BigONE’s Opinion: Is the current hot NFT market worth investing in?
NFT, also known as a non-fungible token, is another cryptocurrency market’s recent boom. According to BigONE’s data, the NFT value of global transactions exceeded US$250 million in 2020, representing a 299% growth over 2019. This is only one of the reasons why people want to know if they should invest in NFT. What is an NFT exactly? NFT is a token that carries information about project ownership and copyright. NFTs can be purchased for art, music, sports star cards, virtual land, and in-game collections, as well as real-life collections.
If an item is fungible, it can be interchanged with another item of the same type. For example, a 10 dollar bill can be exchanged for another 10 dollar bill or two 5 dollar bills. In contrast, original artwork or a signed first edition of a book is irreplaceable, meaning they are unique.
The information recorded in the NFT essentially allows creators to digitally “sign” their artwork. Therefore, even if a picture or a song has been shared hundreds of times, you have also purchased some unique features if you purchase it as an NFT. Each NFT will be recorded in an immutable ledger using the same blockchain technology as cryptocurrencies.
Things to note when buying NFT
The biggest risk of buying NFTs is the volatility and unpredictability of this emerging market. Many environmentalists are also worried about the high energy consumption involved. The following are some things that investors need to keep in mind when buying NFTs that BigONE has compiled:
NFT is an emerging market
Currently, we do not know how the NFT market will develop in the next few years or decades. Take Beeple’s digital artwork as an example. It was recently sold at Christie’s auction house for more than $69 million. This work may appreciate a lot in the future, or it may lose value completely, but it is virtually unpredictable. For all experts who say that NFTs will continue to exist, there are many skeptics on the other hand who question the longevity of the NFT market and regard it as a bubble. In fact, all digital assets on the market are now top-rated. Take Bitcoin as an example. The first and most popular digital currency has risen by about 180% in 2021 alone. This was not possible when it was newly released. When investors invest their funds in the NFT market, the important question of whether they can make a profit or not can be very challenging for investors.
NFT fraud and theft
The fact that NFTs allow digital artists to own their work is a major selling point. Previously, artists couldn't earn money from free downloads and file sharing because many works of art were downloaded and shared without the artist’s permission. However, this does not mean that NFTs are immune to the effects of fraud.
Unfortunately, there have been reports of artists claiming that their works were tokenized without their knowledge. So far, it is unclear how the artist might reclaim ownership of his work once it has been accidentally entered into the blockchain in the name of another individual. When purchasing an NFT, you should choose a high-quality NFT trading platform with real ownership, just as you would when purchasing a cryptocurrency exchange, to verify that it executes a high degree of artist verification and has solid security credentials.
Another issue that has not yet fully unfolded is NFT theft. Like cryptocurrency, your NFT may be at risk of being stolen. If you save your NFT in the trading platform where you purchased it, please ensure that you have good password security and enable two-factor authentication. If you have purchased a high-value NFT, you should consider storing it offline in a secure space that is difficult to hack.
You should be aware that if you buy an NFT, you may not own the rights to the artwork. In many circumstances, the artist will retain ownership of the work, and you can request royalties from the trading platform or the creator after you complete the NFT transaction. Some NFT sellers are unaware of this and should pay attention.
Buying a signed copy of a book does not show that you own the rights to the book, and NFT does the same. Each token has something called a smart contract, which specifies the rights of the NFT’s owner. The NBA Top Shot collection, for example, has limited permissions that allow the owner to distribute and show their NFT for non-commercial purposes. Before you buy an NFT, you should be familiar with the terminology.
We talked about the possibility of tokens being stolen. Besides tokens, how should the original files be stored? Since NFT contains content similar to URL links and the ledger stores tokens and not the project itself, you cannot store a single asset in the blockchain ledger.
Therefore, your NFT should be stored elsewhere. As a buyer, you need to find a suitable NFT storage method and take measures to ensure that the company that keeps your NFT assets can always remain secure.
Is NFT worth the investment?
All of the issues that require investors’ attention are solvable. However, the NFT business is still in its early stages. It is unclear what the future development trend will be and how far protection and protection mechanisms for early NFT adopters and holders will evolve in the future.
However, BigONE feels that purchasing NFT is a risk worth taking because NFT is an essential component of the mature cryptocurrency market. Furthermore, the vast majority of art makers and collectors believe that NFT will serve as a bridge to the revival of conventional art and collectibles. With the progressive expansion of NFT practical applications, NFT will attract pioneers in the same way that the early e-commerce sector did. Return on investment is incalculable at this point.
In fact, if you can understand the following in detail, then investing in NFT will be a good choice, and investing in NFT will become more meaningful:
Learn about the traditional art market
Learn about the collection of sports star cards, artwork, or anything else
Making quick profits while also being able to accept the long-term value of the investment
Finally, it is recommended that the funds invested in the NFT should not exceed the tolerable loss. In the future, the NFT market may experience explosive growth, and your NFT may appreciate substantially. But before buying, you should do a good job of investment planning, more research, and more study, and it will be helpful to whether you can get a high return on your future investment.
BigONE is a global cryptocurrency exchange that provides a platform for trading various cryptocurrencies. It was founded in 2017 and registered in the Netherlands. The group operates in Russia, Brazil, Vietnam, Seychelles, Singapore, Japan, and Indonesia, providing marketing, investment, and blockchain technology research & development.