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NFTs: Student Investment Beyond Art

Introduction

Non-fungible tokens (NFTs) are digital assets that represent unique and scarce items on the blockchain. Unlike cryptocurrencies, which are fungible and interchangeable, NFTs have distinct characteristics and cannot be replicated or replaced by another token.

NFTs can be used to create digital certificates of ownership and authenticity for various types of assets, such as art, music, gaming, sports, and more.

Thos who holds a large amount of NFTs and Crypto are called whales.

The Rise of NFTs in Finance

NFTs have gained popularity and attention in the financial world, especially after the record-breaking sale of a digital artwork by Beeple for $69 million at Christie’s auction house in March 2021. Since then, the NFT market has exploded, with billions of dollars worth of transactions and thousands of new projects and platforms emerging. According to DappRadar, the total sales volume of NFTs in the first quarter of 2021 was over $2 billion, a 2,100% increase from the previous quarter.

NFTs have also attracted the interest of investors, who see them as a new way to diversify their portfolios and access alternative asset classes. NFTs offer several advantages for investors, such as:

  • Liquidity: NFTs can be easily bought and sold on online marketplaces, such as OpenSea, Rarible, and SuperRare, where buyers and sellers can connect and trade directly without intermediaries.
  • Transparency: NFTs are recorded on the blockchain, which provides a secure and immutable record of the ownership history and provenance of each token. This reduces the risk of fraud, counterfeiting, and theft, and increases the trust and confidence of buyers and sellers.
  • Democratization: NFTs enable anyone to create, own, and trade digital assets, regardless of their location, background, or income level. NFTs also allow for fractional ownership, where multiple investors can own a share of a single asset, lowering the entry barriers and increasing the accessibility of the market.
  • Innovation: NFTs open up new possibilities for creativity and experimentation, as artists, creators, and developers can leverage the unique features and functionalities of NFTs to create novel and engaging experiences for their audiences. NFTs can also incorporate smart contracts, which are self-executing agreements that can automate certain actions, such as royalties, dividends, or rewards.

Understanding NFTs

Before investing in NFTs, it is important to understand what they are, how they work, and what makes them valuable.

Beyond Digital Art

While digital art is one of the most popular and visible categories of NFTs, it is not the only one. NFTs can represent any type of digital or physical asset, such as:

  • Music: NFTs can be used to create digital albums, songs, or soundtracks, and to grant exclusive rights and benefits to the fans, such as access to backstage passes, live concerts, or merchandise. For example, the rock band Kings of Leon released their latest album as an NFT, which included a special vinyl, a digital download, and a limited-edition golden ticket.
  • Gaming: NFTs can be used to create in-game items, such as weapons, skins, or characters, and to enable players to own, trade, and use them across different games and platforms. For example, Axie Infinity is a game where players can collect, breed, and battle NFT-based creatures called Axies.
  • Sports: NFTs can be used to create digital collectibles, such as trading cards, memorabilia, or highlights, and to capture the moments and achievements of athletes, teams, and leagues. For example, NBA Top Shot is a platform where fans can buy and sell NFTs of video clips featuring the best plays and moments of the NBA.
  • Real Estate: NFTs can be used to create digital representations of physical properties, such as buildings, land, or spaces, and to facilitate the ownership, transfer, and management of real estate assets. For example, Decentraland is a virtual world where users can buy, sell, and build on NFT-based parcels of land.
  • Identity: NFTs can be used to create digital identities, such as avatars, profiles, or personas, and to enable users to control and protect their personal data and reputation. For example, CryptoPunks are a collection of 10,000 pixelated NFT-based characters, each with their own unique traits and attributes.

NFTs as Investment Assets

NFTs are not only digital assets, but also investment assets, as they can generate returns for their owners in various ways, such as:

  • Capital appreciation: NFTs can increase in value over time, depending on the supply and demand of the market, the quality and rarity of the asset, and the reputation and popularity of the creator. For example, the first-ever tweet by Twitter founder Jack Dorsey was sold as an NFT for $2.9 million, a 580,000% increase from its initial price of $500.
  • Income generation: NFTs can produce income for their owners, either by selling them at a higher price, renting them out to other users, or earning fees or commissions from their use or performance. For example, an NFT-based artwork by Beeple called “The Complete MF Collection” generates $50,000 per year in fees for its owner, who can also sell it at any time.
  • Value creation: NFTs can create value for their owners, either by enhancing their social status, personal expression, or enjoyment, or by providing them with exclusive access, rights, or benefits. For example, an NFT-based artwork by Damien Hirst called “The Currency” gives its owner the option to either keep the digital token or exchange it for a physical painting.

