What is NFT in Cryptocurrency?

The main objective of cryptocurrency is to create a decentralized ecosystem that allows for people to exchange value without the need to go through or even trust a single third party. One of the most significant players in this space today, which will have a great impact on cryptocurrencies and blockchain, is Ethereum.

Ethereum provides an opportunity for developers to create games and other applications with a simple coding experience and low cost. It also offers access to the blockchain, and therefore, it is the only framework available to run them. Amongst all, best known are the games like CryptoKitties, Age of Rust, DAZN, etc.

Ethereum gives a lot of opportunities that make developers more innovative and creative. But what makes these games valuable to buyers and sellers, you may ask? And how does one value such assets? First, let’s consider this question, then we can explain why so many different companies develop products on Ethereum. This list is based on my research and has been written after reading several articles.

There are two types of assets on the market — tangible assets like ERC20 tokens, and intangible assets like NFTs and ITPOs, both can be bought in bulk. Both of them have one thing in common – they are non-fungible. You buy a specific amount of these assets and they stay yours forever. With NFTs and cryptocurrencies, there exists an additional layer of complexity — as one of its essential components is a digital equivalent of something you already own, like the right of voting rights. So, no matter how much value you have invested into an NFT, someone else would not have a chance to get it. A good example to see this phenomenon in action is real estate. If you bought a piece of land, you can move it to another location at any time, but if I sell your house, anyone could move it back to your spot at any time.

The main difference between NFTs and TACs is that their owners are limited to using a single token instead of multiple ones. Moreover, each time when a holder wants to exchange his or her stake, he or she needs to use a new token to do that, which could affect the existing values of the stake. That means, once you transfer an underlying asset (like a token) from a buyer to a seller, the owner cannot do anything to increase the number of tokens exchanged. But, with financial instruments like stocks and bonds, things get easier. As long as you own a certain share of a company and that’s traded in a given stock exchange, everyone can easily exchange shares and holdings with one click. Although there is still a possibility of exchanging tokens and holding stocks at different times – it doesn’t affect the price or the liquidity of a security.

The biggest advantage of owning shares of a business is that you can vote for who should receive dividends. However, you might suffer a few problems with ownership, like having to spend time and money on legal protection. For instance, you might be able to change the name of your holding company and avoid tax implications, but it is complicated and can be done online.

Therefore, buyers have to pay attention when transferring tokens, as they always have to adjust the ownership stake to meet the amount invested in the project before. To make transfers possible, they can leverage a platform where they can keep track of transactions online. To give some examples, one of the top companies in New York, NYU, uses Blockchain to track and record transfer processes and check that everything goes according to plan.

NFTs have numerous advantages over conventional investment assets. Firstly, as I mentioned above, since they are non-fungible, they are highly valued, and can quickly skyrocket one’s value. Secondly, in comparison to traditional investments, investors can take part in crypto trading without being physically present anywhere. Also, buying such assets as NFTs is not very costly, and the transaction costs are not usually significant. Finally, because of the ability to trade these assets, investors can also exchange the same assets at different points in time. This is called liquidity and it makes investing in crypto projects cheap and accessible.

Even though both of them can bring rewards in return, they aren’t the only important aspect in the field of cryptocurrency. There are other aspects of investing in this area that investors should consider, like diversification. If you want to invest in blockchain, one of the first areas of focus is Ethereum smart contracts. These allow for the creation of apps that control a wide range of virtual goods. They allow developers to write code in a way that ensures that whatever happens between a buyer and seller are highly predictable. You even have to mention, that not all developers try to follow this principle. Overall, the idea is promising in terms of risk management and growth potential.

Conclusion

NFTs as well as crypto assets are gaining popularity and interest worldwide. Most investors agree that it is extremely high time to start paying more attention to this type of alternative finance and get involved in it. Nowadays, the problem can be solved with ease, while the solution itself is evolving and expanding too.