How a new type of digital ownership is changing the world...
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To most people on the sidelines, NFTs started out looking like fun, cute distractions from a hectic, pandemic-ravaged world. As time went on, however, and these strange little pieces of technology kept popping up in online culture, it became increasingly clear that there was something special about them. This became doubly apparent when NFTs started selling at ludicrous price tags, like the artist Beeple’s $69 million sale in March 2021. Meanwhile, countless collectors have raked in profits too.
The popularity of NFTs only seems to be growing, and people involved in NFT culture are finding more and more ways to use them. But why NFTs? What makes this feature of blockchain technology so attractive to artists and collectors all over the world? Let’s explore this phenomenon to find out.
Benefits of Collecting NFTs
NFTs may be fun, but there’s a lot more to their success than just novelty and entertainment. Many of the benefits are totally unprecedented when compared to traditional art collection. A few of these key features include:
- Security – If you want to spend top dollar on a traditional painting, one of the first steps in the process is making sure you’re buying what you think you are. This process may include consulting art experts, tracing a work’s origins, and ensuring authenticity. NFTs completely eliminate these barriers through trade on the blockchain. Because NFTs act as unchangeable digital signatures, traders and collectors are treated to a built-in record of an NFT’s history and authenticity.
- Low barriers to entry – Both creators and collectors can celebrate the ease of exchange of NFTs on the blockchain. There are no gatekeepers preventing the production and distribution of artwork, meaning that creators are free to offer anything they want, and collectors are free to purchase it. This is especially beneficial to anyone who wants to collect or produce art without much starting revenue. Minting an NFT is cheap and easy, and buying one is often cheap or even free if you’re involved enough in a community to learn about projects early enough. These can be resold for a huge profit.
- Accessibility – One huge downside to physical art is that you have to purchase it from a physical location. Whether you need to travel to pick it up or pay handsomely to have it shipped to you, difficulties are sure to arise. By switching to purely digital art, these problems disappear instantly. Anyone with an internet connection and a crypto wallet is free to purchase and collect any NFT that’s for sale. Artists also don’t need materials like paint or canvases to craft digital art.
- Royalties – The distribution of royalties has long represented an ethical and logistical problem in the world of art. Historically, a league of middlemen have stood between the artist and the consumer. Between management, unions, and other agencies shaving off a slice of the pie, little is often left to the artist. Often, artists are only paid up front and miss out on future royalties if the work increases in value and is resold. NFTs make for a much simpler and more streamlined royalty process. It’s longer lasting too. Artists can automatically get a percentage of all future sales for their work. The middlemen are also removed, meaning more profits for the artist and often lower price tags for the collector. It’s a win-win for everyone involved.
Those wondering about the legitimacy of NFTs don’t need to wait for evidence of their success. There are countless artists and collectors who have already made incredible profits through NFT exchanges. In December of 2021, a CryptoPunk, one of 10,000 randomly generated NFTs that were given away for free in 2017, sold for $532 million. 18-year old artist Jaiden Stipp has cashed in around $18 million for his colorful, identity-themed NFTs. These are outliers, but plenty more artists and collectors are making very healthy livings through NFT exchanges. It’s clear that the sky's the limit.
Holding vs. flipping NFTs
If you decide to start collecting NFTs, you’ll eventually be faced with a tough decision: whether to hang onto your NFT for long-term gains or resell it for a quick profit. If you’re collecting for collecting’s sake, the decision is easy, but those wishing to maximize profit have to take a leap of faith either way.
NFTs are speculative, and nothing is guaranteed. It’s worthwhile to ask yourself one question when you make your purchase: which would you regret more, selling too soon and watching the price soar or holding too long and watching the price fall? Answering this honestly will help you assess your risk tolerance, which is an important consideration for investors of any kind.
Next, ask yourself if you believe in the long-term success of the project. Is it appealing to enough people to increase in value over the next few years? Does the project provide enough scarcity to skew supply and demand in your favor? How in demand were the NFTs at the time you acquired one? These answers will vary from project to project, but it’s always best to purchase NFTs that you believe in. Investing, no matter the avenue, is an emotional game.
Ultimately, NFTs are too new to know how value will play out in the long term, but we can look to Bitcoin as an example of the possibilities of blockchain investment. If you’d sold one coin in 2012, you would have received about $14. If you’d held until now, you could sell it for $43,000. However, countless coins have crashed and burned in the meantime.
Discover new NFTs early
If you’re interested in getting involved in NFT trading, enter.art is the ideal place to get started. We host an enormous range of work from both new and established artists on the Binance Smart Chain. If you want to discover new, profitable NFTs, you’ll need to find them early, before their value has had a chance to explode. Enter.art hosts countless artistic investment opportunities.
Want to learn more about NFTs and explore the enterverse further? Check out these articles:
Looking to learn more about NFTs? In this section you can learn more about how NFTs are revolutionizing the world.
PUBLISHED 17TH MARCH 2023
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