The cryptocurrency mining industry is a highly competitive and volatile business. As more miners join the competition, they tend to adopt ever more expensive and complex mining equipment, which results in lower returns for miners.
This has led some to question whether the cryptocurrency industry will ever be able to achieve profitability with current hardware and software. In the meantime, other players in the crypto space have entered the NFT (non-financial services) space.
These entrants include platforms that provide automated trading services and platform providers that facilitate token sales. This article will discuss how the fractional NFTs are changing the NFT space.
1. Increase Inclusion in the NFT Space
Fractional NFTs (FNFs) are financial instruments representing ownership or providing rights over real-world assets. The most popular application of FNFs is in the form of tokens that represent fractions of a real-world asset. For example, one token can represent one unit of a tokenized real estate asset. This means that when your create your own NFT, you will have a chance to participate in the market with other investors.
2. Lower Risk
Investing in NFTs is not as risky as investing in traditional securities like stocks and bonds. There are no counterparty risks associated with FNFs, unlike traditional securities, which require you to have an account with a broker or bank for your investments. This means that there is no risk associated with losing your funds, making NFT investments more attractive for investors who wish to diversify their portfolios.
There are many advantages to investing in FNFs over stocks and bonds. FNFs do not require as much upfront investment as stocks or bonds. Many investors choose to fund their retirement savings with FNFs rather than traditional stocks and bonds because they are far more affordable than stocks and bonds.
3. Faster Settlement
Fractional NFTs can settle faster than traditional securities because there is no need for the exchange to send the asset to a central registry. This means that fractional NFTs can settle faster, and this is an advantage as it allows for quicker payments and settlements.
There are also other benefits to this type of settlement, such as no custody required, lower costs, and no need for a lock-up period. This makes it an ideal solution for smaller and medium-sized enterprises (SMEs) and individuals who do not want to hold security.
4. NFT-friendly Exchanges and Markets
The majority of exchanges that offer FNFs are NFT-friendly exchanges which means that they do not require you to use a different wallet or trading platform when trading FNFs. This means that you will not have to worry about losing your funds if you make a mistake when using an exchange or platform which does not support NFTs. The majority of the major exchanges like Coinbase, Binance, Kraken, Poloniex, etc., are all NFT-friendly exchanges.
5. Lower Fees than Traditional Securities
Fractional NFTs have low fees compared to traditional securities, making them cheaper and more attractive for investors. The fees charged by exchanges and other companies when you buy, sell or trade traditional securities can be very high. For example, Bittrex charges a fee of 0.25%, and Poloniex charges a fee of 0.1%. These fees are quite high compared to the fees you will pay when buying FNFs which can be as low as 0.001% on the Binance exchange and 0.005% on Poloniex.
6. Fractional Ownership
Fractional ownership of an NFT means owning a fraction of the asset instead of a whole asset like you would with traditional securities. This means that if an investor has 10,000 NFTs in their portfolio, they own 100 fractions equal to 1/10th of the total amount of NFTs in the portfolio (10,000). The advantage to owning fractions is that each fraction has its value, and the value of the entire asset does not dilute you. For example, if you own 10,000 NFTs in your portfolio, each fraction has a $1.
If you are looking to invest in NFTs, you should consider investing in FNFs. FNFs are a way for investors to increase their portfolios without buying whole assets. The main benefit of investing in FNFs is that it creates a diversified portfolio and reduces the possibility of losing all your investment due to a single negative event.
ALISON LURIE