Pros And Cons of Non-Fungible Tokens (NFTs)

Non-fungible tokens or NFTs have taken over the world. The underlying benefit of using blockchain technology is the fact that we can create scarcity for anything in the form of a unique digital file. While this sounds simple, the consequences for the world are revolutionary. For the first time in history, we are on the cusp of building a true digital economy. Till now, we had a globalized world in name. With NFTs and the blockchain, we have what it takes to build the foundation of a new global economy predicated on trust, fairness, and openness. 

Sometimes, it may seem as if finance is the main use case of blockchain technology. This is because NFTs and cryptocurrencies enable a truly global market. This means anyone in the world can take part in any market, provided they use the blockchain as the underlying ledger. We still live in a nationalist era. We restricted ourselves to our national economies to make progress, personally and professionally. But, blockchains enable anyone with an internet connection to be a part of global projects and interests from day one. 

Pros and Cons of Non-Fungible Tokens

There are many ways we can think about making a section for pros and cons of Non-fungible tokens or NFTs. For instance, the first misconception that is apparent amongst many individuals is that NFTs seen to be all about art. Not only is there a lack of awareness about the world wide art market, but also the tendency to classify NFTs are simply about art. This is a very narrow to loo at NFTs. Let’s think abot NFTs or non-fungible tokens like this. NFTs are the foundational layer for the new digital economy based on blockchain. There are many assets in the physical world which can be open for ownership to all.

They are Versatile Stores of Value

NFTs can be programmed to have functionalities as and when required. For example, they can used to represent a patent of invention; and also be used to claim access to the patent owner’s expertise from time to time. With time, more functionalities like access to more events, papers or other material, can be added as well. Since ownership is trackable and saleable on the secondary marketplace, there is no limit to the number of services that are possible.

NFTs: A True Global Market

NFTs represent global commerce using global currencies. Owing to the ability of blockchain technology to keep track of data movement and program a digital object to function as a digital asset, any amount of products and services can be embedded together based on new use cases. The current digital art market represents a fraction of the total global value that can be tapped into and made use of. Hence, that said there is a need for NFT platforms to make the right applications that can put NFTs for uses other than displaying them. 

Non-Fungible Tokens are Foundation of Creator Economy

In many ways, many industries like music, publishing, art, food, drink, fitness, are dependent on a professional class of creators and performers who can relate with each other directly. Hence, NFTs represent a better way to fully capture into the relationship between artists and fans. 

Sometimes Illiquid and Speculative in Value

Let’s face it. This is a new emerging asset class. In spite of global utility, this is an unregulated space. Hence, there is space for scams, frauds and security issues ranging from phishing to abandoned projects (unless revived by the community). Hence, when you’re in a mess, and if your NFT is not worth what you think it is, in spite of placing it for an auction, you may have to wait for more time to liquidate it for cash. A high risk environment entails high rewards.

NFT taxes are difficult at the moment

Owing to a lack of certainty on the legality of rate of taxation for NFTs, owners are waiting to see how the government proceeds ahead regarding taxation. Second, governments themselves

Conclusion

There is every reason to believe that NFTs are here to stay. They’re a multi-billion dollar asset class already. We’re seeing the emergence of a new digital economy from scratch. Anyone can tokenize and use the physical world’s data for everyone..