Investors are always on the lookout for promising assets, and the more you read about investment strategies, the more you´ll read about NFTs. But what exactly are they and how do they work?
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The $1 Trillion Opportunity
If you invest in an NFT, you invest in a piece of digital creation – usually an edit, a collage, a certain certificate or video games. But it´s mainly the mere collectibles that have caused NFTs to revolutionize the art market. Art has been around since the beginning of mankind and has been invested in for a long time. If you sum up all artworks, you end up with the unbelievable value of about 1 Trillion USD. By investing in NFTs you can become a part of the art investor community.
What Does NFT Mean?
NFT is short for non-fungible token. Other than cryptocurrencies, a NF token is unique and not interchangeable. It is equipped with a specific code, which sets it apart from the rest. At the same time, that code connects the token with its owner as well as with a specific piece of art.
NFTs are tokens that differ from normal cryptocurrencies in the above-mentioned ways. But just like other digital currencies NFTs are transferred and stored on a blockchain. Ethereum was the first one to support the novel tokens. Other blockchains follow suit. Find more useful information on NFTs and popular marketplaces on nftexp.io.
Are NFTs Good Investments?
Art is a wonderful store of value. Once rated highly by connoisseurs, the value remains or even heightens. The famous auction house Christie´s has realized that it could be a great success to combine investors´ old lust for fine arts with modern blockchain technology. And it was – the famous pixels collage by artist Beepl was handed over the virtual sales counter for almost 70 Million US-Dollars. Other digital collectibles like the popular CryptoKitties enjoy great popularity. And when talking about investors, popularity equals value. NFTs can be an incredibly good investment. Still, buyers should make sure to estimate the presumed price in a realistic way.
NFTs Are Only as Good as Their Underlying Asset
In fact, you can purchase non-fungible tokens for a reasonable price. Their actual value however isn´t set until you buy a digital item with them. Most NFT marketplaces accept Ether tokens as a payment method, as Ethereum is the blockchain that NFTs were launched on. That means that you attribute a certain value to the artwork you are about to purchase and to your token. The payment itself, however, is transferred in Ether. The amount of ETH you transfer to the creator of the artwork is the financial equivalent to the piece of art.
If investors overestimate the value of a certain piece, your NFT may be of great value, but the resale value may not be. An NF token is always just as valuable as its underlying asset.
How to Invest in NFTs?
If you´re thinking about an NFT investment, make sure to find a good Ether trading platform, as you´ll most likely need Ether coins in order to place your NFT bid. Get you own non-fungible token and check out popular marketplaces for digital arts: Opensea, SuperRare, Nifty Gateway, NBA Top Shot or Sorare.
The moment you decide to purchase a digital item for a certain price, you initiate the payment process via the blockchain. As soon as the money shows up in the seller´s wallet, your personal NFT gets connected to the specific piece that you have purchased. The NFT proves your ownership and represents the value of the piece.
What Do You Get When You Buy an NFT?
The NFT market is broad. Apart from digital artwork like pictures, graphics of hashmasks you can purchase video games or collectibles like baseball cards. Keep in mind that your ownership is legal but just as abstract as it would be with cryptocurrencies like Bitcoin – you own it, but it´s stored on the blockchain.
