The Finance World Magazine| Edition: April 2023

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minting process involves creating a new
block, verifying the NFT information
by a validator, and closing the block.
Smart contracts are often employed in
this minting process to assign ownership
and regulate NFT transferability.
When tokens are minted, they are
allocated a distinct identifier that
corresponds directly to a blockchain
address. Every token has an owner,
and the ownership details, such as the
address where the minted token resides,
are publicly accessible. Even if several
identical NFTs are minted, each token
has a unique identifier, and they can be
distinguished from one another. This
is analogous to how general admission
tickets to a movie are issued.
Examples of NFTs
The NFT market began with a focus
on digital art and collectibles, but it
has since expanded. OpenSea, a wellknown
NFT marketplace, now offers
various NFT categories, such as:
Photography: Photographers can
create tokens for their work and sell
either full or partial ownership.
Sports: Collections of digital
art featuring celebrities and sports
personalities.
Trading cards: Tokenized digital
trading cards that can either be
collectibles or traded in video games.
Utility: NFTs that can serve as proof
of membership or provide access to
exclusive benefits.
Virtual worlds: NFTs that grant
ownership of items ranging from avatar
wearables to digital property.
Art: An all-encompassing category
that includes everything from pixel to
abstract art.
Collectibles: Examples of NFTs in
this category include Bored Ape Yacht
Club, Crypto Punks, and Pudgy Panda.
Domain names: NFTs that signify
ownership of domain names for your
website(s).
Music: Artists can tokenize their
music, giving buyers the rights that
the artist wishes to provide.
How to Buy NFTs and Start Investing
Once you have comprehended the
applications and unique benefits of
NFTs, you might consider investing in
them. To do so, you will require certain
essential items:
Prospective
investors must
carry out thorough
research before
making any
investment
decisions regarding
NFTs.
• A digital wallet that permits you
to store both your NFTs and
cryptocurrencies.
• You must buy cryptocurrencies,
such as Ether, depending on which
currencies your NFT provider
accepts.
• Once you have purchased your
cryptocurrency, you can transfer it
from the exchange to your wallet.
• Keep in mind that several exchanges
charge a small percentage of your
cryptocurrency purchase transaction
as fees.
NFTs have the potential to simplify
investment processes. For instance,
real estate can be tokenized. A property
can be divided into several parts, each
with different characteristics, such as
being closer to the lake or the forest.
Each piece of land can be unique, priced
differently, and represented by an NFT.
With relevant metadata incorporated
into a unique NFT associated with
each section of the property, real
estate trading can be simplified. This
is a significant advantage since real
estate trading is often a complicated
and bureaucratic process.
NFTs can also represent ownership
in businesses, just like stocks. Stocks’
ownership is already tracked through
ledgers that contain information such
as the stockholder’s name, date of
issuance, certificate number, and the
number of shares. Using blockchain
and NFTs to represent shares provides
the same function as stocks. The
primary advantage of using NFTs and
blockchain over a stock ledger is that
smart contracts can automate the
transfer of ownership. Once an NFT
share is sold, the blockchain can take
care of the rest.
Prior to making any investment
decisions, prospective investors
should be aware of the advantages and
disadvantages of investing in NFTs. It
is essential to consider the following:
Advantages of Investing in NFTs:
1. Unique ownership: NFTs provide
exclusive ownership of a single
digital asset or data, which can have
significant financial and sentimental
value.
2. Possibility of big returns on
investment: The potential for
substantial investment gains exists,
as evidenced by the multi-milliondollar
sales of certain NFTs.
3. Diversification: Investing in NFTs
allows for portfolio diversification
beyond conventional assets such as
stocks and bonds.
4. Support for creators: By investing
in NFTs, investors can support artists
and content creators, potentially
helping them advance in their careers.
Disadvantages of Investing in NFTs:
1. Volatility and risk: NFTs can
be subject to unpredictable price
fluctuations and speculative
behaviour.
2. Lack of regulation: The NFT market
is largely unregulated, which could
expose investors to uncertainty and
potential risks.
3. High transaction costs: Purchasing
and selling NFTs on certain blockchain
networks can be expensive due to
high transaction fees.
4. Low liquidity: NFTs may not be
easy to sell quickly due to their low
liquidity.
Before investing in NFTs, potential
investors should consider the benefits
and risks associated with them. In
addition, consumers should thoroughly
research the specific NFTs they are
interested in, as well as the blockchain
technology that supports them and the
legal and regulatory issues associated
with NFT ownership. It is also essential
to avoid investing solely based on hype
or speculation and to only invest what
can be afforded to lose. While NFTs can
offer exciting investment prospects,
investors should approach them with
caution and conduct adequate research
before investing.
April 2023 www.thefinanceworld.com 75