BENEFITS AND ROADBLOCKS OF NFT
NFTs have proven to be a profitable form of investment owing to some of the following reasons:
- NFTs are special: What makes NFTs so special?
Non-fungible tokens have unique attributes; they are usually linked to a specific asset. They can be used to prove the ownership of digital items like game skins right through to the ownership of physical assets. This is why non-fungible tokens can be used for digital assets that need to be differentiated from each other in order to prove their value, or scarcity. They can represent everything from virtual land parcels to artworks, to ownership licenses.
Their specialty is what makes Non-fungible tokens not traded on standard cryptocurrency exchanges. Instead, they are bought or sold on digital marketplaces. However, DEFI has now provided a good platform for their trade
- Creates Value for the Tokenized Asset
NFTs create a medium whereby physical objects like art works can be tokenized, thus eliminating the duplication of such art work and limiting ownership to the artist. This in turn creates scarcity for the art work and hence, value for it.
- It provides Investors more Liquidity:
Tokenizing assets gives investors more liquidity over their assets when they need it. An example is when a virtual land owner decides to rent out his/her virtual space to advertisers or influencers for a fee, while still retaining ownership over the land. The virtual land in this case still belongs to the owner, but part of it is liquified as rent.
- Potential for growth and development:
NFTs possess potential for growth and development of the land sector, art and even film industry. For instance, pegging NFTs to land pieces has proven great potential for growth and development. In real estate, owning and controlling virtual lands gives you the power to decide what you want to do on your land. You can decide to rent it out, build up a solid and secure business for advertising or online sales.
- NFTs Leave no Room for Counterfeits.
Each NFT has a record of transactions on-chain, from when it was created, including every time it changed hands. This means each token can be verifiably authentic, and not a counterfeit – obviously a very important thing for owners and prospective buyers!
- It Satisfies the Desire to Own Something Rare
They serve as a powerful demonstration of the human desire to own something that is rare and has some commonly perceived aesthetic or collectible value, a combination which allows NFTs to become an instant sensation. Some NFTs can sell for thousands of dollars. Recently, we saw the one that was dramatized by Elon Musk and its landmark auction and bids.
- NFTs Give Developers the Guarantee they need
Non-fungible token standards are part of what makes non-fungible tokens powerful. They give developers the guarantee that assets will behave in a specific way and describe exactly how to interact with the basic functionality of the assets.
As is the challenge of blockchain to date, non-fungible tokens, their protocols and smart contract technology is still being developed.
Creating decentralized applications and platforms for the management and creation of non-fungible tokens is still relatively complicated. There is also the challenge of creating a standard.
Blockchain development is fragmented, many developers are working on their own projects. To be successful, there may need to be unified protocols and interoperability. However, we must have to appreciate the role of Trust wallet and Binance in this regard. But more inclusiveness are needed.
Despite its benefits, the adoption of NFTs is still low relative to the tens of millions of people who own cryptocurrencies worldwide. The roadblocks preventing mass adoption of NFTs are: inaccessibility, the newness of the technology, difficulty to link real-world assets to NFTs, and regulation.
As much as people like owning expensive stuff in crypto, they like owning stuff they can sell whenever they want even more (call it a liquidity fetish). NFTs had managed to be expensive but they had not managed to be liquid. However, thank God for recent intervention of DEFI. This particular roadblock will soon give way
I shall be rounding off this article in my subsequent submission