Investing sounds complicated and challenging, but it isn’t when you take your time to consider some factors, such as the time period you plan to hold your investment, debt (if any), and strategies. For example, an investment strategy to think about is making use of a diversified portfolio of equity and fixed income securities with exchange traded funds (ETFs) for a long-term investment like a retirement account.
You also have to take account of different asset classes, which can be difficult to grasp if you’re a novice investor. One such asset that’s a highly debated topic in the crypto world is non-fungible tokens, better known as NFTs. The popularity of these assets soared in 2021 and has attracted huge brands, such as Louis Vuitton, Nike Inc., and Coca-Cola Co.
But even with big players investing in this asset class, you shouldn’t jump onto the bandwagon just yet. First, you should learn why it’s worth investing in NFTs. The following are reasons why NFTs make a good investment.
- Decentralized Marketplace
Content creators, in most cases, need to work with an agent when looking to sell their work, for instance, art in the marketplace. But with a minted NFT, this isn’t the case, as you can easily sell your work directly to your customers without working with intermediaries altogether. This is great for you as the original content creator or artist because you no longer need to pay a commission to agents. As a result, your profit margin is lowered.
Moreover, you can earn a commission every time your non-fungible token changes hands. Plus, NFTs remove the need for cumbersome transactions, which helps streamline transactions better by lowering costs.
- Accessibility
Another reason that makes NFTs a great investment is that it’s accessible to everyone from different parts of the world. All you need to do is use an NFT marketplace app and mint your non-fungible tokens. Alternatively, you can buy NFTs for sale, and the transfer of ownership for this asset class can efficiently and easily be done quickly across the globe.
What’s more, NFTs are cheaper and more easily reachable than certain asset classes, such as some collectibles. For instance, accessing an auction where rare paintings or automobiles are sold is quite challenging. In contrast, accessing a digital asset class, such as an NFT, doesn’t come with such restrictions since there are no gatekeepers involved.
- Proof of Ownership
Aside from being a decentralized marketplace and an accessible investment, NFTs make it possible to track ownership because they exist on the blockchain. Therefore, ownership of NFTs is completely transparent since blockchain is a public and digital ledger that allows anyone to find who the current owner of the NFT is.
In addition, only one non-fungible token can be created at any time. NFTs are developed in such a way that they offer something that can’t be replicated: ownership of the work. However, the artist can still keep their reproduction and copyright rights. For example, if you’re collecting art, you can buy a Van Gogh print, but there’s only one owner of the original work.
- Blockchain Security
Cybercrime has become a significant issue in the financial world, so it’s understandable to worry about the risks. However, this isn’t something you have to be concerned with if you plan to invest in NFTs. NFTs are generated using blockchain technology. And because of this technology, all NFT transactions are transparent and less likely to be susceptible to hacking.
- Transparency
In business, transparency is important, and NFTs offer it through blockchain technology. Blockchain boasts the ability to know who the original creator of NFT was, who has owned it in the past, and where it has been since. Thus, all types of transactions, be it consumer to consumer, business to consumer, or business to business, are safe.
And with this transparency comes other benefits: trust and permissionless access. Since blockchain provides you with all the data from an NFT, you can trust this information while conducting business. Hence, you get to feel comfortable when buying and selling NFTs.
Furthermore, blockchain doesn’t require special passwords or permissions to review or access data. That means you can easily check the ownership and transaction history on any NFT and make sure that what you’re buying is genuine and made by the actual creator.
- Diversified Portfolio
There’s no specific investment that’s safe from a possible downturn in the future, as the market dynamics are constantly changing. This is why you should go ahead and invest in NFTs as a hedge against your other asset class. Adding NFTs to your asset portfolio is advised, considering they’re excellent alternatives to traditional assets. Additionally, NFTs are more likely to experience considerable growth in the future, making them a worthwhile addition to your investment portfolio.
Takeaway
Although there’s been a lot of hype surrounding NFTs, you shouldn’t make an investment without doing necessary research on this asset class. With this article as your guide, you’ll have a better understanding of what makes NFTs a valuable investment.
