• NFTs are illiquid and hard to sell
• Investing in NFTs is an easy process
• NFTs are easy to track

Now you might be asking yourself what is fungible and non-fungible, so let us differentiate these two terms and what it means when it comes to investing.

Fungible

Fungible assets are assets that can be traded for the same asset and by doing so you are not gaining or losing anything, as they all hold the same value. For example, you can take a $100 bill and trade it for another $100 bill and by doing so you are receiving an asset that's worth exactly the same.

Non-fungible

Non-fungible assets, on the other hand, are the exact opposite of fungible assets. These assets are unique as there are no two identical copies. You can't trade one for another and have an equal exchange in set value. For example, if you own a painting, you can not trade it for another painting and call it an equal exchange in value as those two things don’t hold the same value, and they cost as much as someone is willing to pay.

You might say that everything is non-fungible, dollar bills have different serial numbers, and they might be torn and have some different physical characteristics. So when differentiating between fungible and non-fungible, we should look at the use-value of an asset, not its characteristics.

As we already mentioned, NFT is a non-fungible token. Each NFT is unique or very limited in serial numbers. These can be various digital assets such as paintings, videos, sound, and more. These assets are stored on blockchain networks, where you can see the ownership status and who owns the set asset. So in short, NFTs are digitalized assets, which are unique or in limited supply, with some even having utilities attached.

"NFTs are a powerful tool for creators to build and cultivate their own audience and community." - Trevor McFedries

When it comes to investing in NFTs, there are many different factors associated with it. It has both strengths and weaknesses which we need to differentiate, analyze and only then decide if investing in them is worth it for us.

Pros

It is an easy process

As we mentioned, investing can be a tough challenge. When it comes to shares, bonds, and other traditional assets, there are a lot of small complicated details that need to be taken care of when making an investment. However, investing in NFTs is not that complicated. 

For example, there is no need for a broker. All you have to do is to do some research to decide which NFT is worth investing in and then just purchase it. It is an easy process, especially if you are somewhat familiar with crypto and blockchain. If you are not, it is still easy as most NFT marketplaces in general work the same way as regular online marketplaces.

The NFT market is efficient

Another benefit associated with NFTs is that their market is efficient and can be streamlined to be even more effective.

For example, artists have a new platform to engage a wider range of audiences, showcase their work, and avoid the cruel and challenging real-world fine art ecosystem. As a result, we see many different artists, both famous and lesser-known, digitizing their work and placing it on the blockchain.

Because of this, investing in NFTs right now can be a great opportunity to be on the ground floor of what could become a skyscraper of an industry.

It can be a great learning experience

When we talk about investing in NFTs, a lot of people associate it with spending huge sums of money on what seems like a pointless digital asset that has no real-world value. While it is true that NFTs might not hold value for some people, it is still a great technology that can become a learning platform. 

NFTs, as we mentioned earlier, are stored on the blockchain. Because of this, if you are invested in this ecosystem you can get familiar with it really fast. NFTs are usually part of big collections that have big communities behind them. These communities are usually really communicative, they share different news, ideas, and developments, which can be a really good place for learning from those who have a deeper knowledge of blockchain and crypto.

Good ownership tracking system

Ownership and copyright law can be hard areas to navigate. There are countless cases of ownership and copyright infringement where court cases lasted years with the prosecution failing to prove beyond reasonable doubt that copyright law has been broken. 

When it comes to NFTs, there is no such problem. Each NFT has a unique code that proves its authenticity and ownership. Blockchain is really safe which means that this code can not be altered or changed. This also provides a chain of ownership where you are able to see every single owner of any NFT (except in some cases, where this information is hidden, but most of the NFTs don’t fall under this category). 

Community

Humans gravitate towards something that is unique and not many possess. Rare collectible items have always been desired and NFTs are no exception. When you own something unique, you feel special and included in a community. This experience alone might be worth it for some to invest their money in.

Cons

NFTs are illiquid

Compared to some other non-fungible assets, the NFT market is relatively small. It is hard to find a buyer who is willing to pay the amount of money you are selling your NFT for. That means that the prices fluctuate a lot. A great example of this is Jack Dorsey's first Tweet, which was made into an NFT and sold for $2.9 million. Now that it is out there, selling it for that same price might not be all too easy.

They do not generate income

Most NFTs do not generate income. There is an exception for this, as there are now play-2-earn NFTs and move-2-earn NFTs, but it is still the early days for such projects, and investing in them is really risky as most of them are losing value after reaching highs.

NFTs are not like stocks, bonds, or real estate which generate some form of income for their owner. NFTs are just like art pieces their purpose is to admire them and brag about owning one. So if you are looking for an investment that has some sort of guaranteed income, then investing in NFT is not the best decision. 

Is used by criminals

NFTs and the whole crypto space, in general, have become a great way for criminals and scammers to do their business. There are countless NFT projects which have their prices artificially blown up as a lot of money is being laundered through them. As a consequence, when we buy an NFT that we think is desired and worth investing in, we must be careful.

Another thing is fake NFTs. Scammers started to copy famous NFTs and sell them on the market as if they were genuine. So if we don’t pay too much attention when buying an NFT we might fall for these scams.

This is still an early market

Yes, the NFT market has been growing rapidly for the past two years, and there is big speculation that it will be a future market for art and other forms of digital assets. But still, it is a baby when compared to other investment options. There are two possibilities. Either it is going to meet those expectations and grow into something unimaginable or be the next dot-com bubble ready to explode at any time.

A key takeaway from this guide is that there are different aspects when it comes to investing in NFT. It has huge opportunities for growth, is safe, is a great learning experience, and is an enjoyable experience. But it also is filled with shady projects and people, is illiquid, and has the potential to crumble.

"NFTs are a new paradigm of ownership in the digital world." - Roham Gharegozlou

• Investing in NFTs can be both beneficial and bad ideas
• NFTs are non-fungible which means they are hard to sell
• Investing in NFTs can be a great starting point for learning blockchain 
• NFTs are still a new concept 

So the last thing left for us to say is that. Do your own research and decide only after that. The aforementioned pros and cons are not all of them. Each person sees value in their own way, and we should make decisions based on those preferences.