Non-fungible tokens (NFTs) are arguably the next big thing in the art asset class, with digital artists earning millions from NFTs and celebrities spending a fortune to acquire them. According to one market report, NFTs generated an expenditure of approximately USD41 billion in cryptocurrency in 2021.
An NFT asset has various unique characteristics, including that anyone with enough cryptocurrency to spare can mint NFTs. So, are NFTs worth the hype, and do they have any value? If you are on the fence about NFTs, keep reading to learn more about NFTs and why you should create these digital collectibles.
What Is An NFT, And How Do They Work?
NFTs are digital assets representing tangible physical assets that exist in the real world, like pieces of art. Fungibility refers to the identical characteristics of a group of goods or commodities that make single units within the group non-distinguishable. Moreover, fungible assets facilitate mutual substitution whereby one asset is exchangeable for another of equal value.
For example, fiat money is fungible because a ten-dollar bill is non-distinguishable from another. Moreover, one ten-dollar bill is exchangeable for two five-dollar bills. However, NFTs like pieces of art, music, or GIFs are 100% unique, hence the non-fungible characteristic, making each NFT rare.
Anyone with the right resources (cryptocurrency) can generate an NFT asset. However, where do you start? The first in making an NFT is creating a digital token. Digital tokens are a measure of digital assets stored within a blockchain, facilitating access to other assets and activities within the cryptoverse. An example of a digital asset is cryptocurrencies like Bitcoin and Ethereum.
Minting is the primary method employed in creating digital tokens. It allows you to create smart contracts. However, you can skip this step if you have enough digital assets.
The second step after creating digital tokens is deciding the type of NFT you want to create. Anything can be an NFT, so research is essential to identify the ideal NFT niche. Third, choose an NFT marketplace where you will store and sell your NFTs. Lastly, set up a cryptocurrency wallet to receive and store the proceeds from your NFT sales.
It only takes a few steps to start creating an NFT collection, but these few steps require a financial investment. Moreover, some NFT niches, like gaming, are more complex and may require hiring developer services.
Digital rights management is the technology that is used to protect and monetize intellectual property and copyrighted materials from misuse or theft in the digital sphere. The two core objectives of digital rights management are data protection and data governance.
So, is creating an NFT collection worth it? Below are five reasons why the effort to create an NFT collection is worth it.
1. Long-term Returns
Any investment within and outside the cryptoverse has inherent risks. Moreover, other digital assets within the cryptoverse, particularly cryptocurrency, have proven unstable, with fluctuation in value and theft instances threatening inverter assets. However, things are different for NFT assets, particularly within the gaming NFT niche and metaverse tokens.
According to one study analyzing the dynamics of 14 tokens, gaming NFTs and metaverse tokens show immense potential for a positive performance in the long run. The study highlighted the absence of high co-movement within the cryptocurrency market and the emergence of bubbles among the features pointing to positive performance. Therefore, creating an NFT collection diversifies your investment portfolio and could generate earnings through rewards and royalties by creating terms in sales contracts guaranteeing such earnings.
2. NFT Asset Ownership Is Transparent And Trackable
An NFT collection’s primary characteristic is non-fungibility. An NFT asset can only belong to a single entity or person at a time. Blockchains (digital ledgers) within the cryptoverse maintain a record of the link to a given NFT collection alongside the digital token that proves ownership of the collection.
Besides ownership authentication, a blockchain documents an NFT’s history, including the creation process and previous sales. Such measures ensure that only the rightful asset owner receives proceeds from a sale, even if someone attempts to duplicate the asset.
3. The Development of Intuitive Blockchains
Blockchain technology and the entire cryptoverse are part of the third world wide web evolution (web 3.0) that is currently happening. The second web evolution (web 2.0) heralded the creation of social networks and the evolution of content creation from mainstream platforms. While web 2.0 gave rise to creative freedom, web 3.0 aims to allow creatives to monetize content as digital assets without third-party mediation and automated property rights.
Moreover, blockchain platforms have different policies, but NFT marketplaces partner with user-friendly blockchain companies to simplify transactions by moderating transaction fees.
4. A Thriving Career As A Digital Artist
Trading NFTs in an NFT marketplace is one way to make an NFT collection. However, you also channel your creative side and create an NFT collection from scratch.
Artists from all genres are transitioning to digital art to make a living by allowing fans access to the collectibles they love. There are no limits to the ingenuity and creativity you can express through your NFT digital creations.
5. Emotional Attachment To Assets
NFTs have long-term fiscal value and, by all indications, are worthwhile investments. However, you can also create NFTs purely for the joy and sentimental value they bring. Digital asset curation based on personal sentiment can link you to like-minded individuals and create new growth opportunities.
Venturing into NFT collection may seem complicated and cost time and money, but it is a worthwhile investment. However, research the market thoroughly to make the right moves and boost your investment portfolio.