Many wonder why NFTs generate such a buzz. They ask how an intangible asset attracts so much attention and value. NFTs are still considered good investments, and with the future of crypto still young and promising, there is no telling what the industry might offer in the future.
We cannot answer this question without first understanding what NFTs are. NFTs (or Non-Fungible Tokens) are unique digital assets stored on a blockchain. NFTs represent the ownership of an asset, such as artwork, music, real estate, or other forms of digital content. Unlike cryptocurrencies, NFTs, as their name implies, are non-fungible. This means they are not interchangeable. They are unique and cannot be replicated or replaced.
Of what use are NFTs?
Through NFTs, creators can monetize their digital content by selling ownership rights to a myriad of users including collectors and enthusiasts. The blockchain which records NFT ownerships is also decentralized meaning that creators can sell their work directly without needing intermediaries such as a gallery or auction house. However, this fact should not be confused with the online marketplaces and auction sites where users purchase NFTs from. NFT marketplaces and auction sites are only decentralized platforms that enable the exchange of NFTs.
Because NFTs are growing in popularity and represent the ownership of something valuable, their prices range from a few dollars (for common assets) to millions of dollars (for rare or in-demand assets).
First, an NFT is not a physical object or asset. It is only a digital representation of ownership or authenticity of a unique digital asset.
Second, NFTs are not a guaranteed investment. The value of an NFT is speculative. It is determined by the demand for the specific asset it represents, which can fluctuate over time. So even though some NFTs have sold for millions of dollars, it does not mean that their value would continue to appreciate. A case in point is “Jack Dorsey’s First Tweet” NFT. Former Twitter CEO, Jack Dorsey sold his first tweet as an NFT for $2.9 million. But when the buyer listed the NFT for sale at $48 million, the highest bid placed for the NFT was $277.
Third, owning an NFT does not necessarily give the owner any exclusive rights (e.g. copyright or reproduction rights) to the underlying digital asset, unless specifically stated in the NFT purchase agreement.
To own an NFT means that you have a unique digital asset that represents ownership of a specific piece of content or item. This ownership is recorded on a blockchain, which proves the authenticity and uniqueness of your NFT.
To own an NFT means you possess a certificate of ownership that certifies you as the rightful owner of that digital asset. To own an NFT means you have the bragging rights to showcase or display your ownership. To own an NFT means you have the right to transfer ownership or sell your NFT to someone else, just like you would do any physical property you own.
But as stated earlier, to own an NFT does not necessarily mean that you own the copyright or intellectual property rights to the underlying content or item. The creator or original owner of the content may decide to retain those rights.
Buying an NFT means you are purchasing a digital asset that is unique and stored on a blockchain. The process of purchasing an NFT varies based on the platform or marketplace from where you are purchasing. Although the steps may differ across platforms, there are key steps common to all platforms. These steps are:
Owning an NFT comes with several rewards or merits.
While owning an NFT can have its rewards, there are also some demerits to consider:
Buying an NFT can provide a variety of benefits. It establishes clear ownership and provenance of a digital asset, provides investment potential, and fosters a sense of community and support for creators. The NFT market is still a relatively new and rapidly evolving space, and based on its current performance, one can assert that it has an interesting future to look forward to.
What do I get when I buy an NFT?
When you buy an NFT, you get proof of ownership of a specific digital asset.
Are NFTs expensive?
Some NFTs can be very expensive. However, there are also more affordable NFTs available on the market.
Is it risky to invest in NFTs?
Investing in NFTs can be risky due to their high volatility, high speculativity, and lack of regulation.