Non-fungible tokens (NFTs) are one of the hottest things these days. NFTs are financial security from a distributed ledger. “Non-fungible” means something unique and cannot be replicated elsewhere. For example, bitcoin is fungible because you can trade it with another bitcoin, and you will have the same thing.
On the other hand, you cannot do that with NFTs. Imagine NFTs like a trading card or a painting. Once you have it, you cannot have another replica. Most NFTs are a part of Ethereum, but other blockchains have their own NFTs. In 2021, NFTs hit a value of USD 22 billion.
Most people would think that NFTs are a trend of the 2020s, but this is a misconception. NFTs have been present in the market since 2014.
What can be considered NFTs?
Any digital asset can be considered an NFT. Art, music, in-game purchases, videos, and pictures are some of the digital works that can count as NFT as long as they’re in a blockchain and the owner has exclusive rights to them. Artists could make cash if they decided to put their art into the blockchain.
Can people replicate NFTs?
Some people try to discredit and mock NFTs by saying they can right-click and save the image or screenshot the NFT, which is theirs. However, these statements are far from the truth. NFTs, give you something more than just a digital piece of work. It gives you the original ownership of the work.
Even though there might be copies of the NFT on the blockchain, no NFT is the same because of the ownership rights that every NFT has. So, you do not have to worry about your NFT getting stolen. The NFT you bought is still yours, no matter how many people try to screenshot and download a photo of it.
What are the Pros and Cons of NFTs?
The first advantage of investing in NFTs is its avenue for growth. Like any other investment, NFTs provide potential development on their projects. A perfect example is the USD 7.5 million return of the CryptoPunk #3100, which was initially sold for USD 2,127 on July 6, 2017.
NFTs also gives you the privilege of owning something unique. NFTs are irreplaceable, and having your digital asset feels good. Some people love collecting toys and other memorabilia; the same psychology applies to NFTs. If you are a digital creator, creating NFTs and selling them is a great way to earn money.
And regarding ownership, NFTs allow clear ownership records because of their blockchain technology. Some say that NFTs would evolve to control sensitive data records. In the future, there is also a possibility that people will need NFTs in the virtual world.
The first disadvantage of NFTs is their confusing assets. Yes, you have ownership over an NFT, but purchasing one does not mean you are purchasing the full copyright for the art. This means that people can still download your NFT and brag that it is theirs, even though it is not. All you have is a record that you own a piece of art.
Another disadvantage of having NFTs is their negative effect on the environment. Any record entered into the Ethereum blockchain consumes a lot of energy. If everyone had their own NFT, it would heavily contribute to the global carbon footprint emissions. Even Cambridge University said anything related to the blockchain is terrible for the world.
And according to experts, NFTs can become an easy-access tool for money laundering. In 2021, analytics firm Chainalysis found small but visible money laundering activity in NFTs. Criminals buy NFTs and proceed to sell and repurchase that thing of value to themselves to create seemingly legitimate sales.
Are NFTs an excellent long-term investment?
According to experts, NFTs are excellent investments now. However, others are still skeptical about NFTs. For one, NFTs are not easy to understand, and purchasing one is complicated. If you are a person who is not tech-savvy, you would need a lot of work in learning all about NFTs and blockchain.
And of course, NFTs are still risky nowadays because they are relatively new compared to other investments. To say that NFTs are an excellent long-term investment is too early because there will be extreme swings in price, people’s interest, and value before leveling itself out in the market.
Some legitimate entrepreneurs like Gary Vaynerchuk believe in NFTs as the next big thing. On the other hand, some groups are against NFTs because of their environmental impact. If you are looking for an investment, there is an investment where risks are way less, and the ROI is secure.
Better investments than NFTs
Would you prefer a picture of a house as an NFT for two million pesos or a tangible house that costs the same? Most people would choose the actual house. Real estate investments have been around for as long as you can remember. The real estate industry is ever-needed, and for sure, someone would rent or buy a property.
Real estate properties are constantly increasing in price, and investing in them is almost always the right choice. Unlike NFTs, investing in real estate properties is not that complicated. There will be marketing and real estate agents to help you have your property. And, of course, you can use a real estate investment in the real world.
A Camella house and lot would be a safer investment than NFTs. Camella has been around for 45 years, which is way longer than the existence of NFTs. Our house and lot are perfect for those who are looking for a starter home. Investing in Camella is never a risk. Just like anything, NFTs have risks and so does real estate. However, it is better to invest where risks are lower.
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