How NFT’s Are Impacting The Cryptocurrency Industry

How NFT’s Are Impacting The Cryptocurrency Industry
May 20, 2022 0
How NFT’s Are Impacting The Cryptocurrency Industry

Digital assets, known as non-fungible tokens (NFTs), have experienced an incredible growth in popularity. Their demand and growth has been almost unprecedented, with so many people being drawn into this new and modern form of ownership.

An NFT is a digital asset that represents a real-life object, like a piece of art or a video. They can be bought and sold online, usually through cryptocurrency, and are coded on blockchains to prove originality and ownership.

They are one of a kind and a collector’s item, their originality and scarcity makes them more valuable, and this brings with it a higher demand.

Most digital creations have been almost infinitely available to whoever desires them, this change has given scarcity by cutting off the supply to a limited number. 

Despite being considered original and ownership is confirmed with purchase, NFTs can often be of things which already exist, like videos of goals scored in a soccer game. Anyone can view these images or videos and share them online, but there is only one owner, and this can always be confirmed due to the coding on the blockchain.

The NFT community is reaching the mainstream culture and more and more money is being invested and paid in auctions for NFTs. $390,000 was paid for an NFT of a 50-second Grimes video and $6.6 million was paid for a video by Beeple, a famous digital artist. 

NFTs are available to all, there is no necessity to already be invited into the community, anyone can visit an NFT marketplace and invest their money. 

Once in these marketplaces, customers and investors will notice the relationship between NFTs and cryptocurrency. 

To purchase an NFT you will firstly require a digital wallet. This allows you to purchase and store your NFT and cryptocurrency. Cryptocurrency can be purchased with a standard credit card and once your wallet has cryptocurrency in it you can purchase your NFT. It is important to bear in mind there are a number of different cryptocurrencies out there, so check what cryptocurrency the marketplace you are using accepts.

NFTs and Cryptocurrency are connected through the underlying technology used, namely blockchains. 

In 2020 Bitcoin, the most well-known cryptocurrency, reached a record high in its prominence and use. Though, currently its value is dropping and experiencing a large sell-off period along with other cryptocurrencies. 

The fact that NFTs and Cryptocurrency requires demand to sustain its value, NFTs will be affected by the demand for cryptocurrency and vice versa. 

Due to cryptocurrencies rapid rise over the past few years, lawmakers and sceptics have had to get more involved in increasing interest rates and Gas Fees. 

Gas Fees are the payments made to the crypto miners who carry out the blockchain transactions. The changes in these fees with the spike in demand for NFTs also had an effect on the costs and use of cryptocurrency.

The declines and volatility of cryptocurrency has become normal in the current climate and those interested in purchasing NFTs have had to do their research prior to investing.

By understanding the crypto market, people can find the best prices for buying cryptocurrency and use the purchase of NFTs as an investment to be sold on at a later date, or to keep depending on the reason of purchase.

The demand for NFTs helped bring more people into the world of cryptocurrency, People who once looked at it with concern and suspicion realized its value and use to them and invested into it. 

NFTs and Cryptocurrency may use the same blockchains, though they are separate things with a close relationship. While they remain separate, each’s demand, and popularity can affect the other. 

Once you have decided upon purchasing an NFT, the best place to start is looking at the different marketplaces that exist. OpenSea is considered to be the largest as well as being “gas-free” which is a great starting point for those new to NFTs. Many others exist such as Binance, Coinbase, Rarible and Axie Markeplace.

Identifying the types of cryptocurrency they accept is important before pouring your money into a different form which will not allow you to purchase the NFTs you desire.

You need to ensure you are clear in why you are purchasing an NFT as the options are very diverse. If it is to invest and sell on, if you are looking for artwork or video, or if you are looking for something closer to a game/metaverse, there are options for such a diverse crowd. 

The community is young and growing, especially in the mainstream culture, and this means that there is a lot of buzz around the different and new forms of NFTs available. By managing your cryptocurrency, you will be able to invest in the NFTs you feel will bring possible future earnings, as well as be part of developing and exciting communities.

The opinions and assessments expressed in the text are the views of the author of the article and may not represent the position of Cryptogeek. Do not forget that investing in cryptocurrencies and trading on the exchange is associated with risk. Before making decisions, be sure to do your own research on the market and the products you are interested in.

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