTs highlights how unpredictable the adoption of new tech can be. Now, with sales in the billions and nearly 38,000% year-over-year increase, NFTs are the lucrative lovechild of fintech and the art world.
As a reminder, an NFT is not just art. It can represent any unique digital asset - an NFT could be a digital work of art or someone's tweet.
Thanks to the creation of decentralized finance (DeFi) and blockchain technology, investors have another investment opportunity: NFTs.
Want to learn more about NFTs? We’ve written a great explainer piece to get you going.
There is potential to make money with NFTs (any unique digital asset), since they can fetch huge sums of money.
For example:
However, as with all investments, including stocks and shares, value depends on demand. You’ll only make a profit if your digital assets are desirable to someone else.
So, as an investor, the onus is on you to understand and research the NFT market well. Work with NFT platforms and marketplaces that are safe and reliable, such as CNFT.io, JPG Store, and Tokhun.
Thankfully, the NFT market is very transparent. Individual pieces, artists and collectors can be viewed along with their trade data or past transaction history.
For collectors, NFTs are the great equalizer. In the past, only the super rich could afford to invest in art. Now, the door is open for organizations, auction houses, creators, celebrities, collectors, and investors to invest, and reap the rewards of those investments.
To invest in art NFT, you first need to know about how to buy NFT art.
Here are the basic fundamentals worth knowing:
As an investor or collector, you need to settle in for the long-term if you hope to get increased value. The more people who invest in NFTs, the better.
A big downside in investing in NFTs is the fees to purchase NFTs. Gas fees a blockchain such as Ethereum (where the biggest NFT marketplaces live to date) can be as much as $200 per transaction. This is to cover the costs of miners who validate the transaction on the network.
On the other hand, transaction fees on Cardano are much more affordable, and mitigates much of this downside.
NFTs can be vulnerable to crypto hacks and scams. Even a quick search for “NFT scams” reveals just how susceptible NFTs are to risk.
Unlike stocks and bonds, where you know their intrinsic value, NFTs are only worth what someone else is willing to pay. So, while you might deem the digital art piece as valuable, the risk exists that others might not deem it so. For that reason, investing in NFTs is highly speculative.
A unique monetization opportunity for digital artists and content creators is provided by blockchain technology and non-fungible tokens (NFTs).
While the 2021 upward trend of buyers investing in art NFTs continues, NFTs are structured in such a way that each piece has its own value and market, which makes it difficult to estimate how big this emerging market is.
However, what is guaranteed is that you wont make any money from NFTs if you have no digital assets available for collectors to buy. The good thing to know is that, as a creator, it is relatively easy to launch your own NFT art collection.
While it's possible to invest in any tokenized asset where the asset’s ownership is recorded by a blockchain, the fundamentals of investing still apply.
So, as with all investments, only invest what you are willing to lose. If you want to invest relatively risk-free, you will do well to identify quality digital assets you'd like to own and then purchase them. There are long-term gains that can be made, so sit tight, enjoy your collection, and wait while the value grows.
As an artist or creator, now is the best time to get on the digital asset trend. Create art that is your passion, create what you love, create what collectors are buying. Launch your own collection today, and start trading.
