Effect of the NFT on Cryptocurrency
The concept of Non-fungible tokens (NFT) is now everywhere. As people were aggressive to invest in cryptocurrencies now people are taking interest in Non-Fungible Tokens (NFT). Some of you have invested in Cryptocurrencies and NFTs and some of you are planning.
You may see the news about NFTs and their value which is increasing day by day. The value of the cryptocurrency market cap has reached 300B USD in 2022 as per the report. On the other hand, the value of the NFT market is also increased up to 840M USD in 2022 as per the report.
If you are still unaware of Cryptocurrencies and NFT then read these articles first:
How does NFT drive its Value?
The value of the art worked which is minted as the NFT derives its value from the original artworks. NFT gain its value as per the demand and supply. The value of the NFT depends on many things. Some of them are:
The demand for the NFT in the market.
The fame of the artist.
The uniqueness of the NFT.
The value of the cryptocurrency on which NFT was minted.
Effect of the NFT on the Value of the Cryptocurrency
As we know that NFTs are created on the underlying cryptocurrency and the crypto market is very volatile. Most of the time NFT market does not follow the Crypto market. As of this year data crypto market has fallen but the NFT market keeps on rising.
The NFT market is independent of the crypto market. As every unique artwork has some value. These artworks may be in the field of Music, Video, Pictures, and many more.
NFTs have a special value beyond the cryptocurrencies used to purchase them. There is a low spread between cryptocurrencies and NFTs.
It found that the effect of the NFTs on the highly volatile Crypto market is very negligible and both markets are distinct from each other.
But the increase in the value of the NFT surely increases the value of the cryptocurrency on which it is minted.
The researcher found that NFTs are less Risky than the underlying cryptocurrencies.
Also read:
What is Bitcoin Mining? | How does Bitcoin Mining Work?
Gaming NFTs: Why it is so popular | What is Gaming NFT and How does Gaming NFT work
