The latest trend in online trading has hundreds of thousands confused, and with the strange business model and astronomic prices some of these assets go for, it’s no wonder it’s got everyone stumped.
The trend in question is NFTs, which made their first step into the mainstream after Christie’s auction house sold the first NFT artwork for nearly $70 million, which is quite a hefty price for a collage of digital art images.
However, what sets an NFTs price so high is the fact that they function in a similar way that crypto does, except they’re not fungible, unlike the currencies, with their value being set by the high demand for them as they are meant to be one of a kind assets on the blockchain.
Naturally, even this much isn’t too easy to understand, and with all this information thrown in your face every single day, who’s to blame anyone for not being able to keep up with every little thing the amalgamation of the crypto industry and the internet manages to pump out each day.
The most important thing to note is that the payoff for these pieces of art has been tremendous, with Jack Dorsey’s first tweet selling for $3 million, a clip of LeBron dunking a basketball for $200k, and a gif of a cat, shaped like a pop-tart, running on a rainbow, for nearly $700k.
While some of the trend’s popularity stems from the art community’s intent to support the digital creators who have spent years unrecognized due to easy misuse of their art, the larger portion of the community is just people looking to acquire proof of ownership of a digital asset.
Digital artists finally get the recognition they deserve
NFT which stands for non-fungible tokens is usually digital content tied to a spot on the blockchain, a technology pushed forward by the cryptocurrency market which was based upon it.
However, currencies can be exchanged into one another, or into real-life monetary value, unlike NFTs which are one of a kind and that cannot have any set value.
They add a different dimension to the seemingly endless „mine” of crypto coins, allowing an asset to be scarce, and its value to be determined by the number of people wanting it rather than the number of people owning it.
To buy your first NFT all you need is a digital wallet and a certain amount of assets in it, but with so many platforms to decide from, you could easily find yourself overwhelmed with the great number of options the community has to offer.:
Consider the Risks, Research Platforms and Don’t Forget About the Gas Fee
There are numerous marketplaces like OpenSea, Mintable, Rarible, but most of them have enforced a „gas” fee, which translates into the energy required to perform the transaction of the asset on the blockchain, with other fees being related to currency conversion.
The same applies for selling your own NFT’s, as even placing a digital image you created on the platform requires a certain „gas” fee, and that number can vary immensely based on the value of the cryptocurrency the platform uses, so try and pick the right moment to do so.
The new wave of NFTs is a revolution within the digital art industry, but the only ones who might be able to benefit from it are those with the right financial know-how and enough money to act on their hunches.
So if you’re looking for an investment opportunity and you want to join the NFT trend, make sure you do your research before taking any risks. No matter how profitable this new craze may become, there will always be some risk involved in investing in something that has such high volatility. Research different platforms, study up on the respective fees each site takes and never forget about the gas fee when trading or selling anything related to NFTs.