Categories
Crypto

What is the Blockchain?

Blockchain is the technology that makes NFTs and cryptocurrencies like Bitcoin possible. And although it’s definitely a buzzword these days, few people actually know how blockchain works.

In this quick guide to blockchain technology, we’ll demystify this technological innovation and explain how it works and how it could be useful for much more than investing in crypto assets.

Blockchain Definition

First off, let’s give a clear definition of what a blockchain is.

A blockchain is a series of connected digital ledgers distributed to and maintained by a network of computers (aka nodes). The ledgers contain vital information about transactions, and blockchain technology uses cryptography (think: codes) to keep the information secure.

Information stored on a blockchain cannot be edited, deleted, or destroyed. 

Every time a transaction occurs on a blockchain, it’s verified and time-stamped by the network of nodes, and a record of it is added to the chain of information. 

Another term for this process is Distributed Ledger Technology (DLT).

Because blockchain technology is decentralized, there’s no third party such as a bank or government needed to handle transactions. 

Computer scientists have been discussing the concept of blockchain technology for 40 years. However, the theory was put into practice in 2008 by the pseudonymous Satoshi Makamoto in his academic paper “Bitcoin: A Peer-to-Peer Electronic Cash System.”Although blockchain technology was first applied to Bitcoin, thousands of cryptocurrencies and non-fungible tokens (NFTs) now depend on DLT.

How Does Blockchain Work?

I know, it’s complicated.

Let’s walk through a theoretical blockchain transaction to give you a better idea of how blockchain or DLT works.

  1. You buy some Bitcoin through a cryptocurrency platform like Coinbase
  2. The transaction information is transmitted to a network of thousands of nodes, or computers, located around the globe.
  3. The node network starts “mining,” or using computer algorithms to verify the transaction.
  4. Once the transaction is confirmed, details of the transaction are added to a block of information on the chain.

Are Blockchain Transactions Secure?

Blockchain transactions are relatively secure.

Now, blockchain technology isn’t 100% safe from hackers. However, because it’s decentralized, it’s not easy to hack into a blockchain.

That’s because, in order to alter the chain of information, a hacker would need to break into more than half of the nodes with the same distributed ledger. And there can be thousands of them!

The larger the blockchain network, the safer the data. That makes major players like Bitcoin and Ethereum safer than “private” blockchain networks.

Of course, if you’re investing in any kind of cryptocurrency, make sure not to give away your wallet key credentials to anyone. There are loads of phishing scams out there — be smart and aware!

Alternative Uses for Blockchain

OK, so we know that most cryptocurrencies and NFTs use blockchain technology.

But there are other uses for DLT as well.

Any organization or company that needs to store large amounts of data can benefit from using blockchain. Walmart (WMT), Pfizer (PFE), and IBM (IBM) already use blockchains to manage transactions and inventories.

Healthcare providers can also use blockchain technology to securely store patients’ medical records. Because the records will be protected by encryption, there’s no way to alter them once they’ve been verified.

There’s also huge potential in using blockchain for keeping track of property records and legal contracts. In fact, the verification that DLT transactions involve could help eliminate the need for costly attorney, mediator, or notary services.

Blockchain could also be used to create a more secure voting system, in which it’s practically impossible to tamper with ballots.

Blockchain Pros and Cons

Pros

  • Blockchain transactions are secure and private
  • Decentralization makes it nearly impossible to tamper with blocks of data
  • Blockchain technology efficiently eliminates the need for a third party in transactions
  • Blockchain eliminates human error in record-keeping

Cons

  • Mining blockchain data can be expensive and energy-intensive
  • Blockchain tech can be slow — it takes 10 minutes to add a block to the Bitcoin blockchain
  • There’s uncertainty about whether blockchain transactions will be regulated

The Bottom Line

Blockchain technology has the power to revolutionize not only how we handle money and transactions, but also how we store sensitive data.

Of course, the most popular use of blockchain today is with cryptocurrencies. A lot of people have made big money on crypto trades, making it one of the hottest trading niches.

