NFTs (Non-Fungible Tokens) have received a lot of attention in recent years, thanks to the buzz surrounding multi-million-dollar sales of digital art pieces like Beeple's "Everydays: The First 5000 Days." NFTs have enabled the ownership of one-of-a-kind digital assets such as art, music, and other collectibles. In this article, we will look at why NFT investment opportunities in art and collectibles are the way of the future.
What Is an NFT?
An NFT is a one-of-a-kind digital asset that signifies ownership of a specific item or piece of content. The NFT's ownership is recorded on a blockchain, which serves as a public ledger of ownership and transactions. Consider it a digital certificate of ownership that can be purchased, sold, or traded just like any other asset. The fact that NFTs cannot be replicated makes them one-of-a-kind digital assets.
In the Art World, NFTs
The art world was one of the first to embrace NFTs. Owning an artwork used to mean having a physical piece of art that you could display or store. However, NFTs have made owning digital art possible, and the value of this digital artwork has skyrocketed.
In March 2021, for example, Beeple's "Everydays: The First 5000 Days" was sold for $69 million. This not only sets a record for digital artwork but also places Beeple among the world's top three most expensive living artists. Other artists have sold their digital artworks for millions of dollars, including Grimes, Trevor Jones, and Pak.
The Digital Ownership of the Future
NFTs have created new opportunities for digital ownership. Artists can monetize their digital creations and gain recognition through NFTs. Furthermore, NFTs provide buyers with a new way to invest in art and collectibles. You don't have to worry about the authenticity of the artwork with NFTs because ownership is recorded on the blockchain.
NFTs also allow artists to generate new revenue streams. Musicians, for example, can sell limited edition digital albums as NFTs, with buyers earning royalties when the music is streamed. Furthermore, NFTs can be used to provide fans with one-of-a-kind experiences, such as VIP access to concerts and meet-and-greets with the artists.
Investing in Non-Financial Transactions
If done correctly, investing in NFTs can be a profitable venture. It is important to note, however, that NFTs are a new and untested asset class, and the market can be extremely volatile. Here are some things to consider before investing in NFTs.
Conduct Your Research
It is critical to conduct thorough research before investing in an NFT. Examine the artist's portfolio, previous sales, and market trends in general. Look for NFTs with a history of appreciation and strong demand.
Invest in What You Enjoy
Investing in non-traditional assets is similar to investing in any other asset class. You want to put your money into something you believe in and care about. If you enjoy the artwork, music, or collectible, others are more likely to enjoy it as well, which can lead to an increase in value.
Diversify Your Investment Portfolio
It is critical to diversify your NFT portfolio as you would any other investment. Invest in various types of NFTs, such as artwork, music, or sports memorabilia. This will help to reduce risk and balance your overall investment strategy.
Select a Trustworthy Marketplace
There are numerous NFT marketplaces, but not all of them are created equal. Look for a reputable, secure marketplace with a track record of successful sales. OpenSea, SuperRare, and Nifty Gateway are some popular NFT marketplaces.
Recognize the Fees
It is critical to comprehend the fees associated with purchasing and selling NFTs. Gas fees (transaction fees), platform fees, and other miscellaneous fees are examples of these fees. Include these fees in your investment strategy and understand how they will affect your overall returns.
What Are the Most Common NFT Art Scams?
Investing in NFT art can still be a hard endeavor, and many people are still walking in on NFT scams. This happens mostly due to the lack of knowledge in navigating the crypto universe.
As such, we highlight some of the most common NFT art scams out there, so you can effectively avoid any pitfalls that might come your way.
Rug-Pulls
A rug-pull scam is a scam in which developers generate a lot of hype around an upcoming NFT only to disappear with the funds they get from their investors. As such, if you see fanfare around an NFT and hear about an incredible, once in a lifetime opportunity, think twice.
Phishing
NFT account details are highly coveted. To get them, scammers will create fake links and share them through social media platforms. Those links will with utmost certainty do one of three things: ask you for your details, use a keylogger, have spyware. Ultimately, their goal is to gain access to your account.
Airdrops
NFT giveaways have become quite dangerous for those not aware of how they work. NFT art fraudsters will ask people to sign up on a website and promote their NFTs. In return, they promise to airdrop a free NFT. However, what really ends up happening is that they will be copying your account details in order to compromise your account.
Fake Bidding
Bidding scams are scams in which NFT scammers will place a high bid only to change the cryptocurrency they’re using in the bidding process without anyone’s knowledge. Avoiding this one will come down to always check and double check which crypto is used when you’re actually being paid.
Plagiarism
NFTs are unique tokens but so are fake NFTs. Stolen copies are rampant in the NFT universe, so verifying a purchase, and the seller’s history becomes mandatory.
Pump and Dumps
Pump and dumps aren’t exclusive to stocks, coins, and tokens. NFT art’s price can be artificially inflated. Scammers will find a way to share fake celebrity endorsements so that unsuspecting buyers can invest. What happens next is easy to guess: scammers will disappear while assets become worthless.
Fake Customer Support Agents
Impersonating a customer support specialist is also a way of phishing someone’s data. Customer support requests will always happen via approved channels so remember to stay clear out of anything that doesn’t come through those.
Conclusion
NFTs are altering our perceptions of ownership and investment opportunities. The art and collectibles industries were among the first to embrace NFTs, and the demand for one-of-a-kind digital assets continues to rise.
Investing in NFTs can be a lucrative venture, but it is critical to conduct thorough research, diversify your portfolio, and select a reputable marketplace. NFTs allow you to own one-of-a-kind digital assets that cannot be replicated, making them a valuable addition to any investment portfolio.
