If you invest in crypto, should you try NFTs too?
Technical/NFT’s
Published on 30 August 2022 |
by Jerry Doby
The cryptocurrency trend shows no signs of slowing down. Many analysts and experts predict that Bitcoin, Ethereum and Cardano could reach all-time highs in the next five years. As this market has exploded over the past decade, it has created entirely new industries within it. One of these markets is the NFT market.
An NFT (non-fungible token) is a financial security consisting of digital data stored in a blockchain, which is a form of distributed ledger. The ownership of an NFT is also recorded in the blockchain and can be transferred by the owner, so that NFTs can be sold and traded. They are an excellent store of value and seem to withstand market volatility better than cryptocurrencies alone.
Many NFTs are sold and traded as works of art. Just like art in the real world, the owner has a certificate of authenticity that shows they own the original. This is the record in the blockchain that is unique to the owner of the NFT. You might be asking yourself where you can buy an NFT. There are many marketplaces available and it is now a multi-billion dollar market. It includes a number of celebrities who have their own NFT brands or promote a particular NFT marketplace.
Snoop Dogg is one of the most famous celebrities involved in NFT marketplace. The rapper admitted that he went by the username of Cozomo de’ Medici when he bought his NFTs. Identified as an anonymous art collector with over $17 million in NFT funds, in 2022, Snoop Dogg also announced plans to make Death Row Records the first “NFT label.” However, he is not the only celebrity involved in the space. Other celebrities including Jimmy Fallon, Paris Hilton and Lindsay Lohan have all endorsed NFTs.
The value of some NFTs has increased by over 600% in the last year and many people have now entered this market because of the profits on offer. NFTs trading increased by 21,000% to peak $17 billion in 2021. However, it is important to note that you must invest in these marketplaces only if you have done proper market research and understand them. You must also only invest money you can afford to lose.
Although the cryptocurrency market and the NFT market overlap in some ways, they are two distinct entities. Both have pros and cons, and many seem to hold NFTs for longer periods than cryptocurrency. However, many NFTs can only be purchased using established cryptocurrencies such as Ethereum. Ethereum is the cryptocurrency that is currently in second place among the top 10 (based on market capitalization) and has been in this position for several years.
Market cap is an abbreviated term for market cap, which in cryptocurrency is calculated by multiplying the current coin price on a certain crypto market by its circulating supply. Ethereum is a cryptocurrency conceived in 2013 by Vitalik Buterin. Other developers include Gavin Wood, Charles Hoskinson, Anthony Di Iorio and Joseph Lubin. Many analysts and experts believe Ethereum is a better investment than Bitcoin in the long run as it continues to innovate in the cryptocurrency space.
There are several factors to consider when determining how much an NFT is worth and whether it is a good investment or not. Some choose to invest in one NFT because they believe that it will have value in the future. They see this market as offering what they consider a safer investment option, as world currencies struggle to deal with inflation. People are constantly looking for alternative ways to invest their money to ensure they get the best value.
Others invest in NFTs to secure digital ownership of physical assets and collectibles, and enjoy access to exclusive benefits. Due to the technology underlying NFTs, they are difficult to forge or steal. This is another positive for investors who are attracted to this space. In any case, each investment poses its own unique level of risk. This is the case for all types of investments, and not just cryptocurrency or NFTs.
If you invest in stocks, shares or property, they can all be subject to market volatility. Ultimately, if you’re looking to invest in an NFT because you’re intrigued by the space, there’s certainly an opportunity to make some money. The same is true in the world of cryptocurrency. As long as you do the right research and have a solid exit strategy, you will surely have the odds in your favor.