NFTs have become so popular last year but are we seeing signs of it slowing down? Or is this phenomenon just getting started?
The Future of NFTs
The market’s downturn also affected the cryptocurrency and NFT market. Remember Jack Dorsey’s NFT for his first-ever tweet which was sold for $2.9 million dollars? It was put up for auction recently and was offered $14,000 as a top bid.
Bored Ape NFT prices have also gone down by 35%. Even Ethereum, the blockchain that supports Bored Apes, is now valued at $1,976. This is a significant drop from November last year when it was valued at $4,800.
For some, this is a sign that the NFT bubble may burst soon. As critics have predicted early this year, prices of NFTs will soar for a time but a crash is inevitable.
On the other hand, proponents of the technology are saying that despite the decrease in value that we’re seeing today, money is still being spent on NFTs. And with the rise of the metaverse, where NFTs are expected to be vital for its economy, NFTs will become more relevant than ever before.
Are NFTs a Good Investment?
Now that you know what NFTs are and what the future may hold for the technology, you’re probably thinking, “Is it wise to invest my hard-earned money in some NFTs?”
Before we delve into that, let’s see first the pro and cons of investing in NFTs
Pros of Investing in NFTs
- It is accessible to everyone: Everyone has the ability to invest in tokenized assets. Asset ownership that has been tokenized into an NFT can be transferred more easily and efficiently between persons all over the world.
- It is secured by blockchain technology: The use of blockchain technology to digitally signify ownership can increase the security of an investor’s asset ownership. Blockchain technology can also make asset ownership more transparent.
- It allows investors to learn more about blockchain technology: By devoting a small amount to tokenized assets, investors can gain a better understanding of blockchain while diversifying their portfolios.
Cons of Investing in NFTs
- It is highly speculative: Values of tokenized assets can become inflated and volatile depending on the misinformation and the hype surrounding NFTs.
- It leaves a huge carbon footprint: NFTs are supported by blockchains that use an energy-intensive operating protocol. A single NFT transaction consumes as much electricity as an average household for a day in a half. This means this can’t be good for the environment.
- It has a complicated buying process: Unfortunately, buying NFTs is not as simple as buying something off of Amazon. To get started, you need an Ethereum-compatible crypto wallet and some Ether (Ethereum’s currency). Then you have to connect your wallet to an NFT marketplace before you can buy or sell NFTs
Our Verdict
The NFT market has grown exponentially over the past year. And with their use cases going beyond digital artworks and game characters, they can transform the way markets function and enhance the way we manage and control sensitive information.
However, although NFTs have shown so much potential in the future, investing in them right now also comes with a lot of inherent risks.
If you want to explore NFTs for yourself, do it mainly for fun and not just as an investment. Just like how collectors find joy in owning a collectible. It’s not because it is a lucrative endeavor but because they simply love what they’re doing.
And as with any speculative investment, you have to do it responsibly and do your research. Don’t put all your life savings, or take a loan just to purchase an NFT. Make sure you will only put money that you’re willing to lose.