What are Fractional NFTs?

Jan 31, 2022 | Crypto | 0 comments

Fractional NFTs

 

Yes, there’s no shortage of content when we’re talking about non-fungible tokens and its technology is always receiving some interesting updates to keep users on hype. They can be implemented into art, gaming, businesses, and many other scenarios.

Imagine that you wish to be the owner of some NFT, but don’t have the money for it. Some collectors are more than happy to own a fraction of something.

In short, you can be the owner of a fraction of a big project rather than the full owner of a small one.

How do fractional NFTs work?

Fractional NFTs

In a few words, fractional NFTs grant you the possibility to buy fractions of an NFT. Some content creators are releasing stuff that rapidly becomes highly valuable in the short term; thus, only a few users can get full ownership. Others with fewer coins can’t even dream of them.

However, fractional NFTs make things a lot more democratic — a group of users can take profit from the tokens they have and diversify their portfolios.

Say you own a Picasso painting, and you’d like to sell an NFT of it: this painting will surely be something expensive — even prohibitive to most — but you’re aiming to get as many buyers as you can. You could divide your NFT into fractions so a lot of users will be able to own a single fraction of an immortalized artist.

Is this useful?

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Indeed, it is. Fractionalized NFTs are democratizing the use of some NFT content that has become very expensive for most users. Even if the prices go higher, they’ll be more accessible than ever for most investors.

If one of the owners sells its share, the action will not affect the overall value of the digital item. That could lead to a less volatile market, which is great.

With more buyers, comes more liquidity to NFT markets as well — something essential to make everything work smoothly. There are plenty of users creating enormous NFTs collections and a liquidity problem could happen anytime if fractional NFTs were not a reality.

How about regulations?

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Intellectual property, rights of publicity, and contract issues: all this can be a real problem when talking about fractional NFTs. So, be sure to check if everything’s correct before making a purchase.

Governments around the world will certainly say something about this revolutionary change. But how they will execute regulations remains a mystery so far. You’ll surely get updated soon.

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#Fractional NFTs

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