NFT stands for Non-Fungible Token.
A non-fungible token (NFT) is a non-interchangeable unit of data stored on a Blockchain.
So, what do you mean by non-fungible?
NFTs are digital items that can be bought and sold using Blockchain technology. But they are not fungible, making them a different type of asset.
NFTs are unique cryptographic tokens that exist on a Blockchain. Non-Fungible Tokens are undoubtedly one of the following big things in online commerce.
So, whether or not should one invest in NFTs?
Well, that depends upon the following points: –
1. The foremost advantage of non-fungible tokens is evident in the proof of ownership. NFTs are indivisible and cannot be distributed among multiple owners. Therefore, retaining its ownership.
2. It is easily transferable. It is easy to trade NFTs freely on particular markets with a wide range of options for trading.
3. The final and most crucial advantage of NFTs is supporting inclusive growth. NFT creators can obtain the actual value for their creation and interact with their consumers directly. On the other hand, buyers have the option of liquidity in different types of assets with the help of NFTs. While these were some advantages of it, let’s consider its drawbacks.
4. NFTs require the use of significant amounts of energy. Blockchain-based assets aren’t necessarily an environment-friendly process.
5. The reasons to own physical art and own digital art are often different. You can’t digitize physical art.
So, according to us, based on decentralization, NFT is a concept on Blockchain.
E.g., Centralization refers to the concentration of power and sole authority of control at the top level of the administrative system. (E.g., Government has control over the legal tender & can print unlimited money, which impacts currency depreciation.)
Due to Centralization, there was a significant setback in the economy, i.e., Demonetisation.
But the case of NFT, which runs on Blockchain, has a decentralisation concept.
Decentralisation means the transfer of power and authority from top-level to many sub-levels, therefore, increasing the overall quality and effectiveness of the system of governance while increasing the authority and capacities of sub-national levels.
So, in our opinion, NFT is a good concept, but it is pretty risky to invest a large sum as there are no regulations and proper authority.
So if anyone is willing to invest in NFT, it should be done with a small amount of money, keeping one’s risk appetite into consideration.
Please share your thoughts with us.