Why NFT’S are harder to trade than cryptocurrency?

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Since last summer, the non-fungible token (NFT) market has been flourishing. Historically, NFT has sold $41 billion worth of products, with the majority of those sales occurring since August of last year, when the company had only sold $74 million worth of products. As a comparison, in 2020, the worldwide art market was expected to generate $50 billion in sales. That the NFT market is growing at such a fast pace should worry every investor, not simply because of its magnitude. Is investing in NFTs a good strategy?

Since everyone wants a piece of the NFT action, it’s important to keep the investing side of NFTs separate from the fun side

NFTs seems to be more of a fad than a new financial asset from the standpoint of investors, serving as a substitute for meme stocks for irrational traders. Investing in stocks and options has already been made more fun with Robinhood Markets, Inc., but NFTs take this concept one step further by incorporating gaming elements into the real investing process. Since most NFTs, like meme stocks, trade their social media exposure, this seems like a reasonable conclusion. The future of NFTs as an alternative investment class is bleak for a variety of reasons.

Getting to Know NFTs

Cyber currency tokens known as NFTs are one of a kind. As a result of this, each digital item is linked to a certain NFT catalog platform. In addition to digital files, some suggest that this digital asset may also include physical assets like a tennis shoe.

Buying and Selling NFT Contracts

There are NFT markets, similar to eBay’s, where NFTs may be exchanged. Although some NFTs are offered at set prices, auctions are the most common way to buy them. Some markets specialize on a certain sort of NFTs, such as art, gaming, or sports, while others offer them all. You may mint NFTs on any of the markets if you’d want to do so. With a market share of roughly 90% by dollar trade volume across marketplaces, OpenSea is the biggest marketplace.

The creation and trading of NFTs are subject to a variety of costs, ranging from the initial account setup charge to minting and sales fees. In order to manufacture or trade NFTs, you need to familiarize yourself with the fees charged by a certain marketplace. In January, OpenSea earned around 8% of its sales volume in fees. When a transaction occurs in an NFT through catalog, the original author of that NFT may get a royalty fee of between 10% and 30% of the selling price.

Investing in NFTs Is Dangerous to Your Money

According to the findings of the previous research, the majority of NFT speculative traders do not make a profit. The findings are disappointing, but not unexpected, from an investment standpoint. Trading in NFTs may also expose you to the risk of falling victim to the widespread fraud that exists within the industry. 

When it comes to “bad actors” selling and trading NFTs (including counterfeit tokens or assets they don’t truly own), the CEO of one NFT platform characterized it as a “contagion.” There is a risk that your NFT purchase may be worthless

By Michael Caine

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