NFTs, why are they deemed bad investments by some experts

Elizabeth Smith

If we look at the market today, certainly NFTs have lost much of their initial interest. It may be because of the strongly bearish industry at the moment, it may be because they can no longer attract blockchain enthusiasts, but it is now obvious how the former glories have ended.

There are still those who hope to make their fortunes from Non-Fungible-Tokens, but with the exception of a few famous collections such as The Bored Ape Yacht Club, it now seems difficult to make a fortune from these special tokens.

Financial experts and several analyst communities around the web seem increasingly disappointed with the trend of this sector, and it is not surprising that many of them are not enthusiastic about the subject.

5 reasons why NFTs are bad investments according to experts

But why has such an explosive market died out so quickly? Is this really about the end? With the understanding that the future is yet to be written, we cannot help but list the 5 reasons why several investors continue to stay away from NFTs.

1. Volatility and unpredictable market

This is a common problem with all Web3 digital assets. However, it seems that volatility, unpredictability, and the fact that these are young assets leads NFTs to not be an investor’s ideal choice.

This is literally an industry where hundreds of tokens are born and die every day, where the price can be sky-high at the time of purchase only to fall to lows a few days later.

Investing then in such a young entity prevents having a track record of performance and activity to build on, often making it a difficult decision to make about exposure. This leads many small savers to catapult themselves into a market they do not know and have only heard of, with often disastrous long-term effects.

2. NFT theft: easy and too common

Another problem that should not be underestimated. Since these are cryptographic tokens, not tangible objects, people make the mistake of believing that they are difficult to steal. Nothing could be more wrong.

Yes, it often happens that we forget the password or enter a two-factor authentication system, thus making life easier for thieves.

We have to be very careful, always preferring offline wallets (so-called cold wallets), making sure to protect at least the rarest and most expensive ones.

Those with advanced knowledge, in fact, have no problem robbing us of our NFTs. And let us then remember that these are simple computer codes in 90% of cases.

3. NFT scams: high risk

One of the main advantages of having a Non-Fungible-Token is that it allows digital artists to claim ownership of their work. However, this has often turned out to be just a way for scammers to make money.

Already, scammers have basically started using NFT illegally, even stealing the work from the rightful owner without him even noticing.

They are plagiarizing artists’ original work, building fake websites, raising the price of NFT and selling it to buyers at prices higher than its real value. Caution is a must and remember that having famous faces and celebrities backing a token does not make it safer than others!

4. Non-Fungible-Tokens Value? Zero

Although the cryptocurrency market has grown by leaps and bounds in recent years and the blockchain is increasingly in the eye of investors, know that NFTs are not a good long-term investment.

You need only ask yourself one question: what is their utility? Currently, the value of NFTs lies in resale and how much someone is willing to pay for it. It is pure and simple collecting, wanting to simplify things as much as possible.

If people lose interest in your Non-Fungible-Token and are not willing to pay for it, it will lose its value, even reaching zero.

This is because the person buying is simply intent on the possession of one or more specific tokens, without having a direct benefit from it, either in the short or long term.

5. NFT environmental impact too high

Non-Fungible tokens and cryptocurrencies have a huge environmental impact that makes them unsustainable.

Many will already know that cryptocurrency mining consumes a lot of energy, and our Non-Fungible-Tokens are no exception, in fact some consume even more.

Just think that 8.7 megawatt hours of energy were required for the minting of these digital assets. This energy is equivalent to the electricity consumed monthly by the American resident!

A single NFT transaction can result in excessive and environmentally unsustainable CO2 emissions, especially in a context where all countries around the world are trying to combat global warming.

Read also: Bitcoin price forecast for 2030? 4 variables for long-term investments

Related articles...
Latest news
How rich is Joe Biden? Here is how much his personal wealth is
Brexit disaster: Britain poorer and more repentant
Lenovo is about to present a transparent notebook: what is known about it
Who is Ismail Haniyeh, the political leader of Hamas who lives in Qatar
The 10 most polluted places on Earth
The youngest countries in the world: which are the most recently founded nations?

Newsletter

Sign up now to stay updated on all business topics.