What are NFT advantages and disadvantages?. Non-fungible tokens or NFT is on the floor. From artwork, music to tacos and toilet paper, this digital asset is sold on the market. Some of them are worth millions of dollars.
But actually what is NFT and does it really value it worth the price?
Some experts say they are bubbles that are ready to erupt, such as Dotcom who are crazy or beanie babies. However, others believe NFT will remain, and they will change investment forever.
What is NFT ?
NFT is a digital asset that represents real world objects such as art, music, items in games, and videos. They are bought and sold online, often with Cryptocurrency, and generally encoded with the same basic software as many cryptos.
Even though it has been around 2014, NFT is now becoming more famous. This is due to a way that is increasingly popular to buy and sell artwork digitally.
Surprisingly, the NFT buying and selling value has reached USD 174 million since November 2017.
NFT is also generally only one of each type, or at least one of the very limited processes, and has a unique identification code.
“Basically, the NFT creates digital scarcity,” said Arry Yu, Chair of the Washington Cascadia Blockchain Technology Association Board and Yellow Umbrella Ventures Managing Director.
This is very contrasting to most digital creations, which is almost always unlimited in stock. Hypothetically, cutting supply must increase the value of certain assets, assuming it in demand.
NFT Disadvantages
There is a lot of existing NFT advantages. Because technology has been very growing rapidly, this NFT is predicted to grow rapidly.
But the technology is like a side of a coin. There we can see the NFT advantages and disadvantages at once. Below is an advantages of NFT.
1. NFT does Not Change
Because tokens that cannot be exchanged are blockchain-based, they will never be changed, deleted, or replaced. Again, when proving the origin or authenticity of digital content, this is valuable quality.
To avoid the risk of being changed and even replaced. Making NFT become more special by offering excess can not be changed.
2. Trusted
Blockchain technology uses tokens that cannot be exchanged. As a result, you must be sure that your NFT is valid, because counterfeiting and permanent records are not possible.
NFT has advantages over real world collections because users can use blockchain to verify its authenticity or track the original maker so that NFT can be trusted.
3. Unique and Collected
NFT is rare and mostly used in collections and art. Validity and ownership of collection goods or artwork can be easily verified with the inclusion of this token. It also protects artists from being copied or misused.
NFT has been use in greeting cards and goods. In addition, this token also stores tabs that provide information about its uniqueness. This data is completely accurate and secure than others.
NFT inspired by original art, using blockchain to be more prominent than others and evaluating the validity of an artwork can also help you distinguish between original objects and the replica.
So, many people enjoy the excitement that comes by collecting something unique or rare. NFT provides an extra legitimacy layer for collected content, especially in the form of digital assets.
4. NFT can Include a Smart Contract
Smart contract is another feature of Blockchain technology that is quite interesting. Basically, they can store instruction execute when certain conditions are fulfill.
Thus, NFT with smart contracts can provide a percentage of profits when NFT is sold in the future.
The existence of a smart contract helps investors for more secure security and rules that exist in the use of the NFT.
5. The Scarcity of NFT Adds Value
NFT developers can produce non-fungible tokens in unlimited amounts, and often update tokens to keep interest in remains high.
Every token will have a unique ID with only one owner and the scarcity of NFT can only be determined by the developer.
The total number of nft in the world is currently quite low, and quite rare. This not only makes them unusual, but also increases their value. The less numbers of NFT, the higher the price.
NFT Disadvantages
After knowing the excess NFT, below is the opposite. NFT technology can provide advantages and disadvantages. Below is the deficiency.
1. NFT Includes Speculative Markets
It is difficult to say whether NFT will be used widely in the coming years. Obviously, there are great interest in them today, as well as some potential benefits.
However, this technology is still in the early stages, and there are many challenges that must be overcome.
The whole future NFT depends on the next generation, how these generations can affect the value of the NFT itself. Investing in NFT can be a speculative and risky investment.
2. Cannot be Divided
Many NFTs cannot be divided into smaller units. So you won’t be able to access digital items until you pay in full quantity.
NFT is not like other cryptocurrency, you cannot send some NFT to anyone because it cannot be exchanged and does not contain the specified value.
For example, one bitcoin after the transfer will have the same value, but if the NFT value will be different.
3. NFT Can Be Stolen
NFT sales are tracked using Blockchain technology that establishes ownership. Marketplace and platforms such as Open Sea and Rarible are original NFT places made and stored.
If this platform is closed for any reason, there is no guarantee that you will be able to access the NFT. So that it makes NFT become less safe.
Even though the technology behind NFT is relatively safe, many exchanges and platforms do not guarantee 100%.
However the risk remains and cannot be removed but can be reduced or minimizes the lowest risk. Moreover, nowadays are still rampant whose name is hacker in advanced technology today.
4. NFT is Not Set
Because NFT is not regulated, a high level of trust is also needed. You have to think that the NFT you bought is a work of art or unique work that has never been duplicated elsewhere, if not, you risk the copyright issue.
If the authorities and administrators are worried about this rapidly growing industry, the platform can be closed, and collecting contributions may be limited. This might reduce the value of NFT coins on the market.
5. Not User Friendly
The network decentralized where developers build NFT is not user-friendly. This is an important barrier for mass adoption because most of the targeted audience for this product does not know anything about blockchain
Many have been said about the environmental impact of Blockchain-based Cryptocurrency such as Ether and Bitcoin. It takes a lot of computing power to enter a note into the blockchain.
There are big questions whether blockchain-based assets can last long.
Conclusion
After knowing the advantages and disadvantages of NFT above. How do you plan in the future? Although it only appears on the surface, NFT is a type of digital asset that has long been traded by the community.
In this 2022, NFT was even more popular and was becoming a big phenomenon among investors.
If you have more money and love Cryptocurrency investment, NFT is the right digital asset for you.
