Guide to Invest in NFTs
NFTs have grown substantially in the past two years with new cryptocurrencies being introduced, new metaverses and different methods of creating and trading in NFTs. This can be very overwhelming for beginners who want to Invest and partake in this new product but don’t know where to start.
The process of investing in an NFT has become more and more simple with more companies coming into it to help beginners invest. Places like OpenSea have allowed users to easily put their NFTS up in the marketplace without the complications of blockchains. However, they have not been the most reliable place due to all the scammers. Other places like Rarible, minable, foundation and Nifty Gateway are just to name a few.
NFTs should be an investment but more so for fun rather than a way of earning a profit. That profit earning shouldn’t be the priority but an extra perk to investing in NFTs. When analyzing whether or not to invest in a project, a criteria cane be looked at;
Objective criteria being:
● Where an NFT is being traded
● Looking at the minting price of an NFT
● Seeing the floor price that is set
● How much volume is there for the NFT collection?
These are questions someone can ask before investing into an NFT collection. They are objective questions that can be used to compare statistics with to make an informed decision
Subjective criteria being:
● How active is the team?
● What is the relationship with the online community?
● How is the marketing team for the project?
● Does the project have utility and mapping?
● And most importantly, does the project have longevity and sustainability.
It is important for projects to surpass the test of time, that there will still be demand for a project after the hype of it in its launch dies down. Also, it is important to look out for the supply of these collections. A lot of them can be over supplied which in return causes the demand for them to fall and for the floor prices to be low. Which in the long run won’t help its sustainability and longevity, making it a bad investment.
NFT art is very subjective, so someone might invest just for the actual art, not just because it is a potentially profitable project. Stefania Barbaglio says the NFTs she invests in NFTs that capture her interests and attract her and that can give her utility.
Some key things to look out for to see the Legitimacy of a project:
● Is there a strong Discord community?
A strong engaged discord community shows that a project is serious and that it will try to continue to grow. Telegram is also a platform that is used like Discord, but overall Discord has a better reputation.
● Does the project have social media?
Having an active Twitter account is important for any project. And the followers and likes must correspond to know how many of these followers are real and not bots. Having a medium page and website also helps users to keep track of progress of the projects.
There’s a big problem with scammers and hackers in the NFT world. As of recently, Bored App Yacht had hackers come into the discord group and steal NFTs. Which is why security must be taken very seriously when getting involved in this world. There are a few simple steps that can be taken to prevent this from happening to you.
- After making any transactions, lock your wallet.
- Sign out of any websites, you don’t have to be always connected. You can easily reconnect again when you want to make a transaction.
- Avoid sharing screens on Discord as it is a target for hackers.
- Get a hardware wallet, such as Ledger to keep you safe and give you the peace of mind.
- Learn your own IT, so you don’t have to rely on anyone else for help with your personal information.
- Frequently change your passwords to avoid getting hacked. Make those passwords unique and different to one another.
7. Look into free sources to learn how to become a developer to be self-reliant. For example, on YouTube, the channel “Hashlips” is a great resource.
It is also important to understand market bubbles when it comes to investments as sometimes investments can become a bubble that bursts and you end up losing all the money you’ve invested. It’s been criticized that NFTs are a bubble that will eventually burst.
There are 5 stages to an asset bubble.
- Displacement
- Boom
- Euphoria
- Profit taking
- Panic
It is evident that NFTs are pas the displacement stage and the boom that happened in the summer of 2021 with fashion brands taking up NFTs. So, it makes sense that it is currently in the euphoria stage as there’s still lots of excitement and new things surrounding NFTs. However, as an investor, you must be aware of the profit taking stage and be a look out for when that happens. This would be when less people invest in NFTs and leave the space and start to diversify in other things.
This is a simple guide that can help but this is not financial advice. Just a guide to how you can be more aware of the NFT world.
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