NFTs: An Explosive New Frontier

Non-fungible tokens (NFTs) have become one of the most popular topics since 2020. Its popularity mainly comes from the headlines it has been making worldwide. NFTs made by well-known artists, like Bored Ape Yacht Club (BAYC), are being sold for astronomical prices. The most expensive so far, the Beeple’s Everydays: The First 5000 Days, was resold for 69.3 million US dollars in 2021! While people are excited by headlines like these, few actually understand what NFTs really are, and some simply see them as a dishonest scheme. Despite the skepticism surrounding NFTs, investing in NFTs is a lucrative business, as long as one knows how to look out for deceptions.

The re-selling of NFTs is currently a flourishing business because buyers are willing to pay extra money in order to acquire the rarest ones on the market. These buyers believe that rare NFTs hold value since they are backed by a secure technology called Blockchain. Blockchain is more than just a data storage system that contains all the information of the users’ digital items. It is also a network of countless computers working together to authenticate the validity of a line of code, which guarantees the value of an NFT.

Investors of NFTs endeavor to acquire rare pieces that have the potential to increase in value so they can flip their investment and make a profit. NFTs are traded through online auction houses and virtual platforms like Christie’s. Buyers make their purchase with cryptocurrencies like Bitcoin or Ethereum. Since the value of cryptocurrency fluctuates significantly, there is a very high chance for an NFT to double its value over a short period of time.

Despite the promising outlook on NFTs, there is a negative side as well. NFTs are sometimes used as a scam since the price of NFTs can be easy to manipulate. A group of scammers could work together and buy select NFTs to pump up the demand for the NFTs, causing the price to rise. Another way that scammers cheat buyers is by making replica accounts. Those involved in the fraudulent schemes pretend that they are legitimate NFT distribution organizations. Since NFTs are traded through cryptocurrency, it is impossible to trace where the money flows if a person were to fall victim to fraud.

Granted, the concept of trading NFTs is still extremely new compared to stock trading. The risks are high, but the profits are also considerable, which is what appeals to many brave investors involved in the world of NFTs. Despite the likelihood of scams, one could also enjoy a fruitful profit if one knows how to stay safe.