If you’d like to get started trading cryptocurrencies — or would like a helping hand — I recommend signing up for a free membership to Titan Alerts. You’ll receive daily trading intel and education from our team of experts. 

Categories
Trading Guides

How to Make Money in a Stock Market Crash

Do you hear that noise? That’s the sound of stocks falling. 

The stock market has been very volatile these days, to say the least. In January, we’ve seen steep losses to many stocks (mostly in the tech sector). And it’s likely that stock values will get worse before they get better.

But believe it or not, you can actually make money during a stock market crash.

Instead of hiding your head in the sand (or gold coins in your backyard), we’ve pulled together some tried-and-true methods for not only surviving a market crash — but thriving in spite of it.

To find out how, keep reading our guide to making money in a stock market crash.

First Off, Don’t Panic

If you’re a sci-fi nerd, you probably know the two words written on the cover of  The Hitchhiker’s Guide to the Galaxy:

DON’T PANIC

No matter how far the market is falling, panicking is never a good idea.

One of the prime rules of smart investing is ignoring your emotions. That’s because our emotions tend to make us act on impulse. And impulsive actions are never good when it comes to investing.

Right now, a lot of investors are panicking and experiencing the emotion of fear.

That leads them to bail out of stocks at the absolutely worst time — when they’re super-low.

The point of investing in stocks is to buy low and sell high, not the other way around.

Legendary investor Warren Buffett had a classic quote:

“Be fearful when others are greedy and greedy when others are fearful.”

Right now, there are a lot of fearful investors. So get your greed on!

Buy Good Stocks at a Discount

So instead of panicking, we should use this opportunity to buy shares of good businesses at good prices.

That doesn’t mean piling into stocks willy-nilly. 

Instead, look for companies that generate real profits. It’s probably a good time to stay away from stocks with high debt-to-equity ratios (that would include many growth stocks in the tech sector).

Stocks that tend to recover well from market downturns include financials (think banks), health care (but don’t go for moonshot biotech startups), consumer staples (everyone needs toilet paper), and industrials (raw materials for the win!).

Buying a stock when it’s at or near a low is often referred to as “buying the dip.”

When attempting to buy the dip, don’t worry about timing it exactly right. Many times, investors lose out on great deals by waiting too long. Decide what you’d like to pay for a great company, and snap up shares then.

Buy Dividend-Paying Stocks

Stocks that pay regular dividends to shareholders tend to be among the safest on the market. As you hold these stocks, they will pay you income.

Now, there’s no guarantee that any dividend stock will continue to pay out. Sometimes, during recessions, dividend-paying securities will halt payouts or decrease their payout rates.

If you’re interested in dividend stocks, a great place to start is the Dividend Aristocrats list. Right now, there are 65 stocks on the list, which is compiled by the S&P Dow Jones Indices.

Here are the requirements to stay on the Dividend Aristocrats list:

  • A company must have increased its dividend payouts every year for at least 25 years.
  • A company must have a market cap of $3 billion or more.
  • A company must be included in the S&P 500 stock index.

Because these companies have not only maintained dividend payouts but increased them as well, it’s safe to say these stocks are good bets for a market crash. They’ve recovered from every other downturn of the last few decades.

Pro tip: When you receive a dividend payout, reinvest it!

Or Do Nothing!

There’s a beautiful, ancient saying

 “This too shall pass.”

Although the seconds feel like hours when you’re frantically refreshing your WeBull account, know that the downturn won’t last forever.

And no matter how low stock prices go, if you don’t sell, you won’t have lost a dime.

Instead, keep a long-term outlook and expect to still see gains in the future.  

Why You Shouldn’t Load Up on Bonds Right Now

OK, so a lot of investors right now are getting out of stocks and moving into bonds (particularly Treasury bonds).

Treasury bonds are backed by the full faith and credit of the federal government. They’re about as safe as you can get when it comes to investing.

But here’s the thing: The U.S. central bank, the Federal Reserve, is likely to raise interest rates this year. Right now, bond yields are at record lows. Why get in now when you can wait a few months and most definitely get more bang for your buck?

