As soon as we manage to cover our costs of living, we think about the future: What can we do to create a financial cushion? When it comes to saving up money, there are two groups of people: the ones that prefer the safest possible solution and the ones that seek for the highest possible return of capital. NFTs are an option for those, who´d like to combine both approaches in a sustainable and modern way.
What Are NFTs?
NFTs are attached to blockchain technology. Those, who are not interested in investing in cryptocurrencies, sometimes hastily distance themselves from the idea of NFT investments. Cryptocurrencies are said to be very volatile, even though the flagship currencies like Bitcoin, Litecoin or Ether have taken the stock market by storm. Some simply fear the risk and chose not to work with cryptocurrencies to store their capital.
As you can see on nftexp.io, NFTs are closely connected to digital creations such as hashmasks, graphics, pixels and collages. But how can they be connected to the crypto market and how does an NFT investment even work?
Facts on NFTs
The long name for NFT reads non-fungible token. As you may know, cryptocurrencies – just like fiat currencies – are not designated to single individuals. There is a pool of coins, bills and tokens, which find themselves in a never-ending circle of being spent, being received and being stored. Money – digital and analogue – is interchangeable.
NFTs are not. Every single token has its own unique code. If you buy one, the token and the code are exclusively attached to you. The token does remain on the blockchain, but it is yours. For the most part, NFTs are traded and administered on the decentralized database Ethereum, which is the blockchain that is connected to the cryptocurrency Ether.
In 2017, NFTs generated the large part of all Ether transactions. That is when NFT investment started to become a thing – not just on the financial market, but also on the art market.
How Does an NFT Investment Work?
In order to invest in NFTs, you need to buy tokens on a trading platform. Marketplaces are full of possible investments. The so-called crypto art can be subdivided in the following types:
You can invest in digital baseball cards. Years back, you could earn a lot of money by selling certain cards. Today, it´s just like that – only in a virtual way. As soon as you invest, you store the value within the token. The token represents the value and your ownership as well. Your NFT is attached to the collectible. Other popular NFTs are the CryptoKitties: The digital cats are part of an interactive computer game, can be taken care of and even bred. By breeding them, you create new NFT collectibles.
Digital art is different from analogue art when it comes to technique. But the rest is identical – an artist turns an empty canvas into something meaningful. The popular crypto artist Beeple, for example, created a pixel collage named “Everydays: The First 5000 Days” and sold it for almost 70 Million USD at auction house Christie´s. That makes him one of the few artists, whose creations brought in a fortune during lifetime.
- Video games:
Games like CryptoKitties, Hyperion (God´s Unchained) or Genesis Land´s Plots are sold as NFTs as well.
- Digital Files:
Even licenses and certificates can be purchased as NFTs
How Does the NFT Store Value?
A non-fungible token does have its own market value. But its actual value depends on your purchase decision, as it represents the value of the digital creation you own. People have always invested in art, which makes art one of the oldest markets in the world. The launch of NF tokens has caused the market to change – digitalization doesn´t stop at fine arts. Instead, it causes a change of epoch. We´re still at the beginning of that change, where the market isn´t overflown yet – the best time for a profitable investment.