NFTs in Education

NFTs are not only relevant for investors, but also for students, who can benefit from the opportunities and challenges that NFTs present in the education sector.

Opportunities for Students

NFTs offer several opportunities for students, such as:

  • Learning: NFTs can provide students with a new and exciting way to learn about various topics, such as blockchain, cryptography, economics, art, and more. NFTs can also stimulate students’ curiosity, creativity, and critical thinking skills, as they explore the possibilities and implications of NFTs in different domains and contexts.
  • Creating: NFTs can provide students with a platform to showcase their talents, skills, and passions, and to create their own digital assets, such as artworks, music, games, or collectibles. NFTs can also empower students to express themselves, communicate their ideas, and connect with their peers and communities.
  • Earning: NFTs can provide students with a source of income, either by selling their own creations, or by investing in other NFTs. NFTs can also help students to fund their education, pay off their debts, or save for their future goals.

Risks and Considerations

NFTs also pose some risks and considerations for students, such as:

  • Legal: NFTs can involve legal issues, such as intellectual property rights, taxation, regulation, and compliance. Students should be aware of the laws and regulations that apply to their jurisdiction, and consult with legal experts before engaging in any NFT-related activities.
  • Ethical: NFTs can raise ethical questions, such as environmental impact, social responsibility, and cultural sensitivity. Students should be mindful of the consequences and implications of their actions, and respect the values and norms of their society and culture.
  • Technical: NFTs can encounter technical challenges, such as security breaches, network congestion, or platform failures. Students should be careful of the risks and vulnerabilities that exist in the digital space, and protect their assets and data with appropriate measures and tools.

Getting Started with NFT Investments

For students who are interested in investing in NFTs, there are some steps and best practices that they should follow to get started.

How to Acquire NFTs

There are two main ways to acquire NFTs: creating or buying.

  • Creating: Students can create their own NFTs by using platforms and tools that allow them to upload, mint, and list their digital assets on the blockchain. Some examples of these platforms and tools are:
    • Mintable: A platform that allows users to create and sell NFTs without any coding or upfront fees.
    • NFT Maker: A tool that allows users to create NFTs in minutes with a simple drag-and-drop interface.
    • Art Blocks: A platform that allows users to create generative NFTs based on algorithms and randomness.
  • Buying: Students can buy existing NFTs by using marketplaces and platforms that allow them to browse, bid, and purchase NFTs from other sellers. Some examples of these marketplaces and platforms are:
    • OpenSea: The largest and most popular NFT marketplace, where users can buy and sell NFTs across various categories, such as art, gaming, sports, and more.
    • Rarible: A community-owned NFT marketplace, where users can buy and sell NFTs and earn governance tokens for their participation.
    • SuperRare: A curated NFT marketplace, where users can buy and sell high-quality digital art from selected artists.

Wallet Security and Best Practices

To acquire and store NFTs, students need to have a digital wallet, which is a software or hardware device that allows them to interact with the blockchain and manage their assets. There are many types of wallets available, such as:

  • Web wallets: Wallets that are accessible through a web browser, such as MetaMask, Coinbase Wallet, or Fortmatic.
  • Mobile wallets: Wallets that are installed on a mobile device, such as Trust Wallet, Rainbow, or Argent.
  • Hardware wallets: Wallets that are stored on a physical device, such as Ledger, Trezor, or KeepKey.

Each type of wallet has its own advantages and disadvantages, such as convenience, security, and compatibility. Students should choose the wallet that best suits their needs and preferences, and follow some best practices to ensure the safety and security of their assets, such as:

  • Backup: Students should backup their wallet by writing down or storing their recovery phrase, which is a set of words that can restore their wallet in case they lose access to it. They should keep their recovery phrase in a safe and secure place, and never share it with anyone.
  • Update: Students should update their wallet regularly to ensure that it has the latest features and security patches. They should also check the official website or social media accounts of their wallet provider to verify the authenticity and legitimacy of any updates or notifications.
  • Protect: Students should protect their wallet by using a strong password, enabling two-factor authentication, and avoiding phishing or malware attacks. They should also be careful of the websites and platforms they visit, and only connect their wallet to trusted and reputable sources.

