This recent hype about NFTs may have encouraged investing in NFTs though it is not always the best decision. Almost every other crypto platform is forcing the readers to invest in NFTs. The concept of NFTs is not as simple as you might think before; there are risks associated with this type of investment. So, here are some important things that you need to know before investing in NFTs or non-fungible tokens.
At BITS, also known as Bondi IT Services, we are getting inquiries about investing in NFTs. Our expert computer engineers have tried to explain the concepts in easy words for the technical and non-technical readers.
What is NFT? 👾
NFT is a new type of digital token that has its share of ups and downs in the cryptocurrency market. NFTs have their own unique traits and attributes. NFT is essentially a non-fungible token which means they have no value or market cap. Instead of having a fixed quantity, every unit of an asset is unique and can be easily identified.
Georgi Markov, one of the pioneers of NFT, described it as a digital item that represents something else – like bitcoin being a “digital gold.” The primary purpose of creating NFTs was to combat the double-spending problem faced by blockchain platforms.
Investing in NFTs 💲
NFTs are special because they are the first type of digital tokens that have unique features and traits. Their value is not fixed like in the case of cryptocurrencies, and they follow their own protocol. Some platforms have devised their own rules to create NFTs, which means a user from one platform can use these NFTs on another platform. This is only possible if both platforms support NFTs.
Nowadays, there is a substantial amount of coins created as part of an initial coin offering (ICO). An ICO is a fundraising process where you invest in tokens or cryptocurrencies and receive an equivalent in return for your investment. If ICO tokens make returns on your investment, then it will be worth it for you. However, there are some ICOs that do not make a return on their investment. There are multiple risks associated with ICOs.
New crypto platforms are coming up, and they are hard to differentiate from each other. They all claim to have the best platform and offer high returns on investment to the investors. You might lose your money if you invest in a new platform in this climate where every company seems to be promising something good, but no one can promise you anything good.
Why would anyone be willing to invest?
If you look at today’s market and the number of projects coming up, it is very difficult for an investor to choose what is best for him or her.
Are NFTs worth it? 📈
NFTs are worth it if you invest in them at the right time when the platform is still new, and the token value is low. You should never try to compete with people by investing at a higher price than others. If you try to compete with others and invest your money in NFTs, the chances of losing your money increase. You can invest in NFTs if you have patience and a good knowledge of cryptocurrencies. But, you have to make sure that the platform you invest in has a good reputation.
Where to Buy NFTs?
If you want to start investing in NFTs, you should know where to buy them. Different platforms have totally different rules, which means that you can only buy NFTs on the platform that created them.
There is no centralized exchange where you can trade NFTs with other cryptocurrencies.
So, the first step is to invest on the platform and then trade it with other coins like bitcoin or ETH if the buying is still not there.
Cryptocurrency exchange platforms are a good place to start your investment without any knowledge of smart contracts; however, they might expose you to some risk as well.
Benefits of Investing in NFTs
The primary benefit of investing in NFTs is that you can use them on other platforms without knowledge. The token has a value, and you can use it on multiple platforms. Investing in NFTs is the same as investing in any other cryptocurrency like bitcoin or Ethereum but with added benefits.
NFTs are an excellent solution for scalability issues faced by many blockchain networks because they are flexible and interoperable. NFTs can be easily integrated into existing ecosystems as well as new applications built on top of them.
Leveraging blockchain technology, smart contracts are used for tokenizing non-blockchain assets like real estate, gold and diamonds. Even virtual goods from video games can be tokenized using this method.
Future of NFTs
NFTs have a bright future ahead if the platform that created them has a good reputation and is a well-known platform. The future of NFTs depends on how the developers treat them in the future because they are based on smart contracts technology. If the developers keep adding value to these tokens by upgrading their functionality every now and then, then there is no doubt about their bright future.
However, if the developers fail to add value to these tokens or ignore them in the long term, there is no doubt that their value will depreciate over time. The future of NFTs depends on the investors. As the popularity of blockchain technology is increasing day by day, the popularity of NFTs is also increasing. It is important that investors get to know about NFTs and make smart decisions about investing in them.
It remains to be seen whether NFTs will be successful in the future or not, but there is no doubt that they can bring a huge transformation in many industries, including gaming, real estate and more. The concept of creating unique digital assets has a bright future ahead. Even now, you can see various websites trying to attract new people by rewarding them for creating digital assets like writing articles and completing surveys etc.
Where to get Basic Tech Knowledge?
All of these details may seem overwhelming for some users due to a lack of technical knowledge. In the age of tech and gadgets, you need to be familiar with the latest changes happening around you. BITS is a trusted tech platform for enthusiasts and businesses that offers resources to learn from the best instructors in Sydney and Bondi Beach.
Whether you want digital services for your business or want to learn computer skills in Sydney and Bondi Beach, BITS is the best place to explore the limitless potential. Contact us if you want to get basic or advanced computer knowledge in Bondi Beach.