Is NFT a good investment? How can everyday investors profit from NFT?
1. What is NFT?
In the framework of modern finance, we have seen a lot of money being printed out of thin air. The Federal Reserve holds power to set the price of global oil, turning worthless paper into expensive dollars, and sucking blood from people worldwide.
In the face of this extortion, some savvy investors discovered the value of bitcoin, a digital asset with a fixed supply of 21 million coins that were never reissued, and began to invest in it as an inflation-fighting haven asset.
Long before Bitcoin came into being, the rich had already invented a better set of hedge measures. The asset they choose is even rarer and less replicable, with each item being unique. This hedge asset is called the Art Investment Collections.
NFT is the "art investment collection market" in the decentralized financial world. However, different from traditional art investment, cultural products based on the Internet are no longer limited to collecting physical works of art.
The copyright of a song, a movie, an item in a game, a digital artwork, and the encrypted by an algorithm can all become a commodity in the realm of NFT, so compared to the traditional art market, the NFT market is more of an "intellectual property market". Any worthy intellectual property rights will be circulated and given value via the NFT market, as said by 3-LAU, a DJ whose music album was sold at a sky-high price just days ago:
"We will give power back to the artists."
(This album was sold at auction for a whopping $3.66 million)
The intellectual property products in the NFT market are different in form and color, but they all have irreplaceable and unique characteristics.
Simultaneously, based on the unique and immutable nature of blockchain itself, the long-lasting problem of not being able to judge the authenticity in the traditional art collection market will no longer be a problem in the world of NFT.
Just as there are no two identical leaves globally, there aren't two similar hash values, and this feature naturally gives the NFT high investment value. After all, since human civilization evolved into capitalism, maybe the commodity that has never experienced depreciation would be artworks.
Uniqueness is in itself the most significant value.
And this is also what NFT stands for Non-Fungible Token.
A non-fungible token (NFT) is a type of cryptographic token based on the ERC-721 protocol, which represents something unique; non-fungible tokens are thus not mutually interchangeable. This is in contrast to cryptocurrencies like bitcoin, and many networks or utility tokens that are fungible.
Therefore, products tokenized by NFT technology have unique intellectual property, unique hash values, and eternal value.
2. Is NFT a good investment?
As mentioned above, NFT is unique, which is in line with the fundamental requirement of the traditional art market. As each artwork is handmade by the artist, the world can never see two identical works of art. These unique works of art, along with the history of human beings, formed a market that can withstand the test of time.
On top of that, NFT has added the following features to the traditional art market:
What makes blockchain charming is its complete decentralization. All the information on the chain is entirely transparent and cannot be tampered with.
One of the pain points in the traditional art market is how to distinguish between authenticity and fakes. The high value of artworks has attracted numerous counterfeiters, and the ever-evolving techniques have made it increasingly difficult to tell the authentic from the fake. Even the best artwork appraisers can not make sure that their judgments are completely correct.
With blockchain technology, this problem can be easily solved. Artworks and intellectual property tokenized through NFT technology cannot be issued twice, deleted, or tampered with. From the moment of its birth, every transaction is traceable, which standardizes the market's order, reduces the cost of distinguishing the authentic from the fake, builds trust between people, and makes the market more active.
One of the critical factors determining whether a commodity is a good investment is its liquidity, just as real estate, an undervalued stagnant asset class before the emergence of the second-hand housing market.
Because of the advent of the second-hand housing market and the relevant transaction service personnel and platforms, there is a steady stream of new users to join the market later awakened to the value of houses. Therefore, the degree of liquidity can largely determine the ultimate market potential.
The blockchain market is based on the Internet, which is liquid in nature, providing users worldwide with a value exchange platform, a platform that is running 24 hours a day and 365 days a year. Therefore, in terms of liquidity, NFT overshadows the traditional art market, and its future growth ceiling is naturally much higher.
The expensiveness of traditional artworks makes it impossible for ordinary people to invest in and profit from the appreciation. Blockchain technology is the sought-after solution to this problem.
Taking bitcoin as an example, it's currently priced above $50k. The lowest entry threshold may be less than $1. We can buy at least 0.00000001 Bitcoins, but we can also reap the benefits of BTC's rise - This is completely unimaginable in traditional financial markets.
We cannot tear a painting and sell it separately, while NFT digital artworks can be customized to cut into pieces to lower the threshold of entry. Most of the people can earn together from the appreciation of the artworks, and at the same time bring more liquidity, giving the artwork higher value.
The rise of DEFI
NFT is a vital link in DEFI that will inevitably empower its development. We all know how famous the DEFI market is, and the whales who earned a lot of profits in DEFI are eyeing the rapid growth of NFT in the very early stage.
How can a field with high liquidity, low entry threshold, and close attention to new monies lack profit opportunities?
3. Can everyday investors profit from NFT?
Yes, we can! As we mentioned, NFT is divisible. A pricey artwork can be sold in pieces. We can buy a certain amount of pieces that we can afford. Niftex (NFTX), a self-service platform, is one example.
Note: This article is written to popularize the NFT market and its potential value. It shall not be considered as an investment suggestion. Please rationally evaluate the market risk and your risk tolerance.
In addition to expensive art auctions, there are also markets in the NFT world where the entry threshold is inherently low. If you are lucky enough to pick a rare card or item, you can immediately earn several times profit.
For example, NBA Top Shot, currently one of the most popular card trading platforms, has seen an outstanding performance.
NBA Top Shot is a collectible card trading platform certified by the NBA and its stars. To date, NBA Top Shot has sold 10,631 card packs, generating $1.05 million in revenue.
Most of the NBA star card packs on the platform were originally worth between a few dollars and a dozen dollars. Interestingly, because of the massive appeal of NBA stars themselves and the spread of NFT Internet + blockchain, cards of some legendary players like LeBron James and Kobe Bryant have been bid up to the current $250,000 in only 8 months, which is pretty crazy.
But of course, only a few users can profit from NFT. We need to familiarize ourselves with the risks before making attempts according to our risk appetite. Maybe, NFT market is the one you've always been looking for.
As early as 2017, a kind of virtual cat named Crypto Kitties appeared on the market, bidding up to hundreds of thousands of dollars. This well-known electronic cat has reached 667,970 transactions at present. Part of its popularity remains till today.
In addition to the above two ways of NFT investment suitable for ordinary people, another way to participate is to buy and trade NFT tokens through an exchange such as Digifinex (Click me to register), and make a profit from the rise and fall of the price - This requires a more comprehensive and profound understanding of the NFT market.
The following are some mainstream NFT tokens for your reference (the following tokens are for reference only and should not be considered as investment suggestions)
（Image courtesy of CoinMarketCap)
At this point, I believe that we have our preliminary understanding and judgment of the NFT market.
Besides, we can participate in NFT in various ways due to its exciting gameplay. If possible, I will make more NFT related content for you.
Finally, I would like to remind you that the market is risky and should make any investment with caution. All the above contents are just for your information of NFT and do not constitute any investment advice. After all, risks come from not knowing what you are doing.