That said, it’s always a good idea to have a diversified portfolio — with some money in stocks, some in bonds, and some in other assets like precious metals and real estate.

Just never put all of your eggs in one basket.

The Bottom Line

If you’re relatively new to investing, I get it: Market downturns are scary!

But if you keep a cool head and make smart moves, you can actually make money while others are panicking and losing out.

And if you’d like to learn more about profiting from today’s market, check out our in-depth trading alerts. You’ll receive daily intel and education from our dedicated team.

Categories
Stocks

Ford vs. General Motors: Which Stock Is a Better EV Play?

Ford vs. General Motors: Which Stock Is a Better EV Play?

The age-old rivalry between the Detroit-based automakers continues. As the age of electric vehicles begins, is Ford or General Motors a better buy?

It’s one of the biggest rivalries in history. Microsoft vs. Apple… Coke vs. Pepsi… Alien vs. Predator… Ford (F) vs. General Motors (GM).

For more than 100 years, the two Detroit-based automakers have duked it out. After all, General Motors was founded explicitly to compete with the release of Henry Ford’s Model T in 1908.

Fast-forward to 2022, and the market for electric vehicles (EVs) is growing. Spurred on by worries about climate control, consumers are beginning to choose battery-powered cars over gas-guzzlers.

Both Ford and General Motors have aggressive plans to boost EV production in coming years and compete with EV-focused companies like Tesla (TSLA). The market has rewarded these efforts with soaring shares.

So which company is the better buy? Let’s pit these Motor City megaliths against each other and see which one belongs in your portfolio.

At a Glance: Ford vs. General Motors

Ford Motor Co.
General Motors Co.
Focus

Automobiles and commercial vehicles

Automobiles and commercial vehicles

Ticker

NYSE: F

NYSE: GM

Market Cap (1/14/22)

$100.67 billion

$88.71 billion

CEO

Jim Farley

Mary Barra

Founded In

1903

1908

Headquarters

Dearborn, MI

Detroit, MI

Why Invest in Ford or General Motors?

The electric vehicle market is steadily growing and should experience serious gains in the coming years.

Although the United States has been slow to embrace the EV trend, other countries around the world — particularly European countries and China — have seen exponential EV growth. In 2020, more than 10 million EVs were on the road.

Also in 2020, the global EV market size was $246.7 billion. But that’s expected to grow to $1.3 trillion in 2028, at a compound annual growth rate (CAGR) of 24.3%.

Here in the U.S., the Biden White House has been pushing for improved EV infrastructure. 

One of the biggest roadblocks to owning an EV is the inconvenience of finding a charging station. So the $7.5 billion Biden has allocated to building out a network of EV chargers is good news for the American EV market.

Ford and General Motors vs. Pure-play EV Stocks

The super-obvious way to play the growing EV trend is by buying the stocks of pure-play EV companies, such as Tesla, Lucid (LCID), or Rivian (RIVN). But these stocks can be relatively risky.

That’s because they’re valued more like tech stocks — with investors betting on their technology — rather than traditional carmakers, which the market values based on their actual products.

On the other hand, Ford and General Motors have century-long histories of blockbuster products and solid businesses. They’re not risky growth stocks, but classic long-term holds.

And because they’re massive, with millions of cars already on the road, they’re not dependent solely on their EV sales.

There’s another thing Ford and General Motors have in their favor: The EVs that they’ve released or are planning to release are more budget-friendly than the luxury models put out by many pure-play EV makers. 

They’re also the type of vehicles that appeal to everyday Americans — think pickup trucks, SUVs, and cargo vans.

Should You Invest in Ford?

Ford is arguably the most famous car maker in the world. Founded by visionary entrepreneur Henry Ford, the company pioneered interchangeable parts and the assembly line to make the first cars affordable to everyday people.

Along with its namesake car brand, Ford owns Troller, a Brazilian SUV brand, and stakes in Aston Martin and Jiangling Motors.

Ford’s F-Series is the best-selling line of vehicles in the United States. In 2021, the company sold 726,400 F-Series models.

