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7 Things You Should Know Before Getting Into NFTs

The world of digital art — and the market for it — is a new frontier. However, it is also fraught with risk and uncertainty, which is why we are here to help you navigate it. We will discuss what NFTs are, how they work, and some common risks associated with investing in them as an individual or professional artist.


What Is an NFT?


What is an NFT? BayaniChain


NFTs are unique digital art files. They are not like digital copies of art, or even digital copies of digital art themselves. NFTs are more like objects — it can be sold and traded just like any other piece of property, but also has its own unique set of rules that apply to it when you want to use it for any purpose such as selling, etc.


An NFT does not really have any value unless someone else wants it too; it is more like a thing than anything else because there is no intrinsic value attached to the file itself (unlike say…an actual painting).


Why Are NFTs Popular?


They are collectibles, but instead of being physical objects you own, they have their own unique properties and characteristics. For example, one NFT might be worth more than another; it could also have different colors or patterns on it. This makes them an artistic creation — except instead of being made by human hands; they are created by computers!


What Is the Risk of Investing in NFTs?


As with any new technology, the risk of investing in NFTs is similar to that of other investment opportunities. If you are looking to diversify your portfolio and hedge against market volatility, then you should consider buying NFTs as an alternative to stocks or bonds.


The primary reason why this is not a good idea is because it is still fairly new and there are not so many regulations in place yet (which will likely change). This means that there could be major changes in how things work over time.


These are the common example of risks associated in NFTs:


  • Rugpull: While the NFT market has grown rapidly, there are still some risks involved. In particular, rugpull are malicious acts by developers in luring hyped investors then suddenly abandon the project by sending all of the funds used in minting NFTs to their own wallets or come up with a drama scheme until they can slowly drain all of the funds from the project’s community wallet.


  • Private Keys: The same goes for loss—if you lose access to your private keys or have this could result in your financial loss.


  • Theft: Theft means that someone has taken away something belonging to another person without permission; if an NFT is stolen by someone who gets hold of it without their intended recipient’s consent (or if they keep the item after receiving permission), then this counts as theft too.



How Do I Buy and Sell My Own NFTs?


There are 2 common ways of buying and selling NFTs:


  • Centralized exchanges allow you to trade your own NFTs on a centralized platform, which means that the exchange itself holds all of your funds at any given time. This can be risky if there are any security issues with the exchange, but it is still considered less risky than peer-to-peer (P2P) or decentralized markets.


  • Decentralized exchanges allow users to trade each other’s tokens directly without having access to centralized databases like those run by centralized platforms. This means no one has control over them—and thus no one can steal or hack them—and they are also resistant against government interference since there are no humans involved in the operations.


Do I Have to Worry About My Digital Art Being Stolen or Counterfeited?


Copyright Law - NFTs


As you may have learned, digital art is not protected by copyright. That means that anyone can copy and distribute it — and this includes counterfeiters. If your artwork is stolen or copied, there is no way to know whether it was done by accident or on purpose. You will never be able to prove that the person who stole your work did so with malicious intent.


This has led some people who have been affected by this issue into thinking about what is the best way to protect their work in order for others to not be harmed as well. That is why NFT communities are very important — aside from the fact that every property of your digital artwork can be proved on its record on the blockchain; the community itself can also prove that your digital artwork is the real one.


How Big Is the NFT Market Right Now?


NFT Bubble - BayaniChain


I do not want to sound like I’m hyping you here. But, it is really bigger than you may think.


In 2020 alone, the NFT market grew by over 200% soaring to over $2 billion in the first quarter of 2021 — though the current market that we have right now slows down (a little bit). Data shows that it is still way beyond where it all started. Furthermore, traditional art auction houses are also now getting in on this NFT craze!


What Do You Think?


If you are thinking about getting into NFTs, it is important to keep these risks in mind. However, the good news is that there are plenty of ways to minimize them—and a lot more people are choosing to invest in digital art.


The cryptocurrency market has grown rapidly over the past few years as businesses and individuals alike embrace new technology like Ethereum and Bitcoin. And with more investment comes more innovation in our society as a whole!


So now might be an exciting time for those who want their own digital art collection or to support artists by purchasing their work from NFT marketplaces like Likha who is becoming the gateway for Filipino artists and brands to position themselves in the metaverse!



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