NFTs are the big new buzzword on every tech investor’s lips. But what are they and will they lead you to riches or to ruin?
Here’s what you need to know about NFTs.
What Are NFTs?
A NFT is a “non-fungible token” and yes, when we learned that, we were none the wiser as to what an NFT was, either.
What “non-fungible” means is that whatever is being traded is completely unique and there is nothing else like it on earth.
So, for example, a Bitcoin or a US Dollar is “fungible” because you can find plenty of identical Bitcoins or dollars out there.
Whereas, the original Mona Lisa, for example, is entirely “non-fungible”, as there are no other paintings like it nor will there ever be (except for fakes and reproductions which are not, by definition, “The Mona Lisa”).
What Are They Used For?
Well, as the NFTs we’re talking about are part of the Ethereum (a blockchain similar to Bitcoin) blockchain they are mainly used for trading digital art.
For example, Trey Ratcliffe (the creator of the best Burning Man images, ever) sells his digital images on Makersplace.
Each image is subject to a digital auction with the winners paying either in USD or Eth (the currency from that blockchain).
This allows ordinary folks to invest in art without any barriers to entry, in turn, it allows artists to earn a living without being dependent on galleries, agents, etc.
Is There A Future In NFTs?
Your guess is as good as ours.
Sure, there’s a $69 million NFT from Beeple (it was auctioned in real life at Christie’s and, yes, we feel that whoever bought it overpaid) and that $390,000 video of Grimes but anyone can copy them, right?
Anyone can copy anything digital but they can’t copy the legal ownership of that digital item and that’s what buying an NFT gives you, ownership.
So, in theory, you can charge license fees every time that someone does copy the work and earn money from your NFT.
You can also sell it in, ideally for a profit, in the future.
That latest big winner in the NFT market is the “burning house girl” who sold her famous meme for $500,000.
Before that, Elon Musk’s wife, Grimes, sold her NFTs for millions!
So, should I invest in NFTs?
Only if you properly understand what you’re getting into and the risks of this kind of investment.
If you’re looking for a safe investment, try reading Meet the Frugalwoods or getting into ESG investing, instead.
I’m An Artist, Will This Make Me Rich?
We doubt it.
But we do think that NFTs offer artists a nice way to add additional revenue to their lives without too much effort.
Using platforms like Makersplace, you can sell your NFTs and while it’s unlikely you’re going to sell anything for $69 million, the data suggest that it’s possible to earn a few thousand dollars a month if you learn to use these platforms properly.
Final Thoughts On NFTs
NFTs represent a nice chance to own the rights to something from your favorite artist or for an artist to earn a living online.
However, they are to be considered very high risk investments at the moment and it’s better to buy NFTs for something that will make you happy than with the expectation of profits.
We don’t expect the original excitement to last in this market and it’s unlikely that there will be many more $69 million NFT sales any time soon.
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