The accumulating interest in NFTs offers unlimited potential and subsequent risk
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The accumulating interest in NFTs offers unlimited potential and subsequent risk

By Qryqtx | The ecosystem of Q | 16 Apr 2021

There's a great deal of attention within the cryptosphere towards NFTs currently and with good reason. Supported by underlying benefits, NFTs offer unique traits which are non-replicable and as such investors can own exclusive digital assets widely secured by blockchain technology. This has created a thriving marketspace as a result of its immense popularity with computer games, celebrities and even sports teams adopting NFTs en masse - linking them to various use cases and thus accelerated general adoption. The NFT phrasing in itself is simply put an abbrevation for non-fungible token. This essentially means that the associated token is a one-of-a-kind asset which in principle cannot be copied and therefore adds scarcity - a well known terminology in the industry that affects value due to resource shortages. The marketspace for NFTs is however still in its early stages and should therefore be approached with diligence due to the likelihood of volatility when it comes to value appraisals amongst cryptoassets.

As with all new investment opportunities, there's associated risks and NFTs are no exception owing to preliminary uncertainties while the multitude of NFTs, whether they be plain images or music-enabled animations are flooding the marketplaces. There's as such good reason to be vigilant towards investing in NFTs currently. The underlying argument is that the valuation of individual NFTs are often difficult to adequately estimate and as such investors may overpay for something that ends up being unsellable later and thus turns into a loss. This scenario can be best be compared to that of artists producing physical objects. The reason behind is that such artists typically also need to build a reputation before their creations attain some kind of value. With NFTs the wider cryptomarket investors gain easy access to showcase their earnings from the recent bullish period amongst cryptocurrencies. These are more likely to have been capitalized upon by investors who in return look elsewhere to spend their earnings in hopes of maximizing profits further. Speculating on NFTs doesn't guarantee of this happening though and as such early investments in the marketspace come with a certain degree of risk that needs to be considered carefully in order to avoid unnecessary economic losses.

When it comes to marketplaces for NFTs, then these are comprised by a few larger platforms that, although their target audience varies largely, lead the industry alongside a group of minor independent niche providers. Most commonly, marketplaces incorporate distinct functionalities that supports the inclusion of NFTs within games, while more high-end platforms commonly release NFTs alongside collaborators. These often include music artists and others with a creative focus or by means of sponsorships within various sports, the common denunciator being that both target the commercial marketspace. Alternative platforms are also worth observing in this context as an increase in providers is imminent within this bullish marketspace which shows promising growth potential for the upcoming period. Provided that you're an avid collector of various digital assets there's plenty of opportunities available to own unique pieces of art or gamified collectibles. One should always keep in mind though that the value of NFTs is in the eye of the beholder. The true value of a digital asset can thus both increase and decrease just as there's a chance it could be worthless already when it's released.

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Freelance writer with a significant interest in cryptocurrencies and new technologies.

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