NFTs are non-fungible tokens that use blockchain technology to provide ownership over virtual artwork. They have gained a lot of popularity in the last few years and offer creators the possibility to monetize their work, be it images, songs, videos or text, in a way that hasn’t been possible before their creation. When they were first launched, NFTs were associated with technical complexities and high costs, and this is why not many people found them accessible. However, things have changed, and with the abundance of the NFT marketplaces and all the advancements from blockchain technology, NFTs have benefited from better popularity and become more accessible. This is why people and artists from all around the world have started to embrace the advantages that NFTs bring and create collections of unique collectables.
Ethereum is the most popular platform that encourages the creation of non-fungible tokens (NFTs), but lately, Bitcoin has also made the needed steps to implement NFTs on its blockchain with the development of the Ordinals. In this article, we will discuss more about NFTs, and what are the reasons that make them a good investment opportunity.
What are NFTs?
NFTs are non-fungible tokens that have taken the world by storm, as they changed the way we interact with collectables, gaming, digital art, memes and quite everything we find online. The best advantage of NFTs is that they are unique and can’t be duplicated or divided. So, if someone is interested in purchasing an NFT, they will own a one-of-a-kind item that is impossible to replicate. Furthermore, NFT transactions are completed in a matter of seconds, as there is no middleman involved in this process, so individuals can benefit from a rapid purchase with near zero transaction fees.
The origins of NFTs need to be traced back to blockchain technology. Bitcoin is the pioneer of the crypto space, which has introduced important features like safety, reliability, and immutability. The innovation of blockchain and cryptocurrencies opened the door to other developments, including the one of NFTs. The first NFT ever developed was Quantum, created in 2014 by Kevin McCoy. However, NFTs became more popular in 2017 with the introduction of the Ethereum blockchain, which facilitated the programming, development, trading and storage of these tokens.
Lately, Bitcoin has also made some changes to introduce non-fungible tokens in the blockchain with the help of Ordinals. Simply put, these Ordinals are Bitcoin NFTs, which are created by inscribing the data into individual Satoshis, the smallest unit of Bitcoin. What makes Ordinals unique is that the digital artworks are created directly on the Bitcoin main chain and not on secondary layers, as happens with the Ethereum NFTs.
Why are NFTs a good investment opportunity?
Offer the potential to have substantial gains
NFTs provide the potential for substantial gains in the long run. Over the years, plenty of NFT artworks have been sold for colossal amounts of money, which proves that NFTs can be lucrative assets. This is why some investors choose to buy a non-fungible token at the start of the project so that they will be able to sell it at a higher price when it gains a lot of popularity. Some of the most important NFT projects, such as CryptoKitties, CryptoPunks and Bored Apps, have brought owners considerable amounts of money. Celebrities have also started to be interested in purchasing NFTs, which is one of the reasons that has made the price of non-fungible tokens soar.
Provide a great accessibility
Anyone with an internet collection can invest in an NFT, and even create some digital artworks. The only requirement that people have to buy NFTs is to have the crypto to pay for, and then they will become the owners of the token. Although some NFTs can be pricey, they are still more accessible than other rare collectables or other assets. Buying NFTs is a very easy process, as you just need to have a gadget and connection to the internet, and you will be able to make the purchase. Instead, when you want to buy physical collectables, you might need to travel to the location where the auction is held, which will add more expenses.
The ownership of NFTs can be traced
NFTs are digital assets that exist on the blockchain, where anyone can verify their provenance and track their ownership. As you can always check blockchains, no one can lie about their origins, which can happen in physical auctions.
Help you diversify your portfolio
NFTs are great assets to diversify a portfolio with, and investors should always have a diversified portfolio to reduce risks, and not have the overall return depend only on a single investment. A very diversified portfolio can contain funds, bonds, stocks, real estate, crypto, NFTs, and anything that can offer a good outcome.
Support creators and artists
If you invest in NFTs, you will also be able to support creators and artists who have designed innovative and unique works of art. As more artists have become interested in the NFT world, purchasing an NFT from their collection can make individuals feel closer to them, which is something that people from all around the world want to attain. Plus, investing in NFT is a fun process, as you will join a community with enthusiasts who are passionate about NFTs and their potential.
Wrapping up
The NFTs’ emergence has revolutionized art in general and the way that artworks are purchased and created. Although NFTs can experience volatility, where the prices can fluctuate based on rarity and demand, they can bring big financial returns. Over the years, NFTs have been bought at colossal sums, as happened with Beeple’s “Everydays: The First 5000 Days”, which was sold for $69 million.
As NFTs are characterized by volatility, you should always understand the risks and do your research before investing, as these will reduce the chances that something terrible will happen. So, do you think NFTs are a good investment?