Chromia, Rarible, and Lukso are the names of blockchain tokens posting impressive gains this week, and they are not known to a large segment of the cryptocurrency trading community. These non-fungible tokens (NFTs) have recently been on a bullish roll, and they are starting to get the attention of traders looking for quick profits.
Market analysts are just beginning to cover NFTs, and they see some fundamental aspects that seem to be very attractive, but they have also observed considerable speculation. In fact, some analysts believe that NFTs are the latest tulip mania to hit the cryptocurrency markets.
The first thing you should know about NFT trading is that there is substantial risk involved. The volatility we have seen with Bitcoin and many other tokens is something that is almost impossible to fathom on Wall Street. This is one reason why even experienced stock traders tend to stay away from digital currencies.
What are some of the risks that you may run into with NFTs? First of all, you will encounter all the risks associated with highly speculative trading, and you should understand the need to safeguard against these risks. The tremendous volatility in the market cannot be ignored. Also, you can never assume that your trades will be successful. All of this is true for a good reason: The market is inherently volatile, you need to do what you can to hedge against this risk. If a bear is chasing you around the woods, your first instinct should be to get away from the woods, but you will be surprised how many novice traders do not follow this advice. This is why you need to be cautious with NFTs.
The other reason you should watch your step as you enter the NFT market is that these digital assets have been proven to be less than safe. A few days ago, a digital artist "pulled the rug" from under the feet of NFT investors by changing the original images he created with JPEG files of carpet patterns; this goes to show that the underlying assets are not necessarily protected by the NFT blockchains, particularly if they are centralized.