— Everything You Need to Know
If you’ve been hearing the term “NFT” a lot from your peers and you’re still wondering what they are — we got you covered!
NFTs or non-fungible tokens are digital assets that range from art, music, videos, and in-game items.
NFTs vs. NFT Stocks
The actual NFTs are different from NFT stocks.
Investing in NFT stocks means investing in the COMPANY associated with the digital assets on any stock exchange or cryptocurrency exchange (e.g., Binance, Robinhood, etc.)
In this article, we’ll be discussing about investing in actual NFTs, NOT NFT stocks.
So let’s dive right in!
So, What Can I Do With NFTs?
You can buy and invest in many NFTs since there is NO LIMIT to what these are and what is considered one.
The possibilities are quite endless.
You can use NFTs to collect rare digitizing music, art, and rare merchandise.
If you’re a creator who is eyeing to monetize their digital work, then you can visit the NFT marketplace online!
Relevance of NFTs
NFTs are considered one of the hottest consumer trends. So, investors and organizations alike are MORE LIKELY to dive into it!
This mainstream platform allows companies and creators to engage closer with big companies, start-up companies, and artists from all industries.
Here’s why NFT is highly relevant today:
- Certain physical collectibles have a long track record of appreciating value, and digital art could exhibit the same price appreciation.
- You can reach a wider range of audiences in the NFT space.
- A set of coded commands built into the blockchain ensures that artists and creators get paid based on the use and resale of their work in the future.
The Downsides of NFTs
Everything has its risks.
Here are some of the dangers of NFTs:
- Primarily valued by subjective metrics such as buyer demand.
- Sky-high prices may NOT last forever.
- Creating and selling NFTs ISN’T free, and the fees can add up to more than an NFT is valued.
- Has an environmental impact since this uses up a significant amount of energy to create and verify transactions.
How Do I Invest in NFTs?
If you’ve made up your mind already after reading the ups and downs and now want to know HOW to invest or buy these…
Then you just have to follow these steps!
Again, keep in mind that these are mostly collectible items that have gained value over time.
1. Research About Available NFTs
Find one that has potential in value. An NFT can be in the form of art, music, or even a video.
To better understand the scarcity of your chosen NFT, you should take note of the sale date, the cryptocurrency requirements, and how many of the NFT is being sold.
You also have to confirm if your chosen NFT is on-chain or off-chain. Off-chain uses centralized servers that could lead to the image being lost if the server goes down.
2. Avail of a Cryptocurrency
You need to exchange your money for cryptocurrency to avail yourself of NFTs. Most are purchased with Ethereum.
Take note of the fees when purchasing cryptocurrency because some fees go higher the bigger the trade!
You should review fees based on the transaction size you plan on conducting to get an estimate of what you’ll be spending.
3. Find an NFT Marketplace
This is where you can buy and sell NFTs.
Popular marketplaces for NFTs are
- Open sea
- Axie Marketplace
- Larva Labs
- NBA top shot marketplace
To avoid transaction delays, make sure you have enough cryptocurrency in your wallet.
Here are some fees you should look out for:
- Purchasing and transferring cryptos
- Converting one crypto into another
- Gas fees
While you do OWN the NFT, you DO NOT own the copyright on the original asset. Therefore, you cannot sue anyone for copyright infringement.
Here are some examples of crypto storage wallets that hold NFTs:
- Trust Wallet
- Alpha Wallet
How to Determine If NFTs Are for You
Creating and selling digital content might be for you, especially if you’re a creator.
When purchasing these collectible items via the NFT marketplace, they tend to be a speculative