Pros and Cons of NFT - Non-Fungible Token
When Blockchain Technology first came on the scene, people often wondered how it could be used to make Cryptocurrency and digital assets a reality. Now, blockchain technology is being put to use in most industries worldwide. As of right now, the biggest player in the Blockchain is Bitcoin. However, it doesn't stop there. Over time, we see more potential blockchain applications that revolve around non-fungible tokens. Here are some pros and cons of NFT you should know before you think about investing in them.
What are the Pros of NFT?
The gamers, artists, and investors look forward to investing in this nascent technology. However, there is certainly to take away from Non-fungible Tokens, which will benefit those who adapt to it early. Here are some pros of NFTs you need to consider if you are more into the digital world.
1. NFTs are Uniquely Owned
NFTs are unique in that they are not subject to the rules of traditional property ownership. NFTs are not assigned an owner; rather, they are unique. This means that they can be used in many different ways, and they are always going to remain unique and un-replicated.
The use of Blockchain makes it possible to achieve the highest transparency in business processes. Transparency is highly important for any business. Blockchain technology ensures that all transactions are transparent, even for a layman. This will also prevent corruption and other dishonest activities from happening.
2. Increased Market Value is one of the Foreseeable Pros of NFTs
The market value of NFTs will continue to increase as their popularity, and use cases grow. This is due to the unique benefits that NFTs offer, including security, portability, and scarcity. One of the easiest ways to invest in NFTs is through Bitcoin. You can trade Bitcoin for an NFT, which has helped investors earn immense profits from this type of investment.
3. NFTs will be a Great Option for Licensing Digital Art
Non-fungible tokens (NFTs) are unique digital assets and cannot be divided into identical units. As a result, they provide a great option for licensing digital art, as each token represents a one-of-a-kind piece of artwork. This allows collectors to own and trade the art they love without worrying about someone else owning an exact copy.
At the moment, some of the most popular NFTs include CryptoKitties, which raised more than $20 million in its initial sale, and Artology, which allowed investors to acquire original art for ownership rather than simply view it online.
4. NFTs can be used for Fundraising, Gaming, and Collectibles
NFTs can be used to raise money for a good cause, as in the case of the charitable gaming event called Blockchain for Good. NFTs can also be used to create unique digital collectibles that can be traded or used in gaming applications.
5. Future Trading & Investment Options
Non-Fungible Tokens are becoming Trading and Investment Options as their popularity soars. Their unique features make them perfect for trading and investment purposes. For example, NFTs can be easily transferred and traded, and their value is relatively easy to determine. With this combination of features, they have become many people's trading and investment choice. As a result, many people believe that it is not just a matter of time before NFTs take over the major Cryptocurrencies in terms of market capitalization.
What are the Cons of NFT?
Utility tokens are just digital assets that have no real utility. These types of tokens were all the rage in 2018, but the game seems to be changing. This is because many people saw these tokens as blank canvases for companies to raise money and escape regulatory scrutiny under the guise of being decentralized networks. As such, Utility tokens can be very risky, unstable investments. So let's take a look at the Cons of NFT altogether.
1. Uncertainty is one of the Common Cons of NFT
NFTs have uncertain value because their worth is based on the assumption that they will be used in the future for something. NFTs are, in a sense, speculative investments. But unlike other speculative investments, tokens are generally not backed by commodities. Because their worth is derived from the amount of utility they will provide in the future, NFTs are extremely volatile and difficult to value.
2. Physical Art cannot be digitized through NFTs
Physical art, such as paintings and sculptures, cannot be digitized through NFTs. This is because physical art is a three-dimensional object in the real world, while NFTs are digital assets that only exist on a Blockchain. TREZOR, the Cold Storage Wallet created by Satoshi Labs, combines advanced security with a comfortable and intuitive interface.
TREZOR uses a 12-word mnemonic seed phrase to store your private keys and display its recovery sheet. When setting up your TREZOR, you should write down your recovery sheet to keep it safe because if you lose your 12-word seed phrase, your wallet can no longer be recovered.
3. Blockchain Technology Links to Environmental Impacts
One of the debates around using NFTs and Blockchain technology is the environmental concern. For example, any record entered into the Ethereum blockchain takes high-end computing and uses significant energy. A recent Cambridge University study has shown that the blockchain is an energy-intensive technology. The study has also shown that the rise in crypto mining and blockchain activities has increased global warming by 2%. If done excessively, the environmental problem is expected to get severe in the future.
4. NFTs Can be stolen
NFTs can be stolen if the owner's private key is compromised. But the story is different with blockchain technology. Blockchain technology uses cryptography to prevent unauthorized access to distributed ledger data. The technology relies on distributed nodes to store a permanent and immutable record of the information (data). These nodes are all connected via a peer-to-peer network, and none can be controlled by a central authority. As said earlier about Trezor, if your TREZOR is lost or stolen, you can't restore access to your coins either.
Conclusion on the Pros and Cons of NFTs
NFTs have pros and cons, just like any other technology. Their benefits include providing a more secure way to store data and facilitating faster transactions. However, they also come with some risks, such as the possibility of being hacked. Nevertheless, NFTs have the potential to improve the current state of blockchain technology by decentralizing ownership of digital assets. The technology could also empower users through quicker transactions, especially in the case of microtransactions. As for the environmental concerns, there is sustainable NFT technology in the making.