NFT (Non-Fungible Tokens) is not a new name in the cryptocurrency market. I'm sure many of us are very aware of this word and even have a basic understanding at least. This is also a token but not exactly like a crypto token because here it is a form of digital art but we have the same type of market where we can buy or sell the nft. This is called non-fungible token and in short, we called it NFT. The NFT has gotten a lot of attention in the last couple of years and even now this segment is growing which is good even because of the nft lot of people are coming to the crypto space. In short, nft is built on a specific characteristic in form of art and it works completely different than crypto coin because the value is defined in various tokens. The value of 1 nft can be in USD as well as in other coins depending on the markets we are trading in but one of the difficult parts is to get the value.
If we look closer at the market we can see that NFT and DeFi have been game changers. While DeFi is a way to invest and earn higher retuns and NFT is a token that we can trade or hold the same way as we can do with Bitcoin or even Ethereum. There are different markets to buy or trade NFT and not every exchange offers an NFT marketplace.
There are some good and bad things about NFT so let's try to understand this part of NFT
Advantages of NFT
- Its built on blockchain technology so it provides us the option to own a unique token through NFT. This is not possible with other coins like NFT. For example, if I own a unique NFT token then no one in the world can own and this can be verified easily.
- Its a great segment for people who like arts as now they can own digital arts and can even make a collection. Now instead of owning them in physical form, one can have them in digital format which is easy to access.
- Now the art form can be sold in the market but earlier it was not possible. This has allowed the artists and now they can sell their artwork.
- With NFT things can be easily verified for many purposes. For example, a ticket or pass for any event can be issued in form of NFT and it will be unique that no one else can own other than the owner.
- Some projects offer certain rewards and benefits to their NFT holders and this is a way to generate passive income.
Disadvantages of NFT
- The NFT use case is limited and because of this, so many people are not interested to invest in NFT. Hopefully, this will improve but currently, this is one of the reasons why NFT is not popular among many crypto investors.
- NFT trading is not available across all the exchanges and very few are offering this feature. There is no order book like we can see with crypto coins.
- NFT is a token that not everyone can easily understand and learning about NFT is not easy as relevant content is not available.
- NFT is not for everyone and because of this even after so much hype growth is not going up as expected. Even I don't understand the parameters to figure the price as supply and demand are not easy to understand.
We cannot deny the fact that this will go in the future but the current situation is not going well I am probably it is because people are not able to understand the real use case. People invest more in crypto coins because it is easy to understand and we can see the volume supply and many other factors easily but with nft it is not available. I still believe that the best use case of nft is still not clear. Hopefully, in the future, we will get to see a better use case with the nft so that more people show interest. Anything that can bring a real-life use case in an empty will be great value addition and that's when things are going to go even further but for now, I don't think it is going to happen soon.
I have seen many instances on social media where NFTs are sold at a higher price but to be honest, I never understood the logic behind that why someone is ready to pay such a huge amount just the artwork which does not bring any value in return. It's not that the price of any NFT does not go down because the market is volatile and it also affects the nft prices. I do not understand this concept very much and This is why I keep myself away from the nft investment but hopefully in the future when things are easy to understand or maybe a better use case is provided then I may think of doing something with NFT.
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