Understanding NFTs: Should You Invest In NFTs?

What Is an NFT (Non-Fungible Tokens)?

NFTs are digital assets that represent real-world objects such as art, music, in-game items, and videos. They’re bought and sold online, often with cryptocurrency, and they’re usually encoded with the same software as many other cryptos.

What Is an NFT and How Does It Work?

NFTs are stored on a blockchain, which is a decentralized public ledger that keeps track of transactions. Most people are familiar with blockchain as the underlying technology that allows cryptocurrencies to exist. NFTs are most commonly held on the Ethereum blockchain, but they can also be held on other blockchains.

  • Graphic art
  • GIFs
  • Videos and sports highlights
  • Collectibles
  • Virtual avatars and video game skins
  • Designer sneakers
  • Music

What Is the Purpose of NFTs?

Artists and content creators have a one-of-a-kind opportunity to monetize their work thanks to blockchain technology and NFTs. Artists, for example, no longer have to sell their work through galleries or auction houses. Instead, the artist can sell it as an NFT directly to the consumer, allowing them to keep a larger portion of the profit. Additionally, artists can program royalties into their software so that they receive a percentage of sales when their work is sold to a new owner.

How to Buy & Invest in NFTs

If you’re interested in starting your own NFT collection, you’ll need a digital wallet that can hold both NFTs and cryptocurrencies. Depending on what currencies your NFT provider accepts, you’ll probably need to buy some cryptocurrency, such as Ether. Coinbase, Kraken, eToro, and even PayPal and Robinhood now allow you to buy cryptocurrency with a credit card.

Conclusion

The decision to invest in NFTs is largely a personal one. If you have some extra cash, it’s something to think about, especially if the piece has sentimental value for you. However, keep in mind that the value of an NFT is solely determined by what someone else is willing to pay for it. So remember to treat NFTs as you would any other investment: do your homework, understand the risks (including the possibility of losing all of your money), and proceed with caution if you decide to invest.

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Chibuzor Harris

Chibuzor Harris

Chibuzor Harris is an Blockchain enthusiast & the cofounder of Bittransact, a crypto exchange platform that provides liquidity to $DESO using stable coins.