Risks in NFT Investments

As the march of the digital era continues, innovative technology continues to amaze us. From blockchain to IoT, digital transformation is changing our world.

We are experiencing transformation at such a rapid pace that even our currencies will be replaced by their digital counterparts.

You guessed it: Cryptocurrency.

Carl Runefelt is a global crypto leader and NFT enthusiast who foresee everything crypto. His conviction has led him to invest in more than 360 crypto startups.

He says, “Cryptocurrency is recognized across the world and is not affected by exchange or interest rates. It would also provide individuals living in economically fragile nations more stability and predictability.”

Late at the show, but has bewitched investors and crypto nerds alike with its innovation: The NFTs!

NFTs are a new asset class changing how we interact with our digital world. These are one-of-a-kind digital assets that can be anything from collectibles to art & music.

A lot of excitement is surrounding NFTs. Especially for investors who put in their money for higher gains.

The Benefits of NFTs

There are numerous reasons why investing in NFTs is a viable option. Let’s have a look at some of these:

• NFTs can be easily transferred and stored
• More convenient than physical assets
• NFTs created by celebrities have more value than the others
• You can resell and trade NFTs easily
• You can get a hefty profit when reselling
• The potential is still untapped in the NFT market

On purchasing crypto punk NFT, Carl said, I really think that the crypto punk NFT is a good purchase which I bought for 1 million dollars. I am very certain that I can easily sell it for 1.5 million dollars if I put it out for sale and who knows, in five years, maybe it’s worth 20 million dollars.

But like every investment, NFT investment might have some risks too, right?

Let’s have a look at some of the significant risks involved when you are investing in NFTs

The Risks in NFT Investment

An astute investor knows all the risks in the chosen investment. You can say the same for the NFT investment.

Let’s glance at some of the risks.

Volatility:

One of the biggest concerns of NFT investors is the frequency of volatility when investing in NFTs.

Some might say that NFT is a lost ship in an ocean confounded by erratic weather; some days are smooth sailing, and some days braving the storm!

The prices of NFTs fluctuate rapidly – keeping investors up all night.

Say you have bought an NFT for 5 million dollars, and the next news you learn, the prices have dropped 200 percent. You’d be smacking your head on the wall with frustration.

But this goes the other way around too. Investors who bought NFTs sold them when prices climbed to an all-time high. For cryptocurrency and NFT, be prepared for unexpected volatility.

Carl Runefelt considers volatility a boon. He says, “If you want to make money through crypto, the easiest way is to buy at a low price and sell when it is high. Also, you can intelligently take advantage of massive volatility and volume.”

Lack of Regulation:

NFTs haven’t been around for much time.

This means that this market is still unregulated, and no rules and procedures are in place to monitor investments in this sphere.

So tread carefully on this path as unscrupulous elements are out there to steal your investment.

But at the same time, crypto and NFTs pride themselves on enabling unregulated markets without the involvement of intermediaries like banks and governments.

Risk of Fraud:

The risk of fraud is another concern because NFTs are still unregulated. Some people might try to send fake and counterfeit NFTs.

Also, there is always a chance that online miscreants may try to sell NFTs without having ownership of those NFTs.

Some people have raised security concerns about cryptocurrency security as well. They go as far as saying that Bitcoin can be hacked. Carl Runefelt clarifies, “I know that for the fact that you cannot hack Bitcoin. You can hack exchanges which is something different but not Bitcoin. It’s important to understand that you can hack YouTube, you can hack banks, or literally any internet company out there, but you cannot hack Bitcoin. This is because the blockchain is very robust.”