NFTs are digital assets that act as secure documentation of ownership and can be a profitable investment for collectors. Artists, collectors and speculators alike have flocked to this movement as cryptocurrencies and other digital assets have soared. NFT collectors are not unlike those who collect physical items such as baseball cards or stamps, both wanting rare and coveted items. NFTs associated with sports memorabilia may be more likely to gain value, but collectors may be more likely to invest in tangible items than in digital assets in the future.
NFTs have also been central to the growth and development of virtual land, and as a result have enabled land ownership in the virtual space. Global consumer research platform Pipslay recently surveyed more than 30,000 Americans and found that 48 consider NFTs a "good and safe investment". Although NFTs are often bought and sold using cryptocurrencies such as Bitcoin and Ethereum, they are not cryptocurrencies themselves. This is part of the reason Morgan says investors should be wary of NFTs, even if they are fun to dabble in.
Tying NFTs to land has proven to have great potential for growth and development; for example, in real estate, owning and controlling virtual land gives you the power to decide what you want to do on your land. But not all NFTs are over-inflated bubble assets, and not all assets caught in a market bubble are destined to be a bust. It is immensely exciting to see innovative developers constantly building new functionality for NFTs. Moreover, many NFTs are already turning the art payment model on its head by offering royalties to artists on every future purchase, meaning that, for the first time, many creators will benefit directly from the appreciation of their work over time.
However, unlike the art market, NFTs give more autonomy to artists, who no longer have to rely on galleries or auction houses to sell their works. One of the most important terms to understand when negotiating with NFTs is the minimum price, although this can sometimes be misleading. Thus, perhaps the most sensible approach to investing in NFTs is not to consider them as investments at all, but to buy tokens related to your personal interests or hobbies. Finally, you should only invest in NFTs if your emergency fund is fully funded and you are up to date with your retirement contributions.
ERC-721 is the first open standard used to build NFTs on the Ethereum blockchain and remains one of the two main standards used today.