Acknowledging the investment world can be difficult, especially when it comes to the digital asset class. With all the attention, digital assets or NFTs (Non-Fungible Tokens) are sharing the brightest spotlight at the moment. But at this stage, you might be scratching your head that what NFTs are?
What are NFTs?
They are the digital representations of assets created and stored on the distributed decentralized ledger, that is Blockchain Technology. Each NFT is unique and has a code that distinguishes it from other NFTs and prevents replication. Moreover, NFT can be anything ranging from digital art to a real-estate asset. For instance, Jack Dorsey, the founder of Twitter, recently digitized his first-ever tweet, “just setting up my Twitter,” and it sold for nearly $3 million.
Now lets, find out that, are NFTs a Boon or a Bane, by discussing its pros and cons
Pros of NFTs
1 Revenue System For Creators:
NFTs were particularly created to help artists earn income. Artists and Creators create digital arts, and If their artwork results in more value — which it gains when it becomes popular on the internet — the artist realizes gains income.
2 Ownership Of Physical Assets:
Nowadays it is difficult to define ownership of certain assets such as real estate, jewelry, or a bottle of wine. But when it comes to NFTs ownership can be defined easily, as they are stored on Blockchain Technology and due to this authenticity of the owner is maintained.
3 Secure & Immutable:
As NFTs are stored on Blockchain Technology and this technology is a system of recording information in a way that is impossible to hack, alter or delete. Especially, data stored on the Blockchain is secure and immutable because once the data is stored on the ledger it cannot be changed. Thus, NFTs are secure and immutable.
Cons of NFTs
1 Harm To The Environment: Buying and selling NFTs is creating a negative impact on the environment because transactions happening on the Blockchain require a lot of power usage. It is estimated that, at the current rate, the carbon emissions from mining cryptocurrencies and NFTs will exceed those associated with the entire city of London in the coming years.
2 NFTs Are Not Income Friendly:
NFTs do not offer their owner income potentially like dividend-paying stocks, interest-bearing bonds, and rent-generating real estate.
3 NFTs are Volatile:
NFTs are not very liquid as they are not widely understood by many users. They are very less potential buyers and sellers in the NFT market. Due to this, it becomes difficult to trade NFTs and thus it also means that price of NFTs is highly volatile.
Final Thoughts
NFTs are gaining huge attention as their use cases are also multiplying. Considering the pros and cons of NFTs, they have a lot of potentials and might overcome disadvantages in the future.
About Deefy
Deefy is a decentralized protocol that enables financial utilities on NFTs such as Renting, Lending, and Pay Later.
Deefy’s Vision
Deefy’s vision is to create a revolutionary shift by introducing a truly decentralized ecosystem and creator-centric financial instrument for creators, influencers, Gen Z & micro-financiers.
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