NFT Trends and Future Outlook

NFTs are a dynamic and evolving phenomenon, with new trends and developments emerging every day. Some of the current and future trends and outlooks of NFTs are:

Evolving Landscape

The NFT landscape is constantly changing, with new projects, platforms, and innovations being launched and adopted. Some of the recent and upcoming developments in the NFT space are:

  • Interoperability: The ability of NFTs to interact and communicate with other blockchains, protocols, and platforms, enabling cross-chain and cross-platform transactions and collaborations. For example, Polygon is a layer-2 solution that aims to improve the scalability and performance of Ethereum, and to connect Ethereum with other blockchains, such as Binance Smart Chain, Polkadot, or Cosmos.
  • Layer-2: The use of secondary networks or protocols that run on top of the main blockchain, such as Ethereum, to enhance the speed, efficiency, and affordability of NFT transactions. For example, Immutable X is a layer-2 solution that claims to offer zero gas fees, instant trades, and carbon-neutral NFTs.
  • Metaverse: The concept of a virtual reality where users can create, explore, and interact with digital worlds and assets, such as NFTs. For example, The Sandbox is a metaverse where users can create, play, and monetize their own NFT-based games and experiences.

Potential Impact on Student Finances

NFTs have the potential to impact the financial situation and well-being of students, both positively and negatively. Some of the possible impacts are:

  • Income: NFTs can provide students with an additional source of income, either by creating and selling their own NFTs, or by investing in other NFTs. This can help students to supplement their existing income, pay for their education, or save for their future goals.
  • Education: NFTs can provide students with an opportunity to learn about various topics, such as blockchain, cryptography, economics, art, and more. This can help students to enhance their knowledge, skills, and competencies, and to prepare for their future careers.
  • Debt: NFTs can also expose students to the risk of debt, either by spending more than they can afford, or by borrowing money to buy NFTs. This can lead to financial stress, anxiety, and hardship, and affect their academic performance and mental health.
  • Volatility: NFTs are subject to high volatility, as their prices can fluctuate significantly and unpredictably, depending on the supply and demand of the market, the quality and rarity of the asset, and the reputation and popularity of the creator. This can result in losses, uncertainty, and frustration for students, and affect their financial stability and confidence.

Case Studies

To illustrate the opportunities and challenges of NFTs for students, here are some case studies of real-life examples of students who have engaged in NFT-related activities.

Success Stories in Student NFT Investments

Some students have achieved success and recognition in the NFT space, either by creating and selling their own NFTs, or by investing in other NFTs. Some examples are:

  • Benyamin Ahmed: A 12-year-old student from London, who created and sold his own NFT collection of pixelated fish called Weird Whales, and earned over $400,000 in Ethereum. He learned to code from his father, who is a software developer, and used an open-source code to generate his NFTs.
  • Victor Langlois: A 19-year-old student from Montreal, who invested $2,000 in an NFT project called Bored Ape Yacht Club, and sold his NFT for $150,000 in Ethereum. He discovered NFTs through social media, and decided to take a risk and buy an NFT that he liked.
  • Fewocious: An 18-year-old artist from Las Vegas, who created and sold his own NFT artworks, and earned over $2.5 million in a single auction. He started drawing at a young age, and used NFTs as a way to express his identity and emotions.

Navigating Risks

While NFTs offer many opportunities for students, they also pose many risks and challenges. Therefore, students should be cautious and responsible when engaging in NFT-related activities, and follow some tips and advice to navigate the risks, such as:

  • Research: Students should do their own research and due diligence before creating, buying, or selling NFTs. They should verify the authenticity, quality, and value of the NFTs, and the reputation and credibility of the creators, sellers, and platforms. They should also be aware of the trends, developments, and news in the NFT space, and stay informed and updated.
  • Budget: Students should set a realistic and affordable budget for their NFT activities, and stick to it. They should not spend more than they can afford, or use money that they need for other purposes, such as education, living expenses, or savings. They should also not borrow money or take loans to buy NFTs, as this can lead to debt and financial problems.
  • Diversify: Students should diversify their NFT portfolio, and not put all their eggs in one basket. They should invest in different types of NFTs, across different categories, platforms, and creators, and balance their risk and reward. They should also diversify their overall portfolio, and not rely solely on NFTs as their source of income or investment.
  • Enjoy: Students should enjoy their NFT activities, and not let them consume or stress them. They should have fun and satisfaction in creating, buying, or selling NFTs, and not be obsessed or addicted to them. They should also have a healthy and balanced lifestyle, and not neglect their education, health, or relationships.

Conclusion

NFTs are a new and exciting phenomenon that offer many opportunities and challenges for students. NFTs can provide students with a platform to learn, create, and earn, and to access alternative asset classes and markets. However, NFTs also involve risks and considerations, such as legal, ethical, and technical issues, and market volatility and uncertainty. Therefore, students should be cautious and responsible when engaging in NFT-related activities, and follow some best practices and tips to ensure the safety and security of their assets and well-being. NFTs can empower students in the digital space, as long as they are used wisely and ethically.

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