NFT Art Finance: The Pros and Cons
NFT art finance is under the microscope due to the explosion of interest in non-fungible tokens (NFTs).
Investors are rushing to the trend-setter, but you need to think about the pros and cons before putting your money in.
As an asset class, NFTs are easy for everyone to invest in and ownership of an NFT is highly protected by the blockchain technology used.
What are the Downsides?
NFTs require an energy-intensive operating protocol:
Ethereum blockchain is chiefly used to support NFTs. That means they need Proof of Work (PoW), an energy-intensive protocol. The electricity required for a single NFT transaction is almost equivalent to the electricity used by a home for a day or two.
NFTs are an asset class:
As ownership of an NFT is represented as asset ownership, the value of your investment is exposed to market forces. High levels of interest in NFTs have seen values rise impressively, however, you could see the value of your asset diminish should the hype fade.
While there are other ways emerging, many NFT transactions, because they are based on the Ethereum blockchain, require the use of Ether (ETH). That, of course, requires you to have ETH in order to buy. And the Upsides?
Your ownership of the NFT is protected by blockchain technology. This makes NFTs feel like more secure and reliable investments, giving buyers confidence.
Easy for All:
As these digital assets are tokenised, it means NFTs can be easily and effectively traded by people all over the globe. It makes this investment accessible and straightforward.
A wise investor will always look at the positive and negative sides of every story. While NFTs are a relatively new phenomenon, there is plenty of information about the pros and cons of NFT art finance out there for you to research.
Have a strategy for your investment and accept that there is a level of risk with every investment, even something so seemingly fool proof as NFTs.
Author: Muhammed Abid Khan
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