homecryptocurrency NewsHow NFT trends are changing the world of investments

How NFT trends are changing the world of investments

How NFT trends are changing the world of investments
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By CNBCTV18.com Contributor May 28, 2022 5:17:27 PM IST (Published)

NFTs are offering new ownership opportunities and remixing old ones, but they might be heading towards a "bubble."

The exponential expansion of non-fungible tokens (NFTs) in 2021 was due to a variety of factors, one of which was the unpredictability and universality of new technology adoption.

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Though rise in the value of Ethereum may seem like excellent news for investors who believe the value of NFTs will increase in the long term but NFTs carry a high level of inherent risk.
But what are NFTs, again?
To assess the real impact of NFTs on investments as well as the future of investments, we need to understand what NFTs are. They are non-fungible tokens, many would repeat with a long sigh of frustration, in the same breath forgetting, as they go on to click on another quirky image on a peer-to-peer platform, that they are more than just JPEGs.
NFTs are crypto assets that represent a digital item like an image, video, or even land in a virtual universe but the emphasis lies on “represent” here. NFTs, as blockchain tokens, only certify that you are the only owner of that one-of-a-kind digital thing — regardless of what it is.
The future of investments with NFT in the picture
NFTs are offering new ownership opportunities and remixing old ones, but they might be heading towards a "bubble." Their commercialisation is restricted to a trusting and courageous few. This means that unless the NFT marketplace becomes more accessible to the general public, it won’t be extensively embraced, restricting its promised potential.
The actual value of NFTs lies in the smart contracts on the blockchain technology that powers them. That is why it's important to look at the big picture because even if the demand for NFTs declines in the future, they may still stay around at least in the near future. The frequency of use might decrease, but the more general applications of NFTs, because of the smart contracts that drive them, will continue to be compelling.
Even so, average retail or individual investor should stay away from NFTs for now unless they only want to invest in them for the artwork and don't care if they lose their money. I recommend doing it in a risk-free manner by investing only what you're willing to lose, or avoiding it completely if it would interfere with other financial goals.
In short, whether it's ten dollars or a hundred, don't put any money into NFTs that you can't afford to lose. Cryptocurrency is still another matter; it can occupy up to 5 percent of the investors’ portfolio in the current scenario but that won’t change the position of NFTs.
The investment world is peeling open like fruit right now, it has all the freshness and fragrance of a post-pandemic boom. NFTs may be playing an alluring part in it now but it remains to be seen how relevant they will continue to be in the future.
The author Andesh Bhatti is an Angel Investor facilitating and enabling the future of a technology-driven world. Views expressed are personal.
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