Are NFTs a fad, or could they have a great future?
The world of the cryptocurrencies is something extremely complex, to understand it in depth, much research is necessary. That is why many people trying to start in this world end up with their hands on their heads. Cryptocurrencies are not a game, it is a fierce and brutal market that does not have a compassion with anyone.
In recent months we have seen how a new trend was born around the cryptomones, the NFT or non-fungible tokens. But... Really this trend has a future, or it is simply something temporary? Many wonder this and if it is really worth investing in them or not.
What is an NFT?
The NFT, also known as non-fungible tokens, is a type of digital asset such as art, music, video games, etc. These p can be purchased and sold digitally in exchange for another cryptomon. For example: When an NFT is sold, the Creator receives some amount of a cryptodivisa commission.
When we talk about something is non-fungible, it means that it is something unique, which can not be divided or multiplied. In addition, it is transferable, and its shortage can be easily tested. This makes it perfect for collectors looking for unique things. And this is the main function that these assets have, being collectible and interchangeable.
However, unlike the cryptodivisas, the NFTs are mutually interchangeable, that is, they are not "fungables" Digital assets are traded online from the bags that allow the trade of NFT with cryptodivisas.
In addition, cryptodivisas such as Bitcoin are all equal, however, L AS NFT carry an asset and a different value. The NFT have been present since 2014, but they are gaining a lot of traction now.
Advantages and disadvantages of the NFT
Advantages of the NFT
A solution to license digital creations.
The process of converting a digital file, such as an image or a video clip, in a NTF is fundamentally similar to licensing for authenticity and property. As well as the possibility of subsequently can transfer your property or the rights of use and distribution or sale.
The NFTs can not be easily duplicated or infinitely copied. Each of them has a different value because each non-fungible token exists in a decentralized and public digital accounting book based on Blockchain technology.
In the center of all the NFT fashion is the tokenization, and serves as a solution so that the creators of digital content and digital artists, including music producers and software developers, can license Your creations and convert them into digital assets.
Possibility of obtaining benefits from digital assets.
Monetization is another possible advantage of the NFT. Converting digital elements into digital assets It means essentially assigning them a monetary value. The first case of use of non-fungible tokens is the monetization of digital art works.
Michael Joseph Winkelmann, also known as Beeple, sold his work of digital art "everyday-the first 5000 days" by 69.3 million dollars in March 2021, While Kristy Kim sold the house model rendered in 3D "Mars House" by $500,000.
Several Internet memes have also become digital assets. Among them, the viral video clip Charlie Bit My Finger, the Meme Disaster GIRL, the video YouTube Nyan Cat. The popular Meme Doge was sold by $4 million in June 2021.
Collectibles, fundraising and games.
Several companies have launched Collectible products NFT-based digital. Physical collectibles such as baseball and NBA cards have become digital assets by generating their digital equivalents and representing them with non-fungible tokens.
NFT coin can also serve as a solution to raise funds by allowing individuals to meet and auction digital creations such as films and literature, digital collectibles, other digital content, as well as documents as a contract and patents.
It is also remarkable the boom of the NFT games or Blockchain. NFTs can represent sets of the game, such as digital plots or characters and playable objects. The tokenization of these assets within the game can also provide the basis for the development of video games "Play-to-Earn"
Investing and trading non-fungible tokens.
The conversion of digital files into Non-fungible digital assets creates limitations or supply restrictions. The uniqueness of a tokenized digital asset creates shortage. In certain situations, especially if there is demand, scarcity and limitation of supply increase the value of a specific asset.
Numerous individuals have acquired NFT as part of their collection of assets, similar to the collection of physical art works, or with the intention of trading with them in the future once their values increase. The possibility of obtaining benefits through investment or trade is an advantage of the purchase of an NFT.
As an example, the collective digital object known as "Cryptopunk # 3100" was sold for the first time by $2.127 in 2017. When sold to another collector in 2021, the original collector generated more than USD 7.5 million in the return on investment.
Disadvantages of the NFT
The NFT hype and concern for uncertainty.
Those who have bought digital assets coined with NFT believe that what they have are investments. The numerous examples of NFT digital works sold by hundreds of thousands to millions of dollars are also a testimony of the value of investing in these digital assets.
However, the current madness for buying these assets has led several experts to compare the phenomenon with an economic bubble that would end up collapsing, analogous to the bubble of the final points of the 1990s and other similar events.
Of course, several non-fungible tokens have proven their value and growth potential. However, it is also important to note that not all digital assets would have the same value. There is still a potential for speculation and flock in the NFT investment.
Environmental problems of Blockchain technology.
A remarkable disadvantage of the NFT is that the underlying Blockchain technology that drives its creation has a significant environmental impact. Like the disadvantages of cryptomones, the tokenization of digital files requires an important computing capacity.
The combined energy consumption of computers and servers, as well as refrigeration systems, used to undermine and operate cryptodivisas systems is equivalent to a million transatlantic flights. By extension, the greatest use of NFT would increase the existing energy requirements of Blockchain technology.
What are NFT games?
For some months, we have seen that the Games NFT are having great fame, in fact, there are currently tens of these types of games. And this is mainly due to its possibility of generating income in a relatively simple way.
In these games, it is necessary to invest a certain amount of money and perform various actions, you will be able to obtain coins of the game or NFT. Then, these you can exchange it by cryptomoneds and get extra money.
Generally, these games are based on Ethereum or Binance Smart Chain(BSC). Many of them are based on getting characters that are collectible, whether fighting or aging, with these you can get income.
Is the purchase of these tokens safe?
In general, The purchase and sale of NFT is quite safe, in fact, there are currently many platforms for the exchange of these assets. In these, both purchases and sales are completely safe, they work as a great Marketplace where artists publish their creations and those concerned.
Let's say it's a kind of Amazon or eBay of NFT, so, by buying them you are making a totally secure purchase. However, as well as anything else, buying directly to a third party can have your risks.
Is it a good time to invest in NFT?
It will always be a good time to invest, either in nft or any other type of asset or cryptomoned. Something you should be very clear is that the NFTs are a long-term investment, that is, do not expect you will generate large amounts of money in a short time.
Also, like any other investment, this has its risks, the assets you purchased can rise quickly, make it slow or even lower. This is something you must be very clear when you go to invest in this sector.
Are the NFT a fashion or are the future?
The truth is that the non-fungible tokens can have great potential in the future. These greatly facilitate the exchange of digital collection assets. However, as we have seen, these also have some disadvantages that are important.
The truth is that the boom of the NFT is taken as a fashion or trend that in the coming months can be greatly reduced. After all, this is how trends work. But it is also important to mention that the NFTs will not disappear, they will continue to work for years, but the boom is very likely to end up disappearing.
Recall that like any cryptomon, the NFT are a long-term investment. And, as such, technology will not disappear and will continue to be used for many more years. And while people continue to obtain income thanks to these assets,
In the same way, it happens with the NFT Games or Crypts Games, these may generate income more than acceptable. However, they will not last a lifetime, they are a bubble that, eventually, will end up popping.
Remember that all investments are risky, not only because of being related to cryptomones means that you will end up losing everything. But it is always necessary that you invest your money with consciousness and never invest money you need.