The stock market has been on an upward trajectory since the recession of 2008, but that doesn’t mean it’s right for everyone. As with any investment, there are risks involved, but there are also opportunities to make money if you know where to look. NFT stocks may be the way to go if you’re looking to diversify your portfolio, so check out this guide to learn more about these exciting and lucrative investments.
What Are Non-Fungible Tokens (NFTs)?
A non-fungible token, or NFT, is a digital asset whose value is linked to real-world assets, like gold bars. While tokens are often confused with coins and other cryptocurrency terms, there are clear differences between them. A cryptocurrency coin (such as Bitcoin) has its own blockchain and can be divided into fractions for easier transferability. An example of a cryptocurrency is CryptoKitties, which uses ERC721 tokens on Ethereum. Each CryptoKitty has its own ID number and owners can purchase, sell or trade their digital pets using Ether (the currency used to fuel Ethereum).
How Do NFT Stocks Work?
NFTs are blockchain-based tokens representing ownership of a specific asset or utility. For example, you might be able to acquire an NFT token for a piece of art that you own. When an asset has been turned into an NFT and registered on a blockchain, that item can be more easily sold without having to pay transaction fees to an auction house (like Christie’s or Sotheby’s). Digital collectibles are another popular use case for NFTs. CryptoKitties, a game where users breed digital cats and sell them on ERC-721 crypto exchanges, raised $12 million USD in funding last December.
The Benefits of Investing in NFT Stocks
If you’re wondering if now is a good time to invest in non-fungible tokens (NFTs), here are some of their key benefits: * High liquidity. * No minimum investment. * Low fees, if any. * Immense potential for value growth over time due to scarcity and market adoption. For example, take Cryptokitties, which had close to 1,000 new users each day during its peak popularity! That’s explosive growth potential. For more information on why investing in NFT stocks makes sense, check out our primer on buying and trading ERC-721 tokens—the standard behind all non-fungible tokens…
The Challenges of Investing in NFT Stocks
If you’re thinking about investing in non-fungible tokens (NFTs), also known as crypto-collectibles, you’ll be facing both challenges and opportunities. For example, it can take weeks to transfer tokens to someone else—so trading will be a bit more challenging than with traditional stocks. You’ll also need to learn how your wallet operates, something that comes naturally with fungible assets like money or other stocks. But these challenges don’t stop there—there are others to consider, including volatility and liquidity problems. Overall, however, many see immense potential for cryptocurrency and believe that investing now is a good idea.