NFTs. Im sure you’ve heard about them as its all the news seems to talk about every other week. “This new NFT could make you millions!”, “Buy this NFT before it's too late!”, are both article headline I’m almost certain you’ve seen before. Like many others I was impressionable when I first started my investing journey and was just looking for new projects to throw my money at. This also so happened to be in the midst of the NFT craze which I was gravitated to immediately.
So what is an NFT?
An NFT(non fungible token) in simplest forms. Imagine you buy a car. Once you pay for this car you get a title that says it’s yours assuming you paid in full. Nobody can come and take this car from you because you have proof of ownership. Now imagine you buy a new paint job for your Lamborghini Aventador in your favorite video game. Let's just say this skin cost $65 (please do not do this buy the way, terrible waste of money). You paid for this skin but at any moment the game can take it away or make more, decreasing the rarity and devaluing your purchase. With our lives becoming more and more digitally focused it's important to have a way to show proof of digital assets so that you can protect them. If that skin was an NFT than you could show ownership and it would be protected because there would only be a limited number of them available. What makes them valuable though is the fact you could sell it to another buyer and make back some of the money or more that you paid for it depending on how the market is for that particular Token. NFT’s can also be paired with utility that gives the potential buyer more of a reason to buy. An example of this would be that skin you bought in the game offers a limited edition race every month only for the holders of that NFT.
My biggest purchase led to my greatest lesson
Junior year of high school, the NFT craze was in full swing. Of course my friends and I wanted a piece of the action as we saw people on the internet making millions off a literal picture of an ape. We scoured the internet searching for the next big NFT that was going to blow up and make us rich. We eventually came across one that was released a few months prior. It was called Swampverse. 999 pictures of frogs that once all bought, would fund a video game and a piece of land in the Metaverse. The utility was they would generate a coin called “Croak” every day and eventually the goal was to turn it into the next big crypto. My three friends and I finally found the one we wanted to purchase, the only problem was that it cost 0.6 Etherium which at the time was a little under $2,000. We kept telling ourselves, “but all the pioneers in the NFT space are invested we have to” which led to us all chip in $500 each and buy it on the spot. We were so excited and all I could think about was next week I might wake up $50,000 richer! Then a month passed and nothing happened but a slight decline. Again in month 2, and 3, and well you get the point. About a year later and I’m sad to say our frog once valued at $2,000 is now sitting around $200. This taught me that research is key. We didn’t do any background checks on the creators or look up when the Swampverse game would be out. And with delays and a team of creators not bought in it flunked. I’ve got to say we do own a damn cool looking frog now though.
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