Buying crypto, NFTs, and domains as an investment
When was the last time your savings gave you a decent return? We’re living in a low-interest world, with borrowing costs down by historical standards, meaning interest rates have fallen to almost zero.
They may rise again, of course — but unless you’re an economic prophet, it’s impossible to say when.
Savers are looking elsewhere for a return, hence the rise of Bitcoin, NFT, and domain investing. The total value of crypto is currently around $2 trillion, despite many traditional bankers saying they have no ‘intrinsic value.’
The World Economic Forum predicts that 10% of the world’s GDP will be in crypto assets over the next ten years.
So are cryptocurrencies worth the risk? What are NFTs? Is domain investing a more viable alternative? Let’s dive in.
Should you buy cryptocurrencies?
Cryptocurrencies are virtual money that you can trade online, storing them in virtual and hard wallets. They are not regulated by any financial authority, making their value subject to extreme volatility.
Since May 2021, cryptocurrencies have taken a significant hit, with all the big tokens, including Bitcoin (BTC), Ethereum (ETH), and Dogecoin (DOGE), falling in price.
Bitcoin dropped in value to $30,000, down from its market peak of $65,000 back in April 2021.
China recently imposed restrictions on cryptocurrencies, with Beijing banning banks and payment firms from facilitating crypto transactions. Another reason for the May 2021 cryptocurrency crash was Tesla CEO Elon Musk’s decision to suspend Bitcoin as a payment method due to its environmental impact.
Bitcoin requires it to be adopted by merchants to succeed, and many investors were spooked by Musk’s call, given he had previously been a supporter of Bitcoin.
Choose your crypto investment wisely
Crashes are awful for existing investors, given the enormous losses, but a fire sale opens doors for newcomers. So if you’ve been waiting for prices to drop, think carefully about which currency you want to buy.
It pays to check your crypto’s fundamentals and ask yourself whether it will grow over time? Can it operate as a future utility or provide a competitive advantage to an industry?
Bitcoin (BTC) and Ethereum (ETH) are safer bets right now as they can be used in the real world, whereas smaller currencies are purely speculative and cannot operate as a utility.
Security token offering (STO)
Whenever you buy or sell cryptocurrencies, it’s verified on a blockchain network, or a digital ledger technology (DLT), that stores your transactions on thousands of decentralized servers.
Blockchain has led to the rise of the security token (STO) in 2021, a digital, smart contract, allowing for the fractional ownership of previously illiquid real-world assets, such as real estate or vintage cars.
STOs can act like a utility and, thereby, gain long-term value, making them attractive to crypto investors looking to diversify their portfolios.
What’s a non-fungible token (NFT)?
Likewise, non-fungible tokens (NFTs) have taken the financial world by storm this year. NFTs allow investors the chance to buy and sell unique virtual items, such as digital artwork, memes, and videos.
In March 2021, American graphic designer Beeple sold an NFT for $69 million at a Christie’s auction, while Jack Dorsey, CEO of Twitter, sold his first tweet as an NFT for $2.9 million.
More recently, Sir Tim Berners-Lee’s original code that created the Internet went on sale at Sotheby’s.
His NFT is being made available on the Ethereum blockchain, including time-stamped files of the source code, animated visualization of Sir Tim’s code, an explanatory letter written by the British inventor, and a “digital poster” of the code.
Sir Tim never profited from inventing the Internet, choosing never to patent the code, and any proceeds from the Sotheby’s auction will go to charity.
Does investing in NFTs make sense?
Whether it’s Sir Tim’s code or a Uffizi Gallery masterpiece, art is what someone is willing to pay for it. Indeed, many of the world’s finest paintings and sculptures have been tied to power and money.
Without patrons such as the Medici family in Florence, there would have been no Renaissance gems like Botticelli’s “The Birth of Venus” or Donatello’s “David.” These works became status symbols showcasing the newly rich’s good taste.
NFTs allow crypto investors to follow in the Medici’s footsteps, with virtual fashion items blurring the lines between reality and fantasy. None more so when a digital Gucci bag sold for more than the real thing.
What’s in a domain?
Like NFTs and cryptocurrencies, buying a domain name comes with concomitant risks, but they remain a smart way to diversify your portfolio.
Domain investing involves buying a domain name and selling it for more than your purchase price.
Investors often prefer “aged” domains on the grounds that those registered in the 1990s and 2000s offer greater value, like a fine wine or malt whisky.
Millions of expired domain names come on the marketplace every month when owners don’t pay to renew them, making them available to anyone who wants to register.
These marketplaces are home to many bargains, while forward-thinking investors snap up trending domains (from tech to celebrity baby names) before everyone else does.
Wrap up your investing
So whether you’re investing in a domain name, an NFT, or cryptocurrencies, it’s always thrilling to make a profit.
With interest rates at record lows and savers struggling to keep up with inflation, investing in digital commodities can help diversify your portfolio.
If you fancy trying your hand at domain investing, you can do so at Namecheap today. We accept Bitcoin (BTC), in addition to PayPal, Visa, Mastercard, and American Express.
Otherwise, please let us know what you think about the rise of domain investing, NFTs, and cryptocurrencies in the comments below.