NFTs in the hype: What you should know about digital art and how to invest

What exactly is NFT?

The acronym NFTs stands for Non-Fungible Tokens. Let’s break the term: the token corresponds to a virtual title – and thus represents a digital asset. Irreplaceable means that it cannot be exchanged. This would be the case with Bitcoin, for example: just as ten euros always remain ten euros, so a bitcoin is always a bitcoin. On the other hand, NFTs are unique – just like a Picasso painting would be in real life, for example. Videos, images, GIFs, memes, virtual artwork or in-game items can therefore be traded as NFTs.

How does all this work in practice? NFTs are stored on the Ethereum blockchain – and therefore also paid for using the cryptocurrency Ethereum. The ownership structure of NFT can also be clearly traced on the blockchain. This protects against copying or forgery.

Why are NFTs being paid so high?

Photos, videos, memes or other virtual objects can be saved at any time with just a few clicks – what’s the point of investing in NFTs? As explained above, they are used to obtain title to a digital asset. It is theoretically possible to duplicate it, but you always remain the sole owner of the “origin”. In the end, it will be similar if you make an offer on a painting by a famous artist. Again, only the real picture has any real value – the only difference is that you can’t touch the NFT or hang it on the wall.

Our world is becoming more and more digital – and with it the art market. As a result, many buyers of NFTs speculate that, like physical works of art, they will increase in price over time, making them a good investment. Also due to the fear that our money will be less and less and thus reduce savings, more and more people are looking for such alternative investments.

How do you invest in NFTs?

There are many online platforms for trading NFTs – the largest being Opensea. Other popular sites are Mintbase, Nifty or Rarible. The latter specializes in very rare art in the form of NFTs. In Decentraland you also have the opportunity to acquire property rights. Even ebay has announced that it will soon offer a marketplace for crypto assets. Since the NFT is stored on the Ethereum blockchain, you also need the Ethereum cryptocurrency to trade. If you are looking to do some artwork on your own, there is an option to create your own NFT and make money from it. In this case, you also benefit from every resale, as you always get a percentage of it. The easiest way is to upload your NFT to OpenSea or Rarible – for this option, however, you first need a crypto wallet.

swipe NFTs

NFTs are a risky investment. It is still in the stars whether they really fit as a profitable investment. Because they have not established themselves as the physical art market for a long time – and even this is subject to strong fluctuations. Another major weakness of NFTs is the climate, as the underlying blockchain technology is a huge energy consumer. According to studies, one NFT consumes as much energy as the average EU citizen in one month. The good news: There are also opportunities to invest in NFTs for a good cause. For example, the WWF has created a crypto artwork, the proceeds of which are planned to be used to save 10 endangered animal species. There is also the Green NFT campaign, which advocates the development of sustainable NFT systems – so there is hope for a greener future for the technology.

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Author: Isabel Schumers