What exactly are NFTs?
NFTs are tokens that contain an item’s ownership and copyright information. You can buy NFTs in art, music, sports trading cards, virtual land, and in-game collectibles. You can even buy NFTs for real-life collectibles, but they are less common.
Why you should buy NFTs?
There are a few reasons why those with the spare cash are choosing to invest in Non Fungible Tokens. NFTs have proven to be a profitable form of investment owing to some of the following reasons:
• Creates Value for the Tokenized Asset
NFTs create a medium whereby physical objects like art works can be tokenized, thus eliminating the duplication of such art work and limiting ownership to the artist. This in turn creates scarcity for the art work and hence, value for it.
There’s nothing like a perceived sense of rarity to increase interest in a particular item. As NFTs can only have one owner, they create this sense of scarcity. This encourages potential buyers to fix on a particular piece and worry that someone else may become the exclusive owner of an NFT that they want.
Think of it like when you find a pair of sneakers you want to buy and the site tells you that there’s only ‘one pair left.’ If you’re like most of us, this increases your sense of scarcity and encourages you to commit to making the purchase—even if it doesn’t make financial sense for you.
• It provides Investors more Liquidity
Tokenizing assets gives investors more liquidity over their assets when they need it. An example is when a virtual land owner decides to rent out his/her virtual space to advertisers or influencers for a fee, while still retaining ownership over the land. The virtual land in this case still belongs to the owner, but part of it is liquefied as rent.
NFTs are essentially trading cards for the super-rich. While there’s no inherent value in these cards other than what the market ascribes to them, their fluctuating worth makes their collectability and trading potential like a high-risk gambling game. As a result, it’s easy to make comparisons between the NFT and the art market.
• Potential for growth and development
NFTs possess potential for growth and development of the land sector. Pegging NFTs to land pieces has proven great potential for growth and development, for instance in real estate, owning and controlling virtual lands gives you the power to decide what you want to do on your land. You can decide to rent it out, build up a solid and secure business for advertising or online sales.
To wrap it up
Because every NFT is unique, it’s impossible to make any kind of blanket judgment on their value. Some may rise in value. Others will surely fall, and some may never sell at all. So make sure that you invest in NFTs wisely.