Are NFTs a Scam or a Great Revolution Within the blockchain?
What are NFTs (Non Fungible Tokens)? What are their possible applications, the hype surrounding them, and the underlying (possible) risks?
This new GAINS article in collaboration with MTX33 should give you some insight.
A few key points
Let’s first go over what a fungible asset is: a fungible asset is simply an asset that can be exchanged for another asset of the same type; Let’s take the example of Bitcoin (BTC) 👇
BTCs are fungible assets because they are of the same kind and quality in the sense that they are all derived from the same computer protocol and are subject to an equivalence ratio; NFTs are the opposite because they are not exchangeable: they are unique.
They are also cryptographic elements like BTC and other traditional cryptocurrencies but what makes them valuable is not simply their rarity, but their uniqueness.
Applying this concept to the real world, we have with works of art, the possibility for an artist to authenticate his work.
By what means?
Thanks to the blockchain, artists can now protect & sign their work using timestamp signatures.
No more piracy, no more illegal download, it would become mandatory to pay subscriptions; This is applicable to dozens, hundreds of industries, thus facilitating the adoption of blockchain.
The Internet is an undeniable revolution because it has essentially made access to information easy; Before its inception, those who had access to it were few in number.
This democratization of information has led to the advent of all alternative media (Youtube, Facebook, Snapchat, etc.); Today, your audience is measured by the impact of your tweets and Donald Trump won’t contradict us.
The problem of access to all this data is the value it contains in part; This is where the blockchain comes in because that’s a tool that allows users to regain control over a part of the value they create.
The potential of NFTs is almost infinite because the size of the market is all the value, that is to say, a market of several million or even a few billion.
For content creators and sellers, there is a fertile ground at this level with a very big potential in terms of cash flow it can generate.
In concluding, we would like to draw your attention to the risk of illiquidity of the digital arts purchased.
Remember that we are in the middle of a Bitcoin hype, Altcoins season should start in the next few weeks and it is therefore not illogical that NFTs take advantage of this craze.
Before buying anything and everything, don’t forget that if you buy with a view to resale, your capital gain will be conditioned at the time of purchase.
So be careful with high valuations since when the Market will dump, your NFT might (unlike traditional alts which usually deflate at around 80%) could lose all its value while BTC enters a new bullish cycle after each halving.
So if you bet big and overpay an NFT (which intrinsically was not worth it), the dream could turn into a nightmare; FOMO doing considerable damage.
Of course, there will always be lucky people, but it is crucial to understand the risks before entering this very promising market.
So, are you bullish about the future of NFTs? 🤔
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