So it’s no surprise that one of the country’s most eagerly awaited EVs is an all-electric pickup, the Ford F-150 Lightning EV. Having received 200,000 reservations for the truck, Ford had to stop accepting them. The Lightning is due out this spring.

But that’s not the only EV Ford has up its sleeve. The automaker has already rolled out the Mustang Mach-E crossover and the E-Transit-350 Cargo van.

Ford Financials

In mid-January, Ford’s market capitalization passed $100 billion for the first time in the carmaker’s long history. That makes the company worth more than GM, as well as many pure-play EV companies, such as Rivian. (However, Tesla is currently the highest-valued car company by market cap.)

The company struggled in the first half of 2021, thanks to the global computer chip shortage caused by COVID. That shows up as a 7% year-over-year decrease for all of the fiscal year.

But as Ford was able to increase its ship supply, sales increased. In fact, in the fourth quarter, Ford sold more than half-a-million vehicles.

In 2021, Ford shares saw a 140% gain. However, the stock might currently be a little overvalued. The median Wall Street consensus 12-month target price for the stock is $23, which would be a downside of nearly 9%.

Still, Ford is a fantastic legacy company. Investors should wait for dips to levels in the low $20s and hold on for the long run.

Should You Invest in General Motors?

General Motors is the largest car company in the U.S. Although GM was founded in direct response to Ford, it’s grown into more than just a “spite company.”

GM’s massive success has been due largely to its owning a varied portfolio of car brands. Currently, the company owns Buick, Cadillac, Chevrolet, and GMC.

In 1996, GM became the first major automaker to release a mass-produced, purpose-designed electric vehicle, the General Motors EV1. 

Unfortunately, the EV1 didn’t prove profitable for the company. Despite customer protests, all EV1s were taken back by the company, and many were destroyed.

Luckily, GM eventually went back to the drawing board and rolled out the Chevy Bolt EV. Bolt sales began in 2017.

GM plans to start delivering GMC Hummer EVs this year, followed by the Chevrolet Silverado EV in spring 2023.

GM Financials

General Motors has been hard hit by the computer chip shortage. Its sales decreased by 13% in 2021.

And although it outperformed the S&P 500, compared to Ford, GM’s 2021 stock performance was relatively flat — 38%.

However, General Motors is betting on its future growth. By 2030, the company aims to double its revenue. GM hopes to do this by bringing out 30 new electric vehicle models by 2025. That’s quite an ambitious goal!

GM shares are currently priced around $61. But the consensus median 12-month price target for the stock is $74. That would be an upside of more than 21%.

I think General Motors — and its investors — will profit from the EV market. However, the company’s EV story is lagging behind Ford’s. 

General Motors is a great buy now. Grab some shares to hold for the long term, as well as some you can potentially sell for a profit next year.

Ford vs. General Motors: Which Is a Better Buy?

Both Detroit-based carmakers are great. I would invest in either of them sooner than I would plunk my cash into Tesla, Lucid, or Rivian.

That said, I would wait for Ford to come off its recent record highs before buying. If you want an EV-exposed stock to buy today, General Motors should fit the bill.



© Copyright DADMIN CAPITAL LLC. All Rights Reserved

Categories
Crypto

The Beginner’s Guide to Cryptocurrency

Cryptocurrency is digital money that circulates without a central monetary authority. It uses cryptography (basically, secret codes) to protect against fraud and counterfeiting. 

You can use cryptocurrencies to buy and sell goods. You can also trade them for a profit.

There are thousands of cryptocurrencies currently in existence, and some are more worthwhile than others. In this quick guide to cryptocurrency, we’ll tell you what you need to know to get started in this exciting and innovative market.

What Are Cryptocurrencies?

Cryptocurrencies, also known as “cryptos,” are digital or virtual currencies that aren’t issued or backed by any central banking system. 

That makes cryptocurrencies beyond the reach of government interference (at least, in theory). They’re part of a larger movement of decentralized finance, or DeFi, for short.  

Many — but not all — cryptocurrencies are based on blockchain technology.

What’s a blockchain?

