Buying NFT Tokens – Should You Invest?

NFT is the short form of a nonfungible token. It is being said that this is another facet of the so-called “crypto boom”. As of 2020, as many as $250 million worths of non-fungible tokens were traded. This was confirmed by NonFungible.

It means there was an increase of 299% as compared to the previous year. And this is reason enough why people are intending to invest in these tokens.

However, before getting into the details, let us understand what non-fungible tokens are in the first place. Non-fungible tokens are nothing, but information related to an item’s ownership as well as copyright that they contain.

So, you have the option of buying non-fungible tokens in trading cards, sports, music, in-game collectibles, and virtual land. Buying tokens for real-life collectibles is not unheard of but they are seldom bought.

If any item is fungible, it means that you can exchange it for any other item that you like. This can be better understood with the help of an example. Let us say that an item is a $10 bill and you will be able to swap or exchange for another item or bill worth $10.

What must you consider before buying NFT tokens?

Before buying the NFT token, you must be aware of the market patterns as it is a highly volatile market. Few other factors that you must take into account include the following-

  • It is comparatively a new market

It is quite uncertain as to how the non-fungible token market will fare in the forthcoming months or years. While experts are divided in their views about the market, few think that despite the claim that the market is here to stay, the longevity of the market is questionable.

  • Fraud

NFT has allowed artists to get their share of recognition since it allows them to claim ownership of the artwork. This is advantageous because earlier, many artists used to complain that their work has been downloaded without their permission.

As far as fraudulent activities related to NFTs are concerned, it has come to the notice of the experts that artwork of artists has been stolen or passed off as someone else’s copyright without seeking consent from the original artists.

  • Storage

It is quite likely that your token might be stolen. This is because the ledger store will store the token but not the item itself. The blockchain ledger will not store the individual asset.

Does it make sense in buying NFT tokens?

One important aspect about these tokens is that the drawbacks that you encountered above have solutions. However, since the market is volatile, your investment might be risky as well.

It makes sense to invest in the NFTs, under the following circumstances,

  • You have a sound understanding of the traditional art market or industry.
  • You already have been collecting cards
  • You are aiming for long-term benefits and not trying to make fast cash.

So, before you invest in the tokens identify your objectives well.


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