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How Indian retail investors perceive NFTs as a new asset class

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How Indian retail investors perceive NFTs as a new asset class

How Indian retail investors perceive NFTs as a new asset class
Over the last few decades, we have witnessed technology becoming a determinant factor that changed the investment landscape. The blend of technology and money management has given rise to various attractive investing options. One such investing option that is currently the talk of the town is digital currencies. In today's world, digital assets have undoubtedly become the most prominent option of the new age asset classes.
Another digital representation is the Non-Fungible Tokens, which are becoming unique assets. The assets have a plethora of options, like art, music, videos, gifs and many more collectables. Therefore, the NFT data is stored on a blockchain digital ledger that ascertains ownership and provides authenticity. Furthermore, investing in NFT necessitates a strong understanding of the content and a sense of what unique asset will appeal to people. Thus, NFTs are highly speculative and should only be considered part of a high-risk investor's alternate investment portfolio if they know that the asset class is illiquid and could lose a significant amount of value.
Understanding the NFT market
The world of NFTs is a burgeoning new market with incredible opportunities and risks. Before NFT became mainstream, retail investors adopted themselves to invest in this domain. With the help of technological infrastructures, NFTs are being developed and helping buyers and sellers to connect. Therefore, it is crucial to determine which NFT to invest in by understanding the blockchain on which the item was minted.
Managing custody of native digital goods living on a blockchain is quite challenging as investing and owning a digital good needs a digital wallet of the blockchain that is being used. Since the blockchain wallets are highly stable and easy to use to make them secure, one should take necessary precautions to protect the password and the private key. In addition, one should keep in mind that these wallets can't be found, and they can't be recovered if they've been hacked.
Another critical factor to always remember is that the market valuation of collectables will differ, so it is crucial to evaluate NFT not just based on investment but also as an asset that will be appreciable. Additionally, one should keep note of collectable appreciation as a long-term approach since NFT is slowly gaining momentum, focusing more on assets rather than profit and losses.
Investing in NFTs
The appreciating value of the NFT is derived from two factors: creator and scarcity. So, before investing in any collectable, it is essential to understand who created it and how many were created. Therefore, confirming the authenticity of the respective item that is to be purchased is vital for safer bets. Thus, NFTs are considered digital collectable, making significant investments since their value tends not to correlate with other investments and markets. NFTs are supported by the democratization of ownership, peer-to-peer transfer, and direct representation of intrinsic value.
Many crypto enthusiasts believe that as the NFT trend gains traction, they will be able to generate substantial returns from these digital assets. For many, the benefits of exclusively owning a certain NFT from a collection of an artist are more thrilling than a typical fan club. As a result, many investors in this space are paying attention to NFT communities, which are predicted to become the epicentre of the crypto market due to better investment potential.
The evolving NFT experience
To maintain the ongoing momentum of these digital assets, it is imperative to engage with the community to generate confidence and maintain transparency. NFTs have a wide range of investment applications such as digital arts, Real Estate, games, marketplace, and much more. The digital realm has become a perfect investment ground for crypto and digital enthusiasts and businesses, thanks to the capabilities of blockchain and NFT.
Crypto markets are also volatile, and the regulatory structures surrounding them are still being ironed out. These fluctuations in the market might have a significant impact on NFT demand. By allowing users to construct and build on new kinds of ownership, NFTs enable new marketplaces. Hence, India stands to benefit a lot by becoming a crypto innovation centre, given its capabilities in computing technology and the fact that crypto technology is at the edge of technical innovation.
Regardless of the risks and regulations associated with NFTs and cryptocurrencies, they are increasingly attracting the attention of many people and investors, so it may be a good idea to at least be aware of them.
The author, Anshul Rustaggi, is Founder at Totality Corp. The views expressed are personal
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