NFTs: To Invest or Not to Invest?
Are NFTs a good investment? This is a question that has been on the minds of many investors lately.
The short answer is, it depends on who you ask.
Some people believe that Non-Fungible Tokens (NFTs) are the next big thing in the investment world, while others think they are a fad.
In this blog post, we will give our take on helping you decide if investing in NFTs is something you should be looking into.
Table of Contents
What Are NFT Stocks?
Non-Fungible Tokens (NFTs) stocks are digital assets that can be purchased and traded on the blockchain.
These digital assets have been around since the early days of Bitcoin but never seemed to get popularity until now.
NFTs are unlike bitcoins, which are fungible assets that can be exchanged much like dollars and cents.
How are NFTs uniquely different than bitcoin and other cryptocurrencies?
- NFTs are not mutually interchangeable in value like other cryptocurrencies
- Every token is unique and has its own value on the open market
This makes NFTs perfect for representing digital assets, such as game items, art pieces, and even real estate.
Nowadays though, NFTs are becoming increasingly more common and people are starting to see them as a viable investment opportunity.
Does this sound interesting to you?
If so, keep reading to learn more about:
- Why it may or may not be such a good idea; and
- What you can do if you choose to invest in NFTs
Are NFTs a Good Investment?
Whether NFTs are a good investment is a matter of debate today.
Non-Fungible Tokens (NFTs) are a relatively new type of cryptocurrency that many people believe will be the next big thing in investing, but others seem to think they are a passing trend.
Don’t get us wrong…
NFTs can produce good, even crazy, returns on investment.
However, always keep in mind that NFTs are highly volatile and any investments made should match your personal risk tolerance.
So, while there is potential for great returns, there is also the potential to lose everything you invest.
Therefore, it is important to:
- Do your research before investing in NFTs
- Only invest what you are comfortable losing; and
- Diversify your investments
If you decide that NFTs are still something you want to invest in, then make sure you have a plan for what you will do if the value of your tokens drops below what you paid for them.
Are We in an NFT Bubble?
The jury is still out on whether or not we are in an NFT bubble.
In laymen’s terms, what exactly is an NFT bubble?
- An NFT bubble is a situation where the price of an NFT token is inflated far above its true value.
- Many people believe that we are currently in an NFT bubble and that the prices of many tokens will drop significantly once it pops.
- Others believe that the current prices are justified and that the bubble will continue to grow.
Only time will tell who is right.
There is no doubt that the popularity of NFTs is growing and more people are becoming interested in investing in them.
However, it is also possible that this growth is being driven by speculation and that the market for NFTs is not as strong as people think it is.
Whether we are in a bubble or not, it is important to do your research before investing in any type of cryptocurrency.
As such, we recommend that you only invest in NFTs if you are comfortable with the risks and understand what they are.
NFT Investing: Pros and Cons
If you’re like most people, you probably have a little extra cash to spare each month.
If so, you’re certainly not alone.
Thousands of people are looking into investing in non-fungible tokens (NFTs) as a way to grow their money.
But are NFTs worth investing in?
Let’s take a look at the pros and cons of NFT investing.
Pros
If you’re a fan of sports betting, you may be interested in learning about the potential benefits of investing in NFTs.
These digital assets can provide several advantages for you — including convenience, security, and anonymity.
By understanding the pros of investing in NFTs, you can make more informed choices about your wagers and improve your chances of winning.
Potential Increase in Market Value
Just like any other type of investment, the market value of NFTS could:
- Increase and grow in value; and
- Potentially make a lot of money down the road if you invest in them now
However, it’s important to remember that there is always risk involved with investing.
So be sure to do your research before making any decisions.
Immutability
One of the key features of NFTs is that they are immutable — meaning that once a transaction has been made, it cannot be undone or changed.
Why is that?
Because of the immutability and non-transferability features of NFTs, once their truth is established on the blockchain, they can’t be altered or replaced in any manner.
This can be both good and bad because:
- On one hand, it means that you can trust that your investment will not be stolen or taken away from you.
- On the other hand, it also means that you can’t get your money back if you change your mind about investing.
Hence, do consider all implications before investing in NFTs.
Excitement in Owning Collectibles
When you own an NFT, you are part of a community of collectors who appreciate the unique value that these digital assets offer.
This sense of community can add excitement and personal value to your investment.
In addition, the potential for growth in the market value of NFTs makes them an attractive investment opportunity.
Cons
While NFTs offer some unique benefits, there are also a number of risks associated with investing in them.
Keep in mind that:
- Investments come with risk; and
- Nothing is ever guaranteed
So before you invest your hard-earned money in NFTs, make sure you understand the risks involved.
With that said, let’s take a closer look at some of the risks associated with NFT investments.
The Market Is Speculative
As with any new investment, the market for NFTs is speculative.
This means that the current value of these tokens may not be indicative of their true worth.
In other words, the current market price for NFTs may be inflated due to speculation and not actual use cases or real-world value.
How can this be? Because NFTs:
- Are linked to aesthetic and sentimental value; and
- Make it difficult to assign a market value to them
So, if you do invest in NFTs, be prepared for the possibility that their value may decrease in the future.
It’s Impossible to Digitize Physical Collectibles
Another one of the key drawbacks to investing in NFTs is that it’s impossible to digitize physical collectibles.
This means that if you want to own a particular digital asset, you’ll need to purchase it on an online marketplace.
NFTs can’t compare to the beauty or sentimental value of having a collectible that you can touch, see, and admire up-close-and-personal.
While this may not be a problem for some people, others may find it difficult or inconvenient to purchase NFTs in this way.
Negative Effects on the Environment
Another potential downside to investing in NFTs is that they could have a negative effect on the environment.
The blockchain is not environmentally favorable due to the high amount of energy used and a large amount of waste produced.
How does that work?
By increasing the demand for digital assets, we may be putting an unnecessary strain on our planet’s resources.
In addition, many of these tokens are created through “mining.”
When a new block is mined, it:
- Requires a process that requires an immense amount of energy; and
- This could lead to increased emissions and pollution
Hence, it’s important to consider the environmental impact of your investment decisions and weigh the pros and cons before you invest.
Now that you understand both the pros and cons of investing in NFTs, you can make an informed decision about whether or not this is the right investment for you.
What Can You Do With Your NFT Investments?
NFT investments can offer big returns, and there are many different ways to get involved.
Whatever route you choose, make sure you do your research first by:
- Talking to experts
- Reading reviews to find the best platforms and investments for you; and
- Weighing the risks and rewards before making any decisions
If you choose to invest in NFTs, there are a few things you can do with your tokens.
Buy, Sell, and Trade
NFTs can be bought, sold, and traded on the blockchain just like cryptocurrency.
This makes them a very volatile investment and it is important to understand the market before investing in them.
Some things you can do with your NFTs include:
- Holding onto your tokens long-term in the hopes that the value will go back up
- Trading them for another cryptocurrency, or
- Selling them on an exchange
By doing your research, you will be in a better position to make an informed decision about what you can do with your NFTs.
