Top reasons why NFTs are Viable Long Term Assets

Long Term Assets

NFTs have shaken up the foundations of investors, who are still trying to figure out if they are worth the investment or too risky to be made profitable.

In the meantime, companies as big as Walmart are preparing to join the Metaverse and invest in NFTs.

Can NFTs be viable long-term assets, or are they another bubble that will eventually burst?

Let’s take a look at the reasons:

NFTs are scarce

The non-fungible nature of NFTs makes them valuable because they tend to be released in limited quantities:

• Though one could see an NFT collection with 10,000 different models being minted and sold, they cannot be re-released once they are gone.
• Traditional stocks can be duplicated almost infinitely, prompting people to sell the same share several times. However, NFTs are unique and cannot be reliably reproduced.
• The unique factor of NFTs makes them more valuable with time, combined, of course, with the scarcity as mentioned above.

The scarcity of an NFT is determined by its availability. If there are only an X number of NFTs available ever, then that means after all of them are sold out, it’s over. This is what’s known as absolute scarcity.

However, even inside the pool of available NFTs in a collection, there’s another type of scarcity: relative scarcity.

Relative scarcity can be an essential factor in determining if an NFT can be a viable long-term asset or not. In a group of NFTs, there’s only a finite number of illustrations with similar characteristics. If it’s a mummy NFT project, there could be a limited number of NFTs that have a specific trait or characteristic.

All in all, the scarce nature of a particularly appealing NFT project could make them appreciate easier with time, as has happened with NFT projects CryptoPunks, Meebits, and Bored Ape Yacht Club.

NFTs create decentralized economies.

NFTs are viable and have been promoting the creation of decentralized business. We’ve seen decentralized gaming manifest in the form of play-to-earn games such as The Sandbox, Decentraland, and Axie Infinity.

Thanks to virtual lands and the Metaverse, we’ve seen decentralized real estate become a million-dollar business almost overnight.

Soon, decentralized service providers will use NFTs as their calling cards for their services.
NFTs can be catalysts for new economic models, as we’ve seen in minor ways with the Super Bowl, Coachella, and Flyfish Club.

NFTs decentralize gaming

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Online gaming is a massive industry that has only grown every passing year.
Imagine an online revolution that gave ownership to NFT owners and gamers?
NFTs are already changing the gaming paradigm by seizing power from the big companies and handing it to the players.

Decentralized gaming works by developing games built on decentralized technology.
The play-to-earn model helps games make in-game rewards by playing the game and completing tasks. These rewards can be cryptocurrency, resources, and digital assets stored in the blockchain.
Some of these in-game items can also have real-life monetary value, as many of them can be NFTs or crypto tokens.

Imagine playing, for example, a fantasy MMORPG and obtaining a flaming sword that’s also an NFT worth 5 ETH in the real world. You can sell this NFT on the game’s NFT marketplace and earn the ETH equivalent.

Now, the player who spent hours grinding for this flaming sword can make an income from just playing the game they love.

• Thanks to blockchain’s tamper-free technology, the fear of your time being sunk because the game will eventually shut down is also easily dissuaded.
• Your actions in-game are forever stored in the blockchain, so the NFT you obtained is also permanently there unless you decide to trade it or keep it somewhere else.

The play-to-earn model is becoming much more widespread, successfully working with games such as Axie Infinity, The Sandbox, and Roblox.

NFT art can make you rich

NFTs make ownership easier to manage, thanks to the blockchain. Since minted NFTs are part of the blockchain, they cut off intermediaries and empower content creators.

Now, you’re able to create your stuff and sell it to those interested in them directly. A musician can sell proof of ownership of their song; a writer can sell their NFT books; a digital artist can sell their NFT art.
NFTs represent a revolution of art ownership, making it desirable to get into it if you’re a content creator.

It’s no secret that many NFT artists have made massive profits from selling their NFT art. One often-cited example is digital artist Beeple, who has made multi-millions from selling NFTs. He sold an NFT for $69 million at Christie’s and another for $6.6 million.

If you’re interested in learning how to become an NFT artist, check out our guide here.

NFTs are becoming mainstream.

Not everybody knows how NFTs work, but you’d be hard-pressed to find someone in 2022 who hasn’t once heard about the term.

• NFT was the most searched word on online browsers in 2021.
• Today, many big companies, brands, and business conglomerates are investing in NFTs.
• The more mainstream they become, the more people will invest in it.

OpenSea has already become a billion-dollar business with tons of financial backing, and that’s just the tip of the iceberg.

NFTs are more appealing than stocks.

Understanding stocks can take time. While it can be wise to start doing it early, it can still seem tedious even to people who have a talent for investing.
On the other hand, people enjoy collecting NFTs because they enjoy purchasing art. Numbers, charts, and stock graphs hardly compare to mystifying digital illustrations, awe-inspiring videos, and gaming rewards.

NFT art collection is similar to a real-life art collection at an auction house. In fact, in Decentraland, there’s an art house where you can essentially do just that.

All in all, an NFT is more than just a financial instrument. It’s a digital asset you can keep for personal use instead of something you want to sell later for a profit.

Of course, an intelligent investor can collect NFTs and also invest in stocks to diversify. 2022 is believed to be the breakout year for NFTs. Investors always warn against a relatively new asset class, especially in such an early stage.

It’s no doubt that the price of crypto can vary wildly in a matter of hours since NFTs tend to be purchased with crypto.

This is also part of the high-risk volatility that has many investors scratching their heads on the reliability of NFTs.

NFTs can be access keys.

NFTs are being used as access keys to many events, such as Coachella’s lifetime passes. Soon, NFTs will be understood as more than pixelated illustrations or GIFs: they’ll become entry passes for events, clubs, and memberships.

This hints at the diverse ways NFTs can be used for marketing and promotion, making them viable assets for investments and tools to promote other services for companies and individuals.

• Experts have looked into the use of NFTs as investments and recommended purchasing them only if they can be used as an asset besides a decorative digital file, such as in-game options.
• This allows investors to carry the NFT out of the game and trade it with other players, ensuring that they can secure their original investment of either time or crypto.
• Other examples of this include NFTs with other practical uses outside of both gaming and decoration.

For example, an NFT that serves as a membership to a club, a service provider, or anything that has value beyond the item itself.

NFTs are excellent goods for trading.

They are viable as long-term assets because they can be easily traded without restriction. Some NFT marketplaces have fees for selling them, though even those based on Ethereum have come up with lazy minting as a way to circumvent fees.

Their record of authenticity and proof of ownership provides owners with a sense of security around their assets.

Refer to the previous flaming sword example. If you’re playing a game, it’s easier to trade in-game rewards and items than trade stocks. This is because people can see the tangible benefit of having the NFT in their possession, such as in-game buffs, than they are of a possible long-term financial instrument. And that’s only if they understand stocks in the first place.

Take a look at this article to learn more about where to buy NFTs.

Final words

Opinions on NFTs as possible financial instruments are polarizing. Experts see them as the next big thing, or a bubble waiting to burst and leave all those who learned about it too late disappointed.

NFTs aren’t an MLM or a fad, and as our society moves to a digital model with increasing speed, we’ll soon find out their actual use as an asset.

There are still regulations, tax issues, and climate change concerns surrounding the Ethereum blockchain, but there’s no doubt that as time passes by, NFTs will become more understood as viable long-term assets.