Investing money with NFT and Co.: The beginner’s course


Investing Money with NFTs and Co.: The New Beginner’s Course

Video Graphics: How NFTs Work

Video Graphics: How NFTs Work

NFT art is becoming increasingly popular. The video graphic explains what is behind the digital certificate of authenticity and how it works.

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Those looking to invest money are increasingly coming across NFTs. Here we explain what it is and how you can use tokens.

Berlin. NFT, Blockchain, Bitcoin and Co.: The modern financial world is digital. New financial instruments can be worthwhile for investors. But you should take a closer look and find out what is behind Ethereum, CryptoPunks and other terms. Here we explain the most important keywords.

1. NFT and Co. – what is it really?

NFT is an abbreviation for Non-fungible token. First, the difference between a fungible token and non-fungible token must be explained. This is best compared to banknotes. If we have two 5 euro notes in our pocket, it does not matter which of the two bills we take out to pay, because both have the same value. This means that the note can also be exchanged or replaced with the other 5-euro note. This is a fungible or exchangeable token.

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A digital example of a fungible token is Bitcoins as currency. Again, it doesn’t matter which bitcoin you own, because 1 BTC always has the same value as another BTC. For a non-fungible token, compare an iPad to a college pad. You can write on both, but they are very different in value. Just because you can write on both doesn’t mean you’ll replace an iPad with a notebook.

NFTs are different from cryptocurrencies

Unlike cryptocurrencies, it doesn’t matter which one NFT one owns. As an example, imagine a screen background of a laptop: this background can be copied 50 times. Copy 1 is more valuable than copy 2. Copy 2 is more valuable than copy 3. This can continue. The value of these different copies can change at any time.

What can NFTs be used for? Basically, NFTs can be mapped to anything that is digital. Even non-digital objects can be tokenized through an NFT. This also includes the music and film sector, documents, images or works of art can be sold as NFT. In principle, anything that is digitally owned or can be digitally owned can be created as an NFT. And that’s what it’s all about technology of NFTs: Blockchain-based digital ownership.

What is blockchain?

Concept Blockchain means blockchain. The “blocks” stand for individual data records that are stored one after the other, creating a kind of data record chain.

Example 1: Bored Apes Yacht Club

Bored Ape Yacht Club, or often called Bored Ape, is one NFT collection, which is built on the Ethereum blockchain. The collection contains a total of 10,000 digital profile pictures of various cartoon monkeys. These different monkey images are generated by an algorithm. It is a project of the company Yuga Labs. Read here: Energy rate: This is how much money is left on average

The special thing about this NFT is the smart contract behind it. Behind a smart contract are lines of code that specify certain things (such as the name of the owner, the creators). Additionally, as the creator of the project, you can also assign properties or utilities to this token.

NFTs: Creating a lifestyle brand from NFTs

Yuga Labs was among the first companies to use NFTs not only as digitally active sold but established an exclusive lifestyle brand from the NFTs. For club membership, possession of a “Bored Ape” NFT was required, so to speak. Due to the exclusivity and high demand, the price of NFT increased from 150 euros to almost half a million.

Example 2: Cryptopunks

CryptoPunks is also an NFT collection on Ethereum Blockchain, launched by Larva Labs in 2017. Similar to Bored Apes, a collection of 10,000 individual parts was created here. This includes pixelated profile pictures of people with different characteristics. Cryptopunks experienced hype in 2020 and were bought and sold for several million dollars. The project was bought this year by the creators of Bored Ape Yacht Club – Yuga Labs.

2. Can you really make money with it?

First, the different types of NFTs must be described. There are NFTs that consist of several 1000 parts, but one collection owned and can increase in value over time, or 1-of-1 types, such as works of art that only exist once as a digital asset. These 1-of-1 NFTs are mostly created by artists and sold as individual items. More on the subject: NFT: The Risky Digital Art Business

So there is an opportunity to buy these one-off products and own them as works of art if you believe that this NFT will increase in value. Another option is to “flip” NFTs: reverse can be thought of as a modern lottery. With a collection of 10,000 unique pieces, be aware that some pieces are rarer than others. We humans automatically perceive the rarer pieces as more valuable.

With “Flipping”, you try to buy cheap and sell expensive in a short time. Some projects are announced months before launch and access to a waiting list or “permission list” released to people who are subsequently approved to buy NFT. The purchased NFT can then be sold again at a significantly higher price, depending on how much hype the project has already received in advance. However, similar to crypto and stocks, the problem is that whether the value of an NFT will increase remains uncertain and cannot be predicted with any guarantee. So if you want to get an NFT, you should invest enough time and inform yourself thoroughly about the NFT project.

3. What do you urgently need to consider? How much money do you need to start with? What are the dangers?

The general recommendation is: “Invest one Totalthat you can handle losing.” But if you are a beginner and want to approach it carefully, you can also shop for smaller sums (50 euros, 100 euros…) and work your way up. It is definitely worth asking, researching and actively following the projects on NFT forums in the beginning. It is also worth entering projects that are not based on the Ethereum blockchain for an even cheaper access.

Of course, there is also the danger that you invest too quickly in projects that then fail completely, and you can lose the entire amount invested. Many are afraid of missing out on a trend (also known as FOMO – “Fear of Missing Out”) and allow themselves to be influenced by this fear. Especially with offers that have significantly high winning totals advertise, one must be careful. This could be a scammer. (fmg)

You can find the free introductory course on NFTs and Co. here.

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