Why do NFTs exist? How can you benefit from the NFT Market?

November 14, 2022

The term “NFT (Non-Fungible Tokens)” has gained popularity over the past few years. It has piqued the interest of several investors as well as traders and money-makers. The term is closely associated with cryptocurrency, another fad that has gained impressive traction over time. Nowadays, those who don’t even know what NFTs are have heard about these terms.

What Exactly is NFT?

Before you dive deeper into the more complex terms, let’s define what an NFT is. NFT is the digital variation of a collectible, much like how Bitcoin is the digital variation of real-world currency. The other types of internet collectibles are art, music and games. The NFTs are created from the same programming which is used to create cryptocurrencies. They are cryptographic assets based on blockchain technology. However, they cannot be exchanged or traded. It is essential to know that they are individual tokens with the value stored in them. Furthermore, the market decides the true value of any NFT.

Buying NFT is a lot like buying a vibrant and innovative piece of digital art and gaining complete ownership of it. NFT has a lot of value, provided it is a utility-based NFT. There are tremendous benefits to owning an NFT, especially if you are an entrepreneur or an artist.

Market Value of the NFTs

There are always going to be downtrends like the bear market of 2022. However, the best approach to rising up in a market situation is to always invest in utility-based NFTs and become a part of a strong innovative community.

a.       Digital Content – One of the most significant uses of NFTs is in content creation. The age of digital content favors the innovative art that is brought by NFTs. They power a creator economy by giving the creators ownership of the content. The owned content can be publicized for multiple purposes.

b.      Game Development – The game development market has thrived because of NFTs. NFTs have real value, especially in online games. They can be used for recouping a gamer’s money by selling the same items they once used. Considering how the metaverse and cryptocurrency are transforming the gaming world, the value of NFTs is only set to increase.

c.       Investments and Collaterals – NFT is a part of blockchain technology. Its tech is based on the same principles as that of decentralized finance, or DeFi. DeFi applications are transforming the world of finance by bringing in a more decentralized version of the economy. In a world where autonomy depends on the community, there is endless potential for growth for techs like cryptocurrency and NFTs. When it comes to financial transactions, DeFi applications change the game by letting you borrow money using NFTs as collateral.

d.   Building a Strong Community – NFTs have been used extensively by top investors and entrepreneurs to build a strong user base which leads to the formation of a robust community. Usually, utility-based NFTs are better at the creation of communities. The value of a community for the market value cannot be overstated. When the market conditions are down, a community can sustain an asset and even revive it.