An expert warns of the risks associated with purchasing digital assets: Is the NFT industry akin to the "dot.com bubble"?

After investors poured millions of dollars into internet companies approximately 20 years ago, a bubble formed, which burst, causing the value of those companies to plummet. Possibly, the same scenario poses a threat to NFT.

For many, the meaning and concept of NFT remain a mystery, prompting them to inquire as to why someone would pay thousands or even millions of dollars for a photograph or video that can be downloaded for free from the Internet anyway, let alone paying half a million dollars to purchase virtual homes. Last year, about 27 billion dollars were spent on non-financial technology, and it is not impossible to predict that this figure will be significantly higher by 2022.

However, purchasing digital information and assets entails significant risks, and instead of making quick and easy money, many people may find themselves with little to show for their efforts. Gary Vaynerchuk, a well-known entrepreneur and creator of the NFT series Vee Friends, which costs over $ 40,000 per piece, made this argument in a recent interview.

He compared the NFT bubble to the "dot.com" bubble of the late 1990s, in which millions were invested in Internet companies until there was a significant collapse or burst of confidence in the stock market. According to Vaynerchuk, this might be the fate of as many as 98 percent of projects based on NFT technology. Despite the fact that many people will put a lot of money into them, they may eventually become worthless.

He cautioned investors that "things don't make sense" at the present, but he believes that NFTs will eventually become a significant and influential industry, and that we are currently in the early stages of the digital asset boom, which he describes as "exciting." After some time has passed, people should begin to concentrate on what NFTs truly provide and "what they can do for us."

Many investors in this market appear to be purchasing NFTs in order to make large sums of money from them quickly, similar to how early investors in bitcoin and other cryptocurrencies got millions when their value rose dramatically. The situation is not as straightforward since, as in the case of crypts, it is difficult to anticipate which NFT will succeed and which will fail, making investment in digital material and assets extremely dangerous.