In a nutshell, a blockchain is a publicly distributed digital ledger that uses cryptography to protect information. Every time a new transaction occurs on the blockchain, a verifiable record of it is added to every participant’s ledger. 

This makes transactions nearly impossible to forge. And it also keeps sensitive financial information safe from prying eyes.

What’s Bitcoin?

Bitcoin is the world’s most popular cryptocurrency. It was also the first. An anonymous person calling themself Satoshi Nakamoto created Bitcoin in 2008.

Since then, literally thousands of cryptocurrencies have been created. You’ll sometimes hear them called “altcoins.” 

Some altcoins are Bitcoin clones, while others — such as Ethereum and Litecoin — have been built from scratch.

Are Cryptocurrencies Legal?

Yes, trading cryptocurrencies is currently 100% legal in the U.S. and many other countries around the globe. In fact, Bitcoin is now the legal tender of El Salvador.

However, there are a few countries — notably, China — where crypto transactions are banned.

Now, a lot of people (and, unfortunately, politicians) live with the misunderstanding that the crypto economy is the domain of criminals.

They’d have you believe only thieves, money launderers, hackers, and drug dealers use cryptos. And while it’s true that illegal activity does happen on blockchains, it’s by far the minority of crypto transactions.

What Are Cryptocurrencies Used For?

Major cryptocurrencies like Bitcoin can be used for everything from booking hotel rooms on Expedia to paying for your Starbucks order. You can even use them to pay your AT&T phone bill or buy stuff at Home Depot.

A growing number of businesses are accepting cryptocurrencies for payment.

Other people speculate on the future prices of Bitcoin and other cryptos. These traders use platforms like Coinbase and even brokerages like Charles Schwab to buy and sell at a profit. 

Although the market isn’t without risk, it’s possible to make tidy profits from crypto trades. In fact, in 2020, American investors made more than an estimated $4 billion on Bitcoin trades alone. If you’d like to learn how you can profit from cryptocurrency too, sign up for alerts from Titan Trading.

How to Buy Cryptocurrency

Buying cryptocurrencies is surprisingly easy. 

All you have to do is sign up for a cryptocurrency exchange. That will allow you to buy, sell, and hold crypto in an online account.

The top exchanges for cryptocurrency include Coinbase, Kraken, and Gemini. You can also trade cryptocurrencies via more traditional platforms like Robinhood, Charles Schwab, Webull, and TD Ameritrade.

There are also other platforms that specialize in advanced crypto trading, like Binance and FTX. 

You can also withdraw crypto from an exchange and store it in a digital wallet for the long term or to use in transactions. You can easily obtain a digital wallet from your bank, Apple Pay, Google Pay, PayPal, or Venmo.

Is Cryptocurrency a Good Investment?

You can make a lot of profit from speculating on cryptocurrencies. But right now, they’re not a particularly stable investment that you’d want to hold for the long run.

That’s because the prices of cryptocurrencies can be extremely volatile. 

Take a look at this chart of the daily price of Bitcoin, the most relatively stable cryptocurrency:

Frequently Asked Questions

In plain English, what are cryptocurrencies?

Here’s the TL;DR definition: Cryptocurrencies are digital assets that aren’t backed by any central bank or government. You can use them to buy stuff online.

How do you purchase cryptocurrency?

You can buy cryptocurrencies through crypto exchanges like Coinbase and Kraken, through an app like PayPal, or from an online broker such as Robinhood or Webull.

How is cryptocurrency made?

Cryptocurrencies are made through a process known as mining. This involves downloading software with a record of network transactions on it. Theoretically, anyone can mine crypto as long as they have a computer and internet access. But it takes a lot of energy, so most cryptocurrencies are mined by large companies.

What’s the biggest cryptocurrency?

Currently, Bitcoin is the most popular and valuable cryptocurrency. But there are thousands of other cryptos — or “altcoins” — on the market.

Is cryptocurrency taxed?

Unfortunately, if you realize any profits from crypto trades, the U.S. IRS will treat them like any other capital gain. If you have questions about capital gain taxes and how to minimize them, consult a tax professional.

