17 June 2022
Before we can decide which NFTs to buy, we need to know what one is and isn't. Firstly, it isn't a cryptocurrency. Because an NFT is not designed to be a currency it has no need to be fungible, therefore it is a non-fungible token. That means that, unlike a bitcoin that can be exchanged with any other bitcoin with no effect, each NFT is unique and so they can and do have very different values. Each one is serial numbered and linked to an asset that it represents in cyberspace. This allows the asset to be traded on one of the many NFT trading platforms like Singularifty.
Firstly, the underlying technology of NFTs can be different. Based on different blockchains an NFT that is built on a proprietary blockchain may only be tradable on the platform where it was originally minted. However, there are many more universal blockchains that NFTs are built on, the most common of which is the Ethereum blockchain, followed by the Solara, Binance, EOS, Cardano, Flow, WAX, Tezos, Algorand, and Tron. There are many more and new ones under development so as with anything crypto if you blink you could miss something! Either way, when first deciding which NFTs to buy, it is better to start with Ethereum-based NFTs because they are the most universal and easy to trade, and then diversify over time as you get to know the market in more depth.
Then there are different kinds of assets represented by an NFT most commonly recognized is digital art like photographs, graphic designs, animations, videos, music, and clothes for characters in a game. Many of these creative artists have found the internet to be a double-edged sword, on the one hand, it has greatly expanded their audience from their immediate area to the world but in the last 30 years artists’ creations whether audio or visual have suffered greatly from copying and sharing over the internet. But now NFTs have allowed those artists to create one-of-a-kind art and sell it online for much higher prices due to its scarcity. When considering which NFTs to buy for investment it is worth considering how much original artwork from famous artists has sold for at auction. So, when it comes to investing in digital art, perhaps we should be looking for emerging artists that epitomize the art of our generation that will hold high value in the future.
NFTs can also be used to represent objects in the real world. This is done by describing the object in detail in the NFTs metadata. For example, let us look at the example of a real estate property that you want to sell by NFT. The metadata would most likely contain tokenized versions of everything that describes and authenticates the property ownership like previous contracts, payments, plans, photographs, and certificates of ownership. It would then be mined (created) and then when sold the new owner’s name and details would be registered in the blockchain as the new owner. Of course, there does not need to be just one owner, it is possible to mint 100 NFTs to represent a piece of land for example and each could be sold to a different buyer. For this to work, it is not necessary for the asset to be dividable, like a piece of land, a single building like a hotel could have multiple owners that can buy and sell their shares and benefit from the profits. Any shareholder profit share would also be written into the NFT metadata. When considering which NFTs to buy, in the case of physical assets we are much more accustomed to valuing these kinds of items so for this purpose we can revert to traditional methods of valuation. But still, NFTs allow any asset to be sold by online auction or for a fixed price, so in the case of the auction, the final sale price will be up to the bidders on the platform in question.
What value would you put on the historic moment when your favorite sports team scored a deciding goal? And what if you could own that moment? When considering which NFTs to buy we need to think of the historic value of sports memorabilia that represents classic moments in the history of a sport. Well now with NFT you can own those moments and probably not surprisingly they are selling like hotcakes. Often these are in the form of a short video clip attached to an NFT they are currently all the range in every sport. Of course, it can be any event that is owned by someone who has the right to sell it. This takes us onto another subject, royalties.
For the creative artist, it has historically been very complicated and unreliable to collect royalties for your work, we could be talking about filmmakers, songwriters’ publishers, producers, novelists, composers, and others. These all represent products that need to be distributed and often broadcast, but how do you pay the artist? Well, NFTs have the solutions and can be programmed to automatically pay some cryptocurrency back to the artist or owner when the asset is copied or played. This makes automated micropayments an extremely lucrative business and should be considered when considering which NFTs to buy.
Singularifty is the NFT trading platform from NextHash and so comes with a reputation for its low transaction costs, security, and reliability. When you open a NextHash account you can benefit from Nexinter, NextHash’s fully regulated crypto exchange, the NextHash OTC trading desk for larger transactions, and is complemented by the Singularifty NFT trading platform. Contact us today for more information or to start trading NFT.