“Why are you buying NFTs, if you can just save the image instead?” Let me explain:
7 Reasons Why I’m Buying NFTs
Before we get started, if you’re not familiar with NFT, I suggest you read this beginner’s guide. And if you’re looking to start buying NFTs after reading this blog, you can find a comprehensive list here: NFT platforms
1] Non Fungible Tokens (NFT) Are Unique
Most cryptocurrencies are fungible tokens, which is the exact opposite of non fungible;
They can be interchanged equally whether the token was mined 10 years ago or today. There is no different value of buying a Bitcoin that was mined in the first few years, over a BTC that is mined yesterday.
In the real world it’s similar. Like how a $1 note = another $1 note = Fungible.
Now we get ‘Non Fungible Tokens‘, they are all unique.
Each one is treated different.
There are many use-cases for this, like currently the crypto art scene is exploding. However it goes beyond that. NBA topshot does video collectibles in NFTs, Jack Dorsey (CEO Twitter) NFT’d his first tweet ever, that got sold for $2.5 Million, and there were NFTs of Pepe memes.
Basically everything digital can be linked to a token on the blockchain, which makes them tradable and unique.
2] Your Token Presents Something
Because NFTs are on the blockchain, their history is publicly traceable. Anyone can see when it’s created, or what was attached to it (whether that’s digital art or a bottle of wine). You can see their previous owners, most are anonymous, others could be Mark Cuban…. You can track exactly how many tokens are out there that have the same “properties” in them
For example, the Ziggy I posted above has 100 editions. Meaning there are 100 NFTs available, that have the same characteristics. The only difference between them is the edition number.
Similar to baseball card collectors, who buy packs of cards to find special editions who have a limited supply, which makes them more valuable than other baseball cards with a much larger, or infinite supply.
So to stick to the same example, the Ziggy I own is a 1 out of 100. No more will be created, and there will only be 100 tokens that can claim to be an original Ziggy.
Another example which will grab your attention even more, is that Punks are characters of a crypto game called CryptoPunks. Someone bought the character Punk 2890 for $762,000 worth of ETH a few weeks ago, just for a few pixels.
3] Buying NFTs is More Than Just a JPEG
How Bitcoin disrupted the financial industry, NFTs will disrupt collectibles, art and content.
It’s a way for artists, creators, athletes, content providers, projects to make digital assets tradable on a free market.
For example, in the art industry, NFTs represent digital art that the creator can generate scarcity. For the first time ever an artist can sell their creation as a limited piece. Whether they choose to create (aka mint) a single token (making it a one of a kind). Or they can mint 100 tokens that represent the same art piece. Thus there can be technically 100 owners of the same artwork.
Another cool feature for an artist is that they can get a royalty every time their art is resold, commonly knows as ‘In Perpetuity,’ This is completely new for artist, who usually don’t benefit from their work being sold at higher prices in the future.
Not to mention, when you own the NFT of the JPEG, it’s a different ball game. Originals have emotional value. And bragging rights.
4] Do Cool Things With Your NFT
A regular art piece is hung on your wall or stored in a vault.
An NFT you can do much more with.
You can take a loan against it on nftfi.com, where you can put your NFT as collateral for a cash.
Or there are platforms out there, where you can stake your NFTs that you bought.
My personal favorite is to fractionalize an NFT. Meaning you can cut your NFT is multiple pieces, so you can sell a part of it.
That one will come in handy if the buyer of “Beeples everydays” ever wants to sell his unique NFT. Which he paid $69 Million for.
5] A JPEG Doesn’t Increase in Value, NFTs Do!
There are hundreds of thousand free JPEG images of the Mona Lisa, but only one painting that has value.
This is mainly due to the reasons I mentioned above, scarcity & authenticity above all.
However, on the blockchain you can see the proof of authenticity. Who is the creator, and is that creator the original artist?
Did you know the Mona Lisa was stolen in 1911, and returned by the thief 2 years later. Since then several “fake” Mona Lisa’s have been sold for hundreds of thousands of dollars.
With NFTs you can track the history back to the source, so you’ll never buy a fake.
You can right-click save all the JPEG out of my NFTs, but the only one that will go up in value is my original one.
6] A New Way to Diversify My Portfolio
I’ve talked about this before, but I have several buckets in my portfolio. Some for long term holding, some for trading, some for short term gains. Now with NFTs I can invest in art through this very easy way. At least for me, cryptocurrency things just make sense, that doesn’t apply to everybody.
Art has been an asset class for investors for centuries, mostly for the elite rich. Now with NFTs on the blockchain, it creates a whole new asset class for people like myself, and maybe you.
I’m a digital nomad, I don’t own a house or storage room. How can I invest in art without too much of a hassle? I can’t.
A NFT is digital, borderless, liquid and I can take loans against it, or stake them to earn passive income.
Those were my first reasons to start looking at buying NFTs as a new kind of investment in my portfolio.
I’m not the only one who approaches it this way. I’ve received emails from crytpo investment funds that are adding NFT portfolios to their fund. And the $WHALE token is partly pegged to a portfolio of the rarest NFT collections in the world.
7] For The Funsies
I have to admit that I like experimenting in new spaces. That why I jumped into BTC in 2013, why I started a platform for airdrops in 2017 and why I’m currently into NFTs.
When things are completely new, I get a little bit of dopamine with the successes.
In my last blog, I mention I bought “The Bitcoin Angel” NFT, by Trevor Jones. I got it a little under $1000 and recently one of The Bitcoin Angel NFTs got sold for nearly $14,000. Although, most volume is between $2500-$6000, I can say I’m most likely in good profit is just a few weeks.
There’s a whole community around this piece now, and I even join The Bitcoin Angel discord channel, which has a little over 1000 people in it that own this NFT.
It’s exciting and fun for me.
Even The BBC Asked, why I’m buying NFTs
So there you have it, my point of view on buying NFTs.
If you didn’t quite get it, you aren’t alone. Even the BBC contacted me through Twitter to asks some questions about investing in NFTs.
You can hear the BBC about NFTs from minute 48, and you can hear me talk about The Bitcoin Angel.
So my conclusion is that a NFT is 1000x better than saving a JPEG! And that’s why I’ve invested about 20 ETH in NFTs over the last few weeks. Let’s go!