Should I Invest in NFTs to Pay for College?
You may have heard of a recent financial tip that recommends investing in NFTs to help you pay for college. However, before making any decision, it is important to know exactly what an NFT is and your options.
What are NFTs and how do they work?
NFT, or non-fungible token, is a virtual asset stored on the blockchain. This may include digital files such as videos or photos. The media rights are retained by the original artist, but NFT itself is unique to the buyer. The buyer can later sell the NFT to someone else and potentially earn money from the investment. Each NFT is unique and identifiable, and is usually held in a cryptocurrency wallet.
NFTs can be used. Some are sold to support nonprofits, while others may support an artist. Example of NFT: An artist releases a music album. However, there is only one digital copy of this album and it is sold to one individual, who is likely to be a fan who absolutely loves their music. The artist retains the rights to the album as if it had been released to the public. But, only the individual has access to the actual album as intended.
The future of NFTs is unclear.
While NFTs may have real-world uses, they are limited, and the future of NFTs is unclear, especially when it comes to investing.
First, the legal rights surrounding non-fungible tokens can be a bit complicated. NFT ledgers are required to provide a certificate of authenticity or proof of ownership, but sharing and copying images, for example, that “NFTs” are common – even if the copied images contain “proof of ownership”. “Don’t get attached.
And while the value of the NFT can increase, there is absolutely no guarantee that it will increase. NFTs are almost always sold with cryptocurrency, which can change dramatically in value overnight. Some compare investing in NFTs to buying Beanie Babies in the ’90s. People believe that young children who are kept in a pristine condition will make thousands of dollars one day. But in reality, there is no prediction for the future. Beanie Babies certainly didn’t take off the way buyers thought, and NFTs may follow suit. And if the value of the NFT grows, will it grow in time to cover your college expenses?
It is also important to note that there are NFT scams. For example, some artists have been accused of buying NFTs to inflate prices and make the work look like a more worthy investment option. Investors, whether they are in NFTs or otherwise, should also be wary of phishing scams as there have been several recent thefts that have led to the withdrawal of more than $1.7 million from digital wallets.
There are other options.
If you’re not sold into the NFT or don’t want to take the risk, there are plenty of other financial options to help you pay for college. If you’re young, you can talk to your parents about 529 plans, for example. If you have money to invest, start a high-yield savings account, or start small with an investment app, you may also want to consider working with a broker.
The use of NFTS to pay for college is still under investigation and requires further research. If you decide to invest in one, be sure to check the artist, portfolio, and expected ROI. In some cases, it may be more beneficial (and safer) to use the money you are considering investing in NFTs directly into college.
Are you looking for help when it comes to your financial aid? Use our financial aid offers comparison tool to better understand your college finances.