Non-Fungible Tokens (NFTs) are new to the world, having only been recently introduced in the previous couple of years. In this article, we’re going to talk about the pros and cons of investing in NFTs for your business.
You might be thinking of investing in NFTs for your business, but you first need to understand what NFTs are in addition to learning about the pros and cons of them.
NFTs & IP rights disputes can occur if the NFT created infringes a third party’s copyright or trademark rights. So, it’s important that when you purchase an NFT for your business, to do your due diligence to ensure no problems occur.
This is one of the most significant disadvantages that can happen, and that’s why we’re going to talk about the pros and cons of investing in NFTs for your business, so you are entirely aware. Keep reading to find out more…
What is an NFT?
An NFT or otherwise known as a non-fungible token, represents something that is one-of-a-kind, most usually being digital artwork, and is stored with blockchain technology.
The term ‘non-fungible’ named in NFT means that it can’t be replaced with something else at equivalency. Examples of non-fungible items can include diamonds and original art pieces.
Some of the NFTs that exist include:
- Video clips
The history of NFTs begins in 2012 when the possibility of ‘coloured coins’ was discussed in a paper written by Meni Rosenfield. But it wasn’t until the 3rd of May, 2014 that the first NFT was created by Kevin McCoy, known as ‘Quantum’.
Until 2017, NFTs weren’t well-known or spoken about but that changed in 2017 when they became more mainstream in 2021. This led to the increased purchase and sales of NFTs, with celebrities and large corporations such as Snoop Dogg, Paris Hilton, Nike, Team GB, Taco Bell owning NFTs worth megabucks.
Where Can You Purchase NFTs From?
When it comes to buying NFTs, the majority are sold with ether (ETH). There are different platforms all across the internet where you can choose to purchase an NFT from, some more specifically relating to a certain niche or another with more random NFTs available.
Examples of places you can buy NFTs from include:
What Are the Pros of Investing in NFTs for Your Business?
Simple to authenticate
NFTs are easy to authenticate, unlike other types of investments businesses might make, such as artwork, which would need to be professionally authenticated. When an NFT is purchased, the record of that purchase will be stored on the blockchain, meaning proof of ownership is not difficult to obtain.
What Are the Cons of Investing in NFTs For Your Business?
NFTs Does Not Grant IP Rights
Just because you own the NFT does not guarantee that you own the intellectual property rights to it. Some creators will require permission if you want to use the NFT for certain actions such as copying, displaying and exploiting it.
NFTs Does Not Generate Income
Unlike other types of investments that businesses make, NFTs do not generate an income, such as stocks which can create interest or dividends, or commercial property, which can provide you with a monthly rent income.
The only income you receive from an NFT will only be received when the business makes the decision to sell the NFT, and this is only if the price has appreciated. This, therefore, means that the business may lose out on money if it depreciates.
NFTs are Environmentally Harmful
For the last couple of decades, our planet has been slowly heating up and becoming an increasing concern, particularly with global warming and climate change, and unfortunately, the creation of NFTs is contributing to this.
When NFTs are being created, they require a considerable amount of computing energy, meaning carbon dioxide emissions are being generated and released into our precious atmosphere.
Bitcoin is already releasing 38 million tons of CO2, to be exact. The more popular these become, the more likely it is to further affect our planet Earth. So, is it really worth having NFTs in your business when they are doing this?
NFTs Can Be Beneficial for Your Business But Also Harmful…
From this list of pros and cons that we have listed in this article you can understand why we cannot give you direct advice on what decision to make, so you’ll need to make the final decision based on your own opinion and judgements. It is important to note that the cons outweigh the pros, and this could be a sign that NFTs are not a good investment, but you should do your own due diligence.
Have you invested in NFTs for your business? Let us know what benefits they have brought your business in the comment box below.