Investing Money with NFTs and Co: The New Beginner’s Course
Those who want to invest money are increasingly coming across NFTs. Here we explain what that is and how you can use the tokens.
Berlin. NFT, Blockchain, Bitcoin and Co: The Modern Financial World is Digital. New financial instruments can be beneficial to investors. But you should take a closer look and learn what’s behind Ethereum, CryptoPunks, and other terms. Here we explain the most important keywords.
1. NFT and Co. – What is this actually?
NFT is an abbreviation for Non-replaceable code. First, the difference between a replaceable token and a non-replaceable token should be explained. This is the best compared to banknotes. If we have two 5 euro coins in our pockets, it does not matter which of the bills we take to pay them, because they both have the same value. This means that the note can also be exchanged or exchanged for another €5 denomination. This is a token that can be exchanged or exchanged.
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A numeric example of a replaceable token is Bitcoin as currency. Again, it doesn’t matter which Bitcoin you own, because 1 BTC always has the same value as another BTC. For a non-fungible token, compare your iPad to a college board. You can write on both, but they are completely different in value. Just because you can type on both doesn’t mean you’ll replace your iPad with a laptop.
NFT is different from cryptocurrency
Unlike cryptocurrencies, it doesn’t matter which one NFT one owns. As an example, you can imagine a wallpaper for a laptop: this wallpaper can be copied 50 times. Copy 1 is more valuable than copy 2. Copy 2 is more valuable than copy 3. This can continue. The value of these different copies can change at any time.
What can NFTs be used for? Basically, NFTs can be assigned to whatever is digital. Even non-numeric elements can be encoded through NFT. This also includes the music and film sector, and documents, images or artwork can be sold as NFT. In principle, everything that is digitally owned can be created or can be digitally owned as an NFT. And that’s all there is to it technology of NFTs: Blockchain-Based Digital Ownership.
What is a blockchain?
term Blockchain It means blockchain. “Blocks” represent individual data records that are saved one by one, creating a kind of chain of data records.
Example 1: Yacht Club Bored Monkeys
Bored Monkey Yacht Club, or often colloquially called Bored Ape, is one NFT . collection, which was created on the Ethereum blockchain. The set contains a total of 10,000 digital profile pictures of various cartoon monkeys. These different monkey pictures are generated by an algorithm. It is a project of Yuga Labs. I read here: Flat Rate Energy: This is how much money is left on average
The special thing about this NFT is the smart contract behind it. Behind the smart contract are lines of code that specify certain things (such as the name of the owner and creators). In addition, as the creator of the project, you can also set properties or utilities for this token.
NFTs: Creating a Lifestyle Brand of NFTs
Yuga Labs was among the first companies to use NFTs not only as digital assets It was sold, but it established an exclusive lifestyle brand of NFTs. For club membership, a “boredom monkey” NFT was required, so to speak. Due to exclusivity and strong demand, the price of NFT increased from 150 euros to nearly half a million.
Example 2: Cryptopunks
CryptoPunks is also an NFT set in a file Ethereum Blockchain, launched by Larva Labs in 2017. Similar to boring monkeys, a set of 10,000 individual parts has been created here. This includes pixelated profile pictures of people with different characteristics. Cryptopunks have seen quite the buzz in 2020, buying and selling for millions of dollars. The project was purchased this year by the creators of Bored Ape Yacht Club – Yuga Labs.
2. Can you really make money with it?
First, the different types of NFTs must be described. There are NFTs that consist of several 1000 parts, but one part Collection Owned and can increase in value over time, or 1 on 1 types, such as artwork that only exists once as a digital asset. 1 in 1 NFTs are mostly created by artists and sold as individual items. More on this topic: NFT: Risky Digital Art Works
So there is an opportunity to buy and own this unique stuff as a work of art if you think the value of the NFT will increase. Another possibility is to “invert” NFTs: flipping It can be considered a modern day lottery. With a collection of 10,000 unique pieces, you have to realize that some pieces are rarer than others. We humans automatically realize that rare pieces are more valuable.
With “flipping” you are trying to buy cheap and sell them expensive in a short time. Some projects are announced months before they are launched and hit the waiting list or “allowlist“Release it to individuals who are subsequently approved to buy the NFT. The purchased NFT can then be sold back at a much higher price, depending on how much hype the project has previously gained. But similar to cryptocurrencies and stocks, the problem is whether the value of the NFT increases in value. It is still uncertain and can not be predicted with any guarantee.So if you want to get an NFT, you should invest enough time and get yourself well acquainted with the NFT project.
3. What do you need to think about urgently? How much money should you start with? What are the risks?
The general recommendation is: Invest one the totalYou can handle the loss.” However, if you are a beginner and want to approach it with caution, you can also shop for smaller amounts (€50, €100…) and work your way up. It is definitely worth asking, researching and actively following projects on the NFT forums. To start with, it is also worth getting into projects that do not rely on the Ethereum blockchain to get a cheaper entry.
Of course, there is also the risk that you will invest in a hurry in projects that will subsequently fail completely and can lose the entire amount invested. Many fear losing direction (also known as FOMO – ‘fear of missing out’) and allow themselves to be affected by this fear. Especially with the offers that have increased significantly Total win Advertisement, one must be careful. This could be a fraud. (fmg)
You can find the free introductory course at NFTs and Co. over here.
This article first appeared on morgenpost.de.