What is an NFT?

A non-fungible token is a cryptographic asset that is stored on a blockchain. In simple terms NFTs act as digital assets that represent any real-life object ranging from art to music to videos. Cryptocurrencies often act as the monetary medium in transactions with NFTs. In many ways, cryptocurrency and non-fungible tokens draw similarities. However, NFTs differ as they each share a unique identifying code.

Unlike cryptocurrency, NFTs cannot be traded or exchanged online giving them the meaning of ‘non-fungible’. You can use wallets for safekeeping.

This space has skyrocketed in recent months with organisations ranging from the NBA to Disney creating their own NFTs.

What Are The Risks of NFTs?

This is not a recommendation to go and buy a bunch of NFTs. Please do your own research to assess if that’s the right move for your circumstances.

The following is a brief overview of the risks involved before we get into the recommended platforms:

A few common risks of non-fungible tokens include:

• Intellectual Property rights

It can be confusing to most how the ownership of NFT really works. After purchase, the buyer becomes required to the terms and conditions of using an NFT marketplace. In many cases, the item purchased still exists online for free viewing.

• Scams

Like most things digital, NFTs also bring about the possibility of scams. The scams include fake marketplaces and fake sellers that impersonate the real artist.

• Environmental Harm

While not a risk to the buyer, a major issue of these non-fungible tokens involve implications to the environment. The use of cryptocurrency-based platforms such as Nifty getaway use up a high use of energy. Non-fungible tokens also take up a large amount of server space increasing their carbon emission.

Best platforms for Non-fungible tokens

These platforms were chosen based on reputation, affiliations, ease of use, and accessibility. They are the most widely used platforms to trade NFTs at the moment, while many new platforms keep coming into the market.

Decentraland

Decentraland acts as an open-source 3D virtual platform where users can buy a virtual plot of land as NFT by using MANA (a cryptocurrency). The platform began in February 2020 and has since then been fast-growing amongst users.

The Sandbox

The Sandbox acts as an online play-to-earn game with a 3D metaverse. Users can build, own and monetize their gaming experience using the Ethereum blockchain. The goal being to have users own their creations as NFTs and earn rewards through participation in the ecosystem.

VeVe

Veve acts as a mobile app which provides a marketplace for licensed digital collectibles. The app offers NFTs from brands such as Disney, Marvel, and Pixar. Users can purchase these collectibles through the app and can then trade, sell or buy with other users.  

What’s coming to the NFT space in 2022?

In 2022, it can be expected that the hype around non-fungible tokens will only grow as many become more aware of the workings of NFTs.

However, with this many may oppose the idea of NFTs due to their impact on the environment and an increase in backlash will be due.

With the idea of a digital world becoming a reality, it will be interesting to see what the future holds for NFTs.