The Bottom Line

Cryptocurrencies are the money of the future. These digital assets are gaining in popularity and quickly becoming “mainstream.”

Using cryptos like Bitcoin and Ethereum for everyday transactions is surprisingly easy and convenient. 

However, if you’d like to try making a profit by trading cryptocurrencies, you’re going to need a guide you can trust. 

That’s why I recommend signing up for Titan Alerts. A basic membership is 100% free, and you’ll receive daily trading intel and education.

Categories
Stocks Trading Guides

5 Money Moves to Make Before the Fed Raises Rates

If you’ve been paying attention to financial news lately (and there’s plenty of reasons why you should!), you’ve probably heard that the Federal Reserve is going to raise interest rates. What does that mean for you as an investor?

We’ve put together this quick guide to preparing for the upcoming Fed rate hikes. You might be surprised to find out that bonds may not be the best investment right now…

What Is a Federal Reserve Rate Hike?

OK, so let’s get through the basics first.

The Federal Reserve (often called the Fed) is the central bank of the U.S.  

As well as doing stuff like regulating commercial banks, the Fed’s main job is controlling monetary policy by affecting the supply and demand for base money (the money in your wallet).

One of the ways the Fed does this is by setting the fed funds rate.

What Is the Fed Funds Rate?

Very simply put, that’s the interest rate at which banks lend each other money.

This rate affects all other rates — including those you pay on your credit cards and the rates at which your bank pays you for owning a savings account or CD.

When the fed funds rate is very low, it’s considered expansionary monetary policy. Because during this time, people can get car and home loans on the cheap or pay less in credit card interest, they tend to spend this extra money. 

Slashing interest rates is a relatively quick and easy way to stimulate the economy.

And that’s what happened in 2020.

Why Did the Fed Lower Interest Rates?

When the COVID pandemic reached the U.S. in spring 2020 — and businesses everywhere shut down — our economy fell into a recession.

The Fed swiftly nipped this in the bud by lowering the fed funds rate to near zero. It was an emergency move to save the economy.

And it worked. The 2020 recession was the shortest in the country’s history:

Why Will the Fed Raise Interest Rates?

But now the economy has rebounded. And prices for everything have skyrocketed, due to supply-and-demand imbalances.

That means inflation is growing at a rate we haven’t seen in nearly 40 years — about 7%.

So the Fed plans to raise the fed funds rate to curb the growth and get the economy back to normal.

Several huge investment banks — such as Goldman Sachs — are expecting the Fed to raise rates three or four times in 2022. And that has implications for investors.

What Do Fed Rate Hikes Mean for Investors?

Unfortunately, higher interest rates can have a negative effect on stocks. That’s because the costs of doing business rises for companies (they have to pay higher interest rates on their debt). 

That can eat away at companies’ revenues and earnings and slow their growth rates.

A lot of investors bail on the markets and plan to jump into new higher-interest-rate-paying bonds. 

And existing bonds also become cheaper so that investors will want to buy them despite their relatively low interest payouts.

In a nutshell, interest rate hikes can play havoc on the market and lead to a ton of volatility.

So what should an investor do?

What Should Investors Do Before a Rate Hike?

First of all, don’t panic. 

Right now — before the new rates take effect — is the best time to get your investing ducks in a row. The best way to do that is with a cool, informed head.

1. Don’t Fall Into the Bond Trap

Don’t be tempted to buy up the low-rate-paying bonds and other longer-term fixed-income assets that are already available. They’re a waste of time. Currently, the 10-year Treasury note is paying a lousy 1.62%. You can do better!

If you want bonds in your portfolio, wait until after the interest rate hikes have occurred. 

Owning bonds can help protect your portfolio against padding, but it’s not a good idea to ignore stocks altogether. After all, bonds are very conservative investments, and you’d miss out on the growth that occurs in the stock market.

2. Get Some Dividend-Paying Stocks

Investing in blue-chip stocks that pay dividends is one of the safest moves you can make in the stock market.

These are companies that have histories of making profits — or else they wouldn’t have the dough to pay as dividends!

