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    What Are NFTs and Do They Affect the Crypto Market?

    Non-fungible tokens or NFTs are data stored in a digital ledger or the blockchain and represents a specific item, such as a piece of art, a music album, or any digital file. Buying an NFT means you are purchasing the digital recording of ownership of a token. 

    Your purchase transaction is recorded on the NFT’s blockchain for proof of legitimacy, but you should transfer your NFT to a secure digital wallet for security and storage purposes. 

    Some of the most notable NFTs had happened only in the past years, especially when NFTs only started to popularise in the mid-2010s. For instance, Twitter’s CEO, Jack Dorsey, sold his first tweet for about $2.9 million, while a Beeple work of art was sold for about $69 million at an auction. 

    All of these are highly-priced NFTs that sold for millions of dollars, proving that NFT may have actual worth.

    Understanding NFTs

    For a lot of people, NFT refers to something that is yet to be fully explained. Even investors remain unsure of what NFTs are and whether they hold actual value. With that said, its status as a good investment opportunity is still debated.

    But in the next generation of sector investing and how technology changes the way we live and the way we invest, NFTs may be here for longer. 

    As stated above, an NFT is a token of a digital record of something, which means that it represents something else entirely. A common misconception about NFTs is that they are a type of cryptocurrency. While both are purely digital and recorded on the blockchain, their similarities end there.

    NFTs are tokens, each with a unique value that cannot be exchanged, even if it was another item of equal value. On the other hand, cryptocurrencies like Bitcoin have uniform value, meaning they can be exchanged for another. 

    Are NFTs Bound to Disappear?

    NFTs may have gained popularity only in recent years, but they have been present long enough. While there is no way of knowing whether an investment actually pans out, the space for buyers’ demands is growing, and so it might be here for many more years. 

    Perhaps the main reason why NFTs have become so popular is because of their idea of uniqueness, something that nobody else can own or replicate without the owner’s active decision. In theory, only the owner can ever access it. 

    NFTs offer a sense of true sole ownership, which is appealing to a lot of people. Moreover, the fact that NFTs feel like the new crypto or that it is purely digital like crypto makes it attractive for new investors. 

    Conclusion

    NFTs are just a new asset class that is bound to support blockchain exchange growth. There may be many to come in the future. While there can be no way of telling how much this asset class will grow in the next five years, the outlook is generally favourable. 

    However, if you’re a first-time investor, it’s best to do proper research about your prospective purchases before jumping right into it. These opportunities are exciting, but there are also high risks, just like crypto itself. It’s best to learn more about the underlying values of NFTs and to diversify your portfolio for lower risks before you invest in NFTs.

    No Names Digital is led by Heath Donald, a dynamic and innovative business strategist with the talent, experience and drive to recognise good ideas in various industries, transforming these into market-busting offerings. 
    We discuss various topics in different sectors, including cryptocurrencies, digital assets, finance, investing, and sustainability. If you want to read more articles about cryptocurrencies and digital assets like NFTs, visit our blog today! We hope we can be of service to you.

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