Shareholder benefits and NFTs allow you to receive incentives such as goods and services by holding them and meeting certain conditions. We will summarize the similarities and differences between them.
Unravelling the essence of stocks and NFTs through their similarities
NFTs and stocks have many similarities, such as proof of ownership, volatility, and fluctuations in value based on scarcity. Strictly speaking, there are many differences, but if you look at NFTs after understanding the similarities in comparison with existing systems, you may be able to face them without any allergic reactions.
NFTs have characteristics that were not mentioned above. For example, the biggest feature of NFTs is non-fungibility. This represents a unique digital asset, and it can be said that each has independent value and identification information. In contrast, stocks are a kind of fungible asset, and stocks of the same type from the same company basically have the same value.
Also, considering the market size, although NFTs have liquidity, not all NFTs have the same high liquidity as stocks traded on stock exchanges open to the world.
In addition, although the calculation method for corporate value varies for stocks, the value is mainly determined based on tangible assets and financial information. On the other hand, the value of NFTs is often influenced by factors that can be considered intangible assets, such as the presence or absence of a community or influencers, the vision of the project, and the rarity of the work.
Risks from Differences
Please keep in mind that there are clear differences between stocks and NFTs, and each comes with its own risks.
Needless to say, stocks fluctuate depending on many factors, such as the supply and demand balance in the market, corporate performance, the economic environment, and the political situation. I would like to spare no effort in basing my investment decisions on the future prospects of the company I am investing in, based on its financial situation and performance.
The new NISA system will be applied from this year, and index investments such as All Country and S&P 500 have attracted attention, but since there may be losses in unexpected places such as fees, I would like to think about the best choice for myself rather than blindly trusting.
In the case of NFTs, there are many that reflect subjective values that are difficult to quantify, such as the intangible assets mentioned earlier, so there is a possibility that the factors that affect the price are more diverse than in stocks. Since liquidity is lower than the stock market, it is expected that the value will decrease without finding a buyer.
I think it would be better to approach it more like a right, or a privilege, rather than an investment. How can we "utilize" NFTs, which have substance and high utility?
Overall, there are attractions and opportunities in both stock and NFT investments, but the key to reaping maximum benefits is to understand the characteristics of each market and manage risks appropriately.
What stocks and NFTs have in common
- Investment aspects
Both can be investment targets. Just as many investors buy stocks in hopes of price increases, when the boom came, they bought NFTs in hopes of future value increases. However, both have investment risks, and now that the investment risks of NFTs have become apparent, there is a shift to NFTs with higher utility.
- Scarcity and value
In the case of stocks, the fact that only a limited number of shares of a particular company exist in the market is also a factor that determines their value. This principle also works for NFTs. The scarcity of digital assets also creates an impact on prices. NFTs that are rarer and have unique characteristics can create high value.
- Liquidity
Stocks are easily traded through stock exchanges and are relatively liquid assets, depending on the stock. NFTs can also be bought and sold through marketplaces, etc., and NFTs can also be sent directly to a specified wallet address. Be careful of tax when making profits when transferring NFTs and when selling them.
- Proof of ownership
Both stocks and NFTs have very similar functions in terms of proving ownership. Stocks represent part of the ownership of a company, and shareholders have the right to receive a portion of that company's profits. On the other hand, NFTs use blockchain technology to prove ownership of digital data (art, music, rights, etc.).
- Fluctuations in market value
Just as stock prices fluctuate due to changes in corporate performance and market conditions in the stock market, the value of NFTs also changes due to market demand and supply, and some NFTs are extremely valuable. Changes in market prices are common to all things, but it is an advancement that NFTs have made it possible to prove that digital things have asset value.
- Potential for profit opportunities
Stocks can also earn profits through dividends. In the case of NFTs, there are cases where incentives can be received for holding them, and creators can use NFTs to earn royalties when reselling them. The common point between the two is that owners have the opportunity to earn economic profits.
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