Did you know that last year NFT trading increased by more than 21,000%? They’re the new buzzword for experienced investors and amateurs alike. But are NFTs a good investment?
There’s no singular answer to this question. The answer depends on the type of NFT and what your goals are. To help you understand the risks and benefits of NFTs, we put together this brief overview so you can make educated financial decisions.
Read on to learn more!
What Are NFTs?
NFTs, or non-fungible tokens, use blockchain in a similar way to cryptocurrency. The blockchain is used to verify and establish ownership. When comparing an NFT vs crypto it’s the same as comparing money to a bar of gold.
Crypto is a currency asset while an NFT is a tokenized asset. So, an NFT isn’t strictly money, but it is a unique asset that has value. Because all of this is virtual, it becomes even more difficult to conceptualize.
You can think of crypto as money in the bank, which is there even if you can’t always touch it, and an NFT as a deed to an asset like a car. The NFT is not the car itself, but simply a virtual deed signifying ownership.
This means that the word “investing” doesn’t really work with NFTs, because they’re not strictly an asset. They’re a deed signifying an asset. However, for our purposes, “investing” works well enough.
NFT Pros and Cons
NFTs are very easy to invest in and are a very secure purchase. Thanks to blockchain technology, your ownership is guaranteed and verifiable.
However, NFTs are not an asset class, which makes it difficult to ascertain value. This means prices can be volatile.
Are NFTs a Good Investment?
The answer is: it depends. Buying an NFT simply because it’s the latest thing on the market isn’t a great idea, but some NFTs offer great returns and can be a solid investment.
So, don’t get caught up in the buzz of tokenized assets. Instead, consider an NFT in the same way you would any other investment.
Will it hold its value or is the price inflated due to the NFT stampede? Are you buying the NFT at the right time? Does its price seem to be steady, or is it still incredibly volatile?
Consider all these questions before purchasing any NFT or crypto. You can look here to track potential investments and manage your virtual portfolio.
With all the talk of crypto and NFTs, many people are wondering, “Are NFTs worth it?” and “Are NFTs a good investment?” Generally speaking, they offer a lot of value and can help you build a diverse and profitable portfolio.
But, you have to do your research. Don’t invest in NFTs as a whole. Take the time to research each investment and you’ll be sure to reap the rewards.
If you enjoyed learning how to invest in NFTs, we have tons more financial advice on our blog. Check it out for more!