NFT

Why NFTs Create Value

Are Non-Fungible Tokens (NFTs) a worthy investment to take on? This topic has been a great debate since this novel technology was launched between 2012 and 2014. However, it is evident that the tokens have gained popularity over the years as the masses continue to invest. Subsequently, its value has undoubtedly been increased. It is reasonable to wonder why one would invest in these recently created non-fungible tokens when fungible tokens have been preexisting. Read on to get a better insight into NFTs.

What are NFTs?

These unique digital tokens were generally built with a similar ideology and programming as cryptocurrency. What makes them unique is that, unlike real money and cryptocurrency, NFTs are non-fungible, hence the name Non-Fungible Tokens. This means that they cannot be replicated, thus reducing the probability of fraud. Moreover, they are stored and verified on the blockchain or distributed ledger.

These tokens can digitally represent any digital assets such as digital artwork, real estate, in-game items such as avatars, collectibles, and even domain names. Once you buy one, you gain ownership of the original copy of the asset in question.

Ways in which NFTs create value

NFTs create value for the following reasons:

The system restores the market design

The market design is gradually changing, especially post-covid; most activities and transactions are digitalized. These tokens are a great way to expand your financial portfolio. Although they are new, they have a great potential to create wealth online. For example, the famous art by Mike Winkelmann was sold as an NFT for $69million. Paks ‘the Merge’ NFT art units were sold on Nifty Gateway at a starting price of $575 and increased by $25 every six hours. Pak sold this at $91.8m. Such transactions redesign the market design and encourage growth in this sector.

They give digital copyrights to owners

NFTs were created to provide a verifiable system of ownership on the blockchain. Thus, with this record of authenticity on a trusted system, the assets can be significantly priced and sold. Moreover, NFTs are less volatile compared to cryptocurrencies. They are safer as they cannot be exchanged for another. They create value by ensuring the asset they digitally represent can only be sold by the owner.

The assets they cover are increasingly expanding

According to nonfungible.com, NFT values are progressively rising. For instance, it has increased by around $700 from April 2021 to 2022. According to a market report by Technaivo, the market size can potentially grow at a CAGR of 35.27% from 2021 to 2026. Value for such digital assets continues to increase as more people indulge, boosting confidence in the market. The assets tokenized include art, collectibles, tweets, books, songs, videos, and in-game assets.

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The tokens are more versatile

The versatility of these tokens makes them a good investment opportunity. They are not limited in what they can be used. They can be used to prove ownership of a given digital asset, such as a song. With these tokens, one can create a collectible that appreciates over time, garnering profits. Moreover, one can use this channel to track a product’s lifecycle. With this information, a customer can easily differentiate between a counterfeit and a genuine item. They can also be used where sensitive information needs to be accessed by specific people only. In such a case, they can use a public key for user authentication and verify the documentation.

Using the tokens provides real-world perks

With NFTs, you can get access to certain events as they can be used to access tickets. Moreover, they can give you exclusive access to certain clubs of elites that can help one grow. NFTs foster better social value.

Tickets for sale on the YellowHeart marketplace

 

Final thought

NFTs are a significant boost to the economy and have growth potential. They create value since they are a splendid entry point for investors, especially new ones. They increase efficiency for the collection industry and are versatile and secure. The unique aspect facilitates actual ownership of digital assets; thus, the value and all trading get documented on a ledger. This fosters a natural trading environment.

About Author

Patrick Münz was already interested in blockchain technology during his computer science studies and mined his first Bitcoins in 2013. As an experienced online marketer with a strong technological background, he continuously optimizes CNF on all levels.

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