When you invest in dividend stocks, not only will you profit from any gains in the market, but you’ll also receive regular income payouts.

When looking for a dividend stock, think about the stuff you have on your shelves at home. Coca-Cola (NYSE: KO), Johnson & Johnson (NYSE: JNJ), and 3M (NYSE: MMM) have been great dividend payers for decades.

3. Invest in Financial Companies

This should make sense: Banks love the combination of a strong economy and higher interest rates because they can charge their borrowers more.

Traditionally, bank stocks have performed very well during periods of rate increases. They’re not very exciting, but the money you make from them can be!

Really big, steady banks stand to make some of the best investments right now. We’re talking about the likes of Bank of America (NYSE: BAC) and Citigroup (NYSE: C).

But you can think beyond traditional banks to other financial-related companies like stock brokers and insurance companies, too. 

4. Don’t Forget Consumer Discretionary Stocks

With the economy on a roll, people tend to treat themselves to splurges. Historically, this has meant an uptick in appliance, car, clothing, restaurant, and travel stocks.

I’d be tempted to check out car makers like Ford (NYSE: F), which is rolling out tempting new electric vehicles, as well as appliance company Whirlpool (NYSE: WHR).

And if you feel like betting on the eventual return of the travel industry, check out stocks like Expedia (NSDQ: EXPE).

5. Buy Tech at a Discount and Hold On

We mentioned that interest rate hikes can be bad news for high-growth companies. That would include practically everything in the tech sector. Apple (NSDQ: AAPL) might be the exception, thanks to its crazy-great cash flow.

Anyway, if there’s a tech company you really love, now is the time to buy its stock at a discount. Tech stocks have plunged in recent weeks, giving you some great opportunities.

However, be prepared to hold on tight. It’s likely tech stocks will have a wild 2022. If you scoop up any during a price dip, understand that you’ll be holding for the long term.

Categories
Crypto

What Are NFTs? How Do They Work?

If you’re reading this article, we bet you’ve heard about non-fungible tokens, or NFTs, and are wondering what the heck they are. 

They’re all over the news these days. But how do they work? And how can you make money from them?

In this quick guide, we’ll cover the basics of NFTs so you can decide whether you’d like to get into the game.

If you’re an audible learner, you can also check out our YouTube video on the topic here.

What Are NFTs?

NFTs, or non-fungible tokens, are blockchain-based assets that are one-of-a-kind and verifiable. Each NFT represents a digital asset – for example, an artwork or a GIF.

The super-important thing here is that NFTs are one-of-a-kind. When you buy an NFT, you can rest assured that you own the only one exactly like it.

And therein lies the value of NFTs.

Anyone who collects anything — from ancient coins to Pokemon cards — knows that scarcity is the key to value. The rarer something is, the more valuable it becomes.

It’s the same story with digital artwork.

NFTs vs. Cryptocurrencies: How Are They Different?

OK, so we know that NFTs are one-of-a-kind and thus “non-fungible.” That’s how they’re different from cryptocurrencies like Bitcoin and Ethereum.

Each cryptocurrency is fungible, or equal in value. That means you can trade one Bitcoin for one Bitcoin, one Dogecoin for another Dogecoin, and even one Tiger King for another Tiger King. 

That’s not the case with NFTs. Each one is unique and has a unique value.

However, typically, NFTs are bought and sold using cryptocurrencies. 

Which brings us to this big question…

How Do NFTs Work?

NFTs are held on a blockchain. A blockchain is a publicly distributed digital ledger that uses cryptography (think: codes) to protect sensitive information.

Most NFTs exist on the Ethereum blockchain, so you’ll see most NFT transactions reported in ETH values.

Because NFTs use blockchain technology, it’s easy to verify their ownership and certify their authenticity.

The act of creating an NFT is called minting. Anyone can mint an NFT as long as they have a crypto wallet and access to an NFT marketplace (more on that in a minute).

When you own an NFT artwork, object, etc., you have exclusive ownership rights. Each NFT can have only one owner at a time. 

