If you are an artist, a musician, or a gaming enthusiast, the hype of NFTs must have crossed your mind. Even with so much ‘buzz’ going around the case, only a few seem to understand the use cases of NFTs completely.
Non-fungible tokens, aka NFTs, are digital assets that serve two purposes; NFTs cannot be copied, exchanged, or divided. As tokens, these are recorded in the Blockchain, pointing to the ownership it carries.
For instance, when you buy an NFT, you can be assured that the NFT carries rareness and that the ownership belongs to you alone. Now, the question is, where can you buy it? The NFT marketplace.
That being said, let's go through the pros and cons of NFT.
Pros of NFTs
1.Improvement in market efficiency
The introduction of NFTs brought many changes, and one such interesting change is the conversion of physical assets to digital ones. This way, there has been an improvement in the supply chains, reduced intermediaries, and increased security. The best example of this is the NFT in the art world. Artists can now directly be in touch with their audience, eliminating the need for an expensive agency. On top of that, the digital revolution of the arts will cost much less.
2.Blockchain technology makes the NFTs secure
All the NFTs are recorded in the blockchain minimizing the chances of being altered or copied. This also increases transparency as blockchain transactions are transparent to the members of a peer-to-peer network.
3.The ownership belongs to the buyer
NFTs recorded in the blockchain have smart contracts representing the authenticity and ownership of the NFT. That being said, if you decide to sell an NFT, the smart contract will also get transferred to the next buyer.
Cons of NFTs
1.NFTs are not liquid
The NFT market is volatile and illiquid. An NFT’s price depends on the market requirements. That is, if the NFT is in demand, prices are high. This can result in a challenging trading experience.
2.NFTs tend to attract fraudulence
Many news outlets have stated that original artists are concerned about seeing their artwork online without their permission. The problem arises when someone creates a digital copy of the artwork and tokenizes it to sell it on the marketplace without even giving credit to the original artist. NFTs use a unique token to tag an artist’s digital art, given that he is the artwork's owner.
3. Addiction to the online marketplace or NFT games
The awesomeness of NFT can sometimes be a concern of addiction as well. The rising trend sure is attracting a bigger count. But that doesn't stop there. The Metaverse introduction has enabled the public to build themselves virtually more than in reality.
Bottom line
NFTs are an intriguing introduction to the market. Though low right now, the market is expected to reach a much greater height in the coming years. However, a smart investor should move with caution while investing in NFTs.
