Non fungible tokens: Non fungible token is a digital asset based on Blockchain technology. The interest of HNIs towards this has increased a lot, but the volume and demand are still very low. In this case the risk factor is high.
Like cryptocurrency, it also has a lot of ups and downs.
Non-fungible tokens (NFTs): You must have heard and known many times about blockchain technology and cryptocurrencies in the last few years. Cryptocurrencies like bitcoin, ethereum are based on blockchain technology. The name of another digital asset based on this technology is NFT which is called non-fungible token. The craze for investing in NFTs has increased for some time now. Like cryptocurrency, it is also quite volatile.
Investing in non-fungible tokens (NFTs) is also risky due to volatility and it is also important to understand this. The interest of high net worth individuals called HNIs has increased tremendously. It is completely a digital asset. Twitter’s founder Jack Dorsey’s first tweet was sold in the form of NFT for $ 2.9 million or 200 million. Similarly, an art work “Everydays: the First 5000 Days” was sold as NFT and it was sold for $ 69.3 million i.e. around Rs 500 crore. Digital art can be in the form of NFTs. Apart from this, anything can be unique music, GIFs, video, audio.
Everything unique is sold in NFTs
Before knowing about investing in non-fungible tokens, it is important to know what it is. Actually NFT is a blockchain technology, under which whatever wonders in the world you put in the blockchain ledger with a token (unique ID). Its uniqueness is its value. In other words, millions of pictures of Monalisa are available on the Internet, but the original picture is in the Louvre Museum in Paris. Similarly, with the help of NFT, if something unique happens, it is put into the blockchain ledger with the help of a password. Everyone can see this, but the ownership is with only one person.
Changes can happen in the lives of artists
Blockchain technology experts and its supporters say that with the help of NFT, the artists of the country can be empowered. Many things like art, food, fashion, culture, style are unique in our country. Women prepare unique paintings with their own hands. Right now it is not able to get its fair price, but if it is linked with NFT technology, then its demand will come from all over the world and there will be economic improvement in the life of every kind of artist. Artists, musicians of the country can get new opportunities with the help of NFT.
What are the risks involved in investing in NFTs
The biggest risk of investing in non-fungible tokens is copyright related. It is possible that what you considered original and unique may have been influenced by someone else or has been stolen. In such a situation, if you buy the second copy NFT, then the first copy person can raise the copyright issue. Apart from this, if it is stored in the wallet, then there will be problems if you forget the password. There is a lot of fluctuation in its price, as well as price manipulation is also possible.
Copyright is an important matter
As the copyright issue escalates, it will be difficult to identify who is the original and who is the first copy. In the absence of a regulator, it cannot be described as the right option for investment. There is no such forum for investors where they can register their views or complaints.
Volume and demand very low
Experts in this sector say that at this time the market of NFT is standing at the same point as the market of cryptocurrencies in the close of 2013. At this time the volume in this token is very less, the demand is also weak. Initially, most of the products like art, music, video are visible in the form of NFT. There is no underlying value with it. Like even after his death, the art of MF Hussain is priceless. In such a situation, in terms of investment, retail investors should invest in it while saving. Even if they invest, its share in the portfolio should be very less.
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