And just as stocks are bought and sold on the stock marketplace and cryptocurrencies are bought and sold on crypto platforms like Coinbase, NFTs are bought and sold on specialized marketplaces.

What Can Be an NFT?

Any digital file can become an NFT.

Many NFTs represent internet memes or pieces of digital art. But we’ve also seen NFTs in the form of video game skins and accessories, as well as virtual real estate. 

Musicians are also hopping into the NFT market. The Weeknd recently made $2 million by selling unreleased tracks as tokens. And rapper Nas is selling royalties to songs in the form of NFTs.

As tech companies continue to build out the metaverse — an interactive digital universe where users can attend virtual concerts, buy products, and hang out with friends — we’ll see that practically everything can become an NFT.

What’s the Most Valuable NFT?

So far, the most expensive non-fungible token ever sold was a digital collage called Everydays — The First 5,000 Days. Created by American artist Beeple, the artwork fetched $69 million at a March 2021 sale at the prestigious Christie’s Auction House.

Not all NFTs are fine art, though. Remember the video “Charlie Bit My Finger” that went mega-viral on YouTube back in 2007? An NFT representing the video’s ownership sold for $761,000.

Other notable NFT sales have included Twitter founder Jack Dorsey’s first tweet, which sold for nearly $3 million, and the original source code for the world wide web, which sold at a Sotheby’s auction for $5.4 million.

That said, there are plenty of NFTs currently for sale for as little as $1.

How to Buy an NFT

If you’ve decided to start owning NFTs for yourself, you’ll need to get set up with both a funded digital wallet and an NFT marketplace account.

You can easily get a digital wallet through Apple Pay, Google Pay, PayPal, Venmo, or even your bank. Chances are, you probably already have one on your phone.

Because most NFT marketplaces use the Ethereum blockchain, you’ll probably want to load up on some ETH. However, check the NFT marketplace you’re interested in using to make sure you’re using the right cryptocurrency. 

You can buy cryptocurrencies through a platform like Coinbase or Kraken. But even PayPal and Robinhood offer cryptocurrency trades. 

Once you’ve put some crypto in your digital wallet, it’s time to get started on a marketplace.

What Are the Top NFT Marketplaces?

There are loads of NFT marketplaces on the internet these days.

As a beginner, you’re probably best off starting with one of the tried-and-true most popular platforms. These include:

  • OpenSea: This is currently the biggest NFT marketplace. It’s free to sign up and check out different NFTs on offer. It’s also easy to use OpenSea for minting your own NFTs.
  • Rarible: Some of the biggest brands (such as Taco Bell and Twitter) partner with this platform to issue NFTs. You’ll find all sorts of digital assets here, from art to music.
  • NBA Top Shot: NBA NFTs are big with basketball fans. You can buy “collectible moments” (video clips) from basketball’s history and other B-ball-themed tokens on this platform.
  • Foundation: This one feels like a fine art gallery. You’ll be able to browse and bid on serious NFT art here. (In other words, it’s a bit pricey but really fun to look at!)

Frequently Asked Questions

Are NFTs safe to buy?

No investment is 100% risk-free. That said, NFTs are riskier than trading, say, stocks. That’s because the market for these digital art assets is unregulated. Anyone can make or sell an NFT, and there are plenty of scams around. And keep in mind that each NFT asset’s true value is equal to whatever someone else would want to spend for it.

While it wouldn’t be wise to put all of your investment money in NFTs, they can be a fun speculation and a great way to support your favorite artists.

Are NFT transactions taxed?

Yep. If you sell an NFT asset at a profit, you may be subject to capital gains taxes – just as you would if you sold a stock. Although the IRS hasn’t made it exactly clear how it will consider NFTs for tax purposes, it’s possible you might be taxed at a higher collectibles tax rate than the rate that’s applied to stocks.

The Bottom Line

Browsing NFT marketplaces and investing in a favorite artwork or two can be a fun way to spend the time. 

But if you’re serious about building an NFT collection and making money, you should join the official Titan Alerts Discord server. You’ll receive real-time trades, exclusive NFT offers, and more.