The world of cryptocurrencies and digital assets is tremendously immense, and at the same time somewhat unknown to many people. However, it is becoming increasingly popular, although we must be careful about what we invest our money in. That is why we give you reasons to buy or not to buy NFTs.
First of all, What is an NFT?
Many people confuse it with cryptocurrencies, but it is not the same thing. An NFT is a digital asset that can be bought and sold through cryptocurrencies. Mind you, you cannot exchange one NFT with another, as it is a non-fungible token that has a unique value and an identified property, so no two NFTs are the same in the market.
An NFT can be any digital content you can think of, such as a JPG image, a meme, an ebook, an avatar, a tweet, or even a GIF of a cat raising its paw. When you buy that content, a record of authenticity and ownership is created to identify the buyer. Meanwhile, to sell such a token, it can be priced or launched at auction within the NFT marketplace. This is not a minor thing, because an NFT can sell for up to $70 million. To give you an idea.
Reasons to Buy NFTs
Among the reasons to know whether it is profitable to invest in this market or not, it is important to show both the advantages and disadvantages of this token. Let’s go first with the positive points to put a part of your money there.
There is Scarcity in the Market, and that Pays very well
One of the things that this type of market still lacks is an abundance of assets. In finance, scarcity is seen as something precious that has a high value in the market. This is a characteristic that the NFT fulfills perfectly because, with a single owner and a single value, there is not a lot of these non-tangible assets.
This helps buyers become interested in specific assets and bid harder for them because they know they won’t find another one like them on the entire Internet. It is the same feeling of scarcity that those interested in a product with a low stock have, accelerating interest in the purchase. These are extremely risky investments, so you can make a large profit, but not always.
Reliability in the Purchasing Process
Through blockchain technology, NFTs are reliable assets whose provenance and author of the content can be easily known. Information that will remain forever along with that NFT, which gives much more authenticity and reliability to the transactions of these tokens, either to buy or to sell. In addition, it prevents counterfeiting or illegal copies of all assets in this market.
If you are a Serial Collector, this is the Market for you
It’s a clear attraction for buyers who love collections. Although they are not physical assets, at least for the moment, there is a lot of digitally collectible content, such as images, avatars, or works from the cultural world. The volatility of these assets makes them tremendously attractive to people with a lot of money and very interested in this type of market.
On the other hand, it is the auction market, there are no intermediaries to set a price for the various digital artworks that are in NFT. This allows creators and artists to offer their works for sale without depending on auctions in art galleries or museums. Therefore, there is a lot of activity in transactions of valuable assets.
Access to Digital Assets Anywhere in the World
NFTs are stored on servers created by companies dedicated to the cryptocurrency market. Therefore, being in the digital world, they are assets accessible anywhere in the world, as only an Internet connection is needed to access them.
It also helps that their buying and selling processes are fast and secure, something that facilitates NFTs transactions anywhere and with any user on planet Earth. This saves time, paperwork, and travel back and forth, so there are no geographical restrictions.
Reasons Not To Buy NFTs
After going over the advantages of investing in the NFT market, we are going to show you the negative points. It’s your money, so you need to know where you want to spend it.
No Specific Regulations
Being a relatively new market, it does not have a regulation that encompasses NFTs in an established legal framework. Although blockchain technology offers a lot of security in transactions, there is no regulation so there is a legal responsibility to any legal problems that may arise.
A Market where there are also Scams
And there are also scams within this market. The transactions of the assets have a reliable value, but even so, they are not exempt from theft or scams. Rather, the assets found in such operations, as there have been cases with sales of fake works through the phishing technique, also including illegal promotions that steal users’ cryptocurrencies.
Are Stored on Servers That Do Not Backup
As we have commented above, this is a market with a lot of volatility that is not legally backed to protect the balance or assets of users. That risk is assumed in that if the server or company goes bankrupt for an external reason, it is not clear what will happen to the NFTs and the money invested during the whole time. These are digital markets that, in the event of a crash, leave everything that has been achieved in serious jeopardy.
A Bubble that can Burst Anytime
Related to the previous point, the world of NFTs is a bubble that can burst at any time. Just like cryptocurrencies. These assets have a lot of fluctuations, so in a short time, they can suffer spectacular price variations. Thus, just as it has risen exponentially since its creation in 2014, at any moment the market can collapse. And with it, all the money invested will also fall.
Is not the most Reliable Investment to Make Money
This is a separate negative factor, but it brings together all of the above disadvantages. Precisely because it is a tremendously risky market, the probability of losing money is high. If you win, the profit margin is tremendous, but several conditions are necessary to achieve this success. The most important one is the market, where you will be at the mercy of its behavior when you buy the cryptocurrencies for the corresponding NFT.