Investing in NFTs: Big New Opportunity or Phantom Danger?
By Katia Shabanova
It is an exciting time to be alive. Many people are inspired by the crypto market and are starting to enter it, motivated by the possibility of still unforeseen possibilities. And it’s not just about quick wins. Distributed ledger technology is a unique invention that has helped create new movements and revitalize many industries. The last area of application was art, where the rare non-fungible tokens became as valuable as traditional real-world items. Owning something truly unique and expensive is becoming a new kind of hobby that elevates its owner in some premium clubs and gated communities. Even though the idea that NFTs started with digital art, it is spreading and spreading to other related fields. There are a number of use cases to explore, and enthusiasts are actively trying to use it for environmental, health or social justice projects, for example, like DADA Art Collective using blockchain in support of BLM. and police reform, or the late project “Unlock Secrets” by Ukrainian director Maria Danke denouncing violence and abuse against humans. Would merging such things make sense in this case? Absoutely.
The start of the new decade has been an exciting and exciting one for cryptocurrency. New all-time highs for major digital assets and altcoins, exciting market events, influencers pumping up cryptocurrencies, and NFT hype – last winter has been almost cold in this area. The ability to make money easily sold the idea of engaging in the market to a lot of people who were originally far removed from the digital asset market. Most wanted to make quick wins – pretty much like another opportunity like crypto-casino or lottery. However, the drive to boast about having something exceptional and inimitable has also created a demand for rare non-fungible tokens, which can now be classified into a new class of virtual assets. Owning something unique and expensive is becoming a new kind of hobby that elevates its owner in some premium clubs and gated communities.
Stand out from the crowd
It might sound strange to a newcomer, but NFT tokens don’t represent anything fundamentally new. Rather, it is the victorious return of a not so successful experience, reinvented. Going back in history, we remember that in 2017 the CryptoKitties or “digital cats” made the headlines, each with a unique color, bizarre shape of eyes and ears. The most expensive “cat” with a unique “genotype” was auctioned for $ 155,000. Smart users have managed to make real money with this initiative and have even managed to overload the still low-speed Ethereum blockchain, as a high volume of transactions has resulted in a sharp increase in fees within the network.
However, some people are still not able to clearly point out the difference between thousands of existing cryptocurrencies and NFT tokens. The last class of NFT represents very rare and expensive items like elite jewelry, old collectible coins or other physical real world items, different but expensive which means they are unique in their kind. These tokens are bought through online platforms and then paid for in USD or cryptocurrency, with costs ranging from a few dollars to millions when it comes to art houses.
NFT tokens can also be compared to baseball cards, which are also unique and popular among sports fans. Collectors are willing to spend incredible amounts of money to buy these items at auction. In 2007, one of these cards featuring the image of American baseball player Honus Wagner, printed in 1909 in 57 copies, sold on eBay for an incredible $ 2.8 million.
The trend hasn’t changed much since then, but there is a lot more hype surrounding this topic. New NFT projects and marketplaces are appearing more and more often and are gaining in popularity. Even the famous auction house Sotheby’s is now supporting this initiative, as the first NFT sale with digital creator Pak amounted to $ 17 million!
Previously, UK auction house Christie’s had launched a one-lot sale of the digital artwork titled “Everydays: The First 5000 Days” by American artist Mike Winkelmann, also known as Beeple. The coin was finally sold on March 11, 2021, for the astonishing price of $ 69.3 million.
Explore the risk area
The uniqueness of NFT is also achieved by using the ERC-721 standard. Compared to conventional ERC-20 fungible token types, the NFT token cannot be counterfeited, replaced, or broken into pieces, which represents its ultimate value as an asset as a whole.
Regardless of the technical details, NFT can be used to prove ownership of an object. And through the tokenization of real assets, NFTs can reflect the fact of their ownership. Such an object or asset can be a picture, real estate, music, a digital work of art, a game element or a character. Once digital files are uploaded as non-fungible tokens on blockchains, they can be offered for sale, as it would still be possible to distinguish the original file from its shared copies online.
It’s already common in the media to see the headlines about selling NFT tokens for millions and tens of millions of dollars. Jack Dorsey’s tweet sold for almost $ 3 million, and as noted above, Beeple’s NFT paint stood at a record $ 69 million!
When it comes to risks, many well remember the fate of most ICO tokens, which have lost most of their value, with over 80% of ICO token projects turning out to be scams. NFT could repeat the story of ICOs if the industry really overheats at the end of 2021. It is also unclear how museums and art galleries plan to include NFT tokens if many visitors are still very conservative. , because they will raise the question of how to return NFT art in the event of theft or loss, to which unfortunately there is no answer at this time.
Are NFTs Worth Investing?
In the event that the interest of wealthy individuals, media personalities and notables
Influencers are increasing, we will surely see even greater growth in the NFT industry and new record gains. Expert Dan Kelly, president of Nonfungible.com, likens it to owning a single Mona Lisa original and painting reprints. That being said, even though thousands of NFTs are sold with digital images that look the same, the underlying information due to blockchain technology will be different.
These markets are highly speculative, just like cryptocurrencies. Many trend monitoring tools are still under development. Until now, users and buyers have not had ample opportunity to assess the value of an asset or find out if there is enough liquidity to realize their earning potential.
Why are people so eager to get such articles? This certain twist in human psychology can be explained by the possession of luxury items such as Swiss Rolex watches, which the wealthy buy almost exclusively to emphasize their high social status and membership in a specific inner circle.
But how can this be described in the digital world? Posting the purchased digital artwork as an avatar, for example, on Twitter is the most obvious way. Anyone using the blockchain will be able to check if it really belongs to the account holder.
NFT tokens are similar in their definition to something like Maybach, Bugatti or Patek Philippe: a very prestigious asset that opens the way to opportunities and privileges closed to most of the population. People who like to have these assets enter the society of elected officials.
Some wonder if the NFT industry is nearing its dawn, and both where and when the downfall will begin. However, art remains art despite the entirely digital nature of NFT. There has always been an increased demand for something new and flashy. NFTs still belong to a mature market, and the history of digital art is just beginning.
Some wonder if the NFT industry is nearing its dawn and where the downfall will begin. There has always been an increased demand for something new and flashy. NFTs still belong to a mature market, and the history of this field has only just begun.
Without a doubt, this niche is highly speculative and even riskier than the crypto market. If you don’t have any experience with digital assets, it’s best to make sure you’re not spending more than you’re willing to lose, but for those who can afford it, NFTs are the new technology in the world. crown and are the new must. have a digital object from the beginning of the 21st century.
NFTs are the fun new thing to collect for some, but they could also be the next trend to fail, so proceed with caution.