If you've heard about non-fungible tokens (NFTs), then you might have thought about investing in them. But what does it really mean to invest in NFTs—and what are the pros and cons? It's a good idea to understand any asset class before you start investing in it.
For starters, investing in NFTs is a misnomer because NFTs by themselves are not exactly an asset class. NFTs use blockchain technology to digitally signify ownership, making an NFT more like the title to a car rather than the car itself. Just like you wouldn't buy a car just for the paper title that comes with it, it's not smart to buy an asset just because it's been tokenized into an NFT.
That doesn't mean that investing in tokenized assets is strictly a bad idea. If you identify an asset that appeals to you and you have the funding, then maybe you should buy it. If the ownership of the asset happens to be tokenized, then you can likely enjoy the additional benefits associated with NFTs. But make sure to also understand the risks of NFT investing too.
Investors have many reasons to want to buy assets that are tokenized into NFTs. Some of the advantages of investing in NFTs include:
Anyone can invest in NFTs. Investing in tokenized assets is accessible to everyone. Asset ownership that is tokenized into an NFT can more easily and efficiently be transferred among people anywhere in the world.
NFT ownership is secured by a blockchain. Using blockchain technology to digitally signify ownership can make an investor's ownership of an asset more secure. Blockchain tech can also make ownership of assets more transparent.
It's an opportunity to learn more about blockchain technology. Investors can become more knowledgeable about blockchain, while diversifying their portfolios, by allocating a small sum to tokenized assets.
The bottom line is that NFTs have pros and cons, but it's probably a bad idea to invest in any asset just because it's tokenized. The fundamentals of investing still apply, regardless of whether an asset's ownership is indicated by a blockchain. Your best move as an investor is to identify quality assets that you'd most like to own, and then do what it takes to acquire them.
Investors buy NFTs for many reasons. Some are keenly interested in owning the underlying asset, while others may perceive value in the asset being tokenized into an NFT. Others may invest in NFTs as a way to learn more about blockchain technology.
Investing in an asset just because it's tokenized into an NFT is not a good idea. NFTs by themselves are not investments, so make sure to understand the value of the underlying asset that you are buying before you purchase the NFT.
You can buy assets that have been tokenized into NFTs through our NFT marketplace after you have created an account. Our NFT platform is hosted on the Ethereum platform and may require you to own Ether (ETH) to buy an NFT.
