When it comes to NFT there are few ways to figure out if the NFT is really worth it .
Table of contents
What is an NFT?
NFT means non-fungible token. Which is generally created using the same type of programming used for cryptocurrencies.
In simple terms these Cryptographic assets are based on the blockchain technology.
What are the ways in which NFTs can be valuable?
NFTs can be pretty valuable in a couple of ways. moreover, from being investment instruments with high-profit potential.
Further they are also used to establish identity.
Community and ownership too. Some people buy NFTs to support artists.
Moreover, the artists earn more from this since they profit directly from their works without any intermediary.
As a form of new collectibles ,they are digital upgrades to items like arts, posters,sports cards etc.
Further, attracting mainly to buy NFT not because of any monetary gain .
They expect from them but because of the other values they have.
Sometimes the value could be in the form of exclusive access to events. further, for gaming purposes , and some just buy it for the novelty of it.
One question you might ask is how to spot which NFT’s have the potential to offer you financial value . equally, the ones to skip for investment purposes.
Key factors that actually make it valuable .
a. Rich ownership history
c. Future value
d. Liquidity premium
e. Buyer perception
NFT – Categories
Scarce/high value – Think Bored Ape, or other art created by world famous artists and endorsed by popular celebrities.
Scarce ,valuable and have a very high barrier to entry. How rare the NFT is ,will determine its value.
Hyped up garbage – Minted at low value and have hype in the short term.
In the long term ,almost always their value drops to cents on the dollar.
What can the NFT be used for?
In addition to being unique digital assets. Additionally, certain non-fungible tokens also serve other purposes.
Some NFTs ,for example give the owner rights and benefits they otherwise wouldn’t have.
The Bored Ape Yacht Club started as a set of NFT images, but now they are tickets to special events.
And give rewards to their owners, such as the ability to print new NFTs.
Many NFTs are also used in games, and they are valued differently based on the functions they play.
1.How Liquid the NFT is?
The ease with which an NFT can be bought or sold within its network refers to its liquidity.
Investors like to invest in liquid NFTs since the risk of holding them is reduced.
ERC-Standard NFTs are instantly tradable across a wide variety of exchanges. The ease of trade adds to the value of such NFTs.
2.Who behind the NFT Project?
The people and projects behind an NFT can stir up speculation .Which can affect the growth and price of the NFT.
In addition to who have owned a certain NFT also affects its value.
For example ,NFTs owned by people of high social standing or celebrities usually have a high value.
This way, we can also say than NFT’s price can be increased by affiliating it with a strong brand or famous figure.
5 Benefits of Investing in NFT
a. Many possibilities – There are endless possibilities in the NFT space as they can be used for almost any project.
Moreover ,the use cases are also increasing steadily .Making the future of NFTs promising.
b. Easily accessible and Transferable
Another reason NFT investment might be a good idea is that are accessible to everyone.
It is not for any selected group of people.It is also easily transferable from one person or place to another.
With this, there is an expectation that the technology will continue to grow.
Investing in NFT’s offers another way to diversify your portfolio. Thereby reducing your overall risk.
Even within the NFT space.There are different categories of assets you can invest in.
Just make sure you do your research well before settling for any asset.
d. Secured Ownership and Transparency
Ownership of NFT is secured through blockchain technology. This feature also helps to fractionalize ownership of assets.
It is easier to divide ownership among several owners while everyone has a secured irreplicable record of their shares.
Blockchain makes all records and transactions transparent. Making trades more straightforward with less chance of fraudulence.
e. Are easy to validate
Since all transactions are recorded in a blockchain, the data can not be changed or tampered with . Making NFTs easier to authenticate than physical assets.
If you are buying a piece of art from an online store ,you might not be able to know if you are getting the original or copy.
However, when buying an NFT ,you can check the blockchain to validate the authenticity of the piece of art before paying for it.
Drawbacks of Investing
Investing in NFT is also not without certain risks. These concerns may hinder the growth of NFTs.
a. NFTs are not environmentally friendly
most NFTs are supported by the Ethereum network,which uses Proof-of-Stake consensus process .
It takes a lot of energy to record and confirm transactions.To mint a single NFT ,heaps of electricity is needed.
Concerns have been raised that this could negatively affect the environment.
b. High price Volatility
NFTs are volatile ,and the prices change rapidly. It makes it little challenging to predict .The future of NFTs.
c. NFTs are slowly getting popular
NFT tec is still in its infant state. Many people still don’t know what NFTs are.
Which makes it hard to trade .Because there are not as many buyers and sellers.
Furthermore, their association with fraudulent activities harms their image.
d. Fraudulent NFT Activities
NFTs can also be used to carry out fraudulent activities. There is no doubt that the integrity of blockchain is unquestionable.
However several NFT scams have been sone .And this makes it necessary to be careful when you trying to buy an NFT.
It can not be overemphasized that, as much as there are advantages to investing in NFT.
There are also risks to it. You should not just invest in an NFT because it is an NFT.
Rather, you should assess it to see if it has the potential to be more valuable in the future.
NFT World development –
The NFT world is rapidly growing .And many things are bound to change, In this light, you should open your mind up to the possibilities.While also being careful in the NFT space.
As a major exploit at leading marketplace Magic Eden appears to be allowing scammers to pass off. And sell fake NFT’s as being part of prominent, verified collections.
Why would anyone buy an NFT ?
Most people purchase NFTs to support their favourite artists and creators while feeling like they own a piece of the song or album.
Additionally, most people prefer to buy music NFT, because they can also be used as event tickets.
How does an NFT make Money ?
The direct and indirect method of making money with NFTs is to create and sell them.
Yes, you can create and sell anything digital such as arts,Images,videos,memes etc. as NFT.
NFTs can be very expensive or valuable .Because they somehow managed to do impossible .Introduce scarcity into the global digital market.
An NFT is not just an overly expensive way to buy an image. Its a way to own it. When you buying an NFT ,you are not just buying the image itself.
Is an NFT a good Investment ?
Many invest in NFTs due to their financial potential. As reselling them has proven to be a lucrative path.
The resale value of NFTs can be a substantial source of profit for investors.
For instance ,the initial buyer can buy low and sell high.Due to the immense resale value of these assets.
Does making a NFT cost Money ?
On average, the cost of creating NFT ranges from $0.05 to over $150.
The cost of creating NFT depends on various factors such as the cost of blockchain,gas fee etc.
Ethereum and Solana are the most expensive and cheapest blockchain respectively.