NFT Art: Should You Invest?
Is art investing only for the super-wealthy?
Not anymore. With the rise of non-fungible tokens (NFTs) and cryptocurrencies, the average person (including yourself!) can now become an art investor.
How? By purchasing NFT art.
If you’ve heard of NFT art but aren’t sure if it’s a good investment, you’re not alone. There’s a lot of confusion about NFT art. Not sure if you should invest in NFT art? Here’s what you need to know before you invest.
What Is NFT Art?
An NFT is a non-fungible token. It’s a form of digital art bought with cryptocurrencies. Essentially, it’s crypto art.
While digital art can be reproduced, when you buy an NFT, you buy more than the art; you buy ownership of it. Since NFTs are bought via cryptocurrency, any purchase or sale of an NFT is visible on the public ledger of a blockchain. Think of it like buying digital art and having a digital receipt of your purchase.
The NFT market consists of a variety of different NFT art. Most of this art is visual, but NFT music is also possible. You can even combine visuals and audio, as shown in this example of digital drip music.
The Pros and Cons of NFT Art Investing
As previously mentioned, NFTs level the playing field, allowing anyone to own art, unlike other investments. They are also unique assets, and there’s no indication that NFTs are going anywhere.
Some NFT buyers get early access to new NFTs by being “white-listed” by the artist. The artist sees their participation or promotion of their upcoming project and white-lists them for early access sales of new NFTs. These NFTs can then be sold later on the secondary market for profit.
As an added bonus, when you buy NFT art, the majority of the purchase price goes towards directly supporting the artist who created it.
Finally, a lot of NFT art is affordable. While there are some extreme exceptions that make headlines, many NFTs sell for less. The average price of an NFT is $232.24, making them an affordable investment for many.
However, all investments carry risk. NFT art is no exception to this rule. When trying to profit from selling an NFT, there are two factors to consider:
- You need to find someone who is willing to purchase your NFT for more than what you paid for it
- They have to want that specific NFT
These two reasons alone make profiting from the resale of an NFT risky. Remember, the intrinsic value of NFT items is based on what someone else is willing to pay.
The lack of passive income is another downside to NFT investment.
Should You Buy NFT Art?
So ultimately, the question is, “Should you buy NFT art?” If you like NFT art and aren’t worried about making a profit, then buying some shouldn’t be an issue.
However, if you’re insistent on making a profit, or want reliable, regular returns on your investment, it’s best to seek other investment opportunities. Other investments may provide you with passive income without the need to actively seek a buyer for your art.
Like this article? Check out our Tech and Business sections for similar articles.