The NFT movement is very new and serves as an early example of the potential that cryptocurrencies have to expand access to the benefits of the digital economy. For creators, producing and selling digital assets might make a lot of sense. But when it comes to buying NFTs for their value as a collectable, they are a speculative investment. Value is unpredictable and will change based on demand for the piece itself.
To determine which collectibles will appreciate in value and which ones won’t, there is no clear-cut formula. But early detection of a new NFT trend can have significant future benefits. Some digital artworks that were initially sold for meager sums have since gone on to fetch thousands of dollars.
Getting involved in NFT investing may make sense for you if you enjoy collecting and have an appreciation for the arts, music, etc. When purchasing, you should consider the asset’s creator, its uniqueness, the ownership history, and whether or not you can make money from it after you have it (for example, payment to view a piece or relicensing fees).
Regarding the claim that NFTs are a “bubble” that is about to burst, bubbles are typically only discovered after the fact. But keep in mind it doesn’t change the possibility that digital assets may eventually cool off.
In reality, along with the stock market, crypto and NFT projects started to experience broad pullbacks in early 2022. Weigh the dangers and diversify your holdings, maybe adding cryptocurrencies and equities of companies working on blockchain technology to your portfolio of NFTs.
NFTs are still in their infancy as a technology. It’s a bright new frontier in technology, but there are dangers to be had when funding an emerging movement. As you learn more about NFTs, use caution and keep your investments diversified to reduce the danger that any one asset will obstruct your efforts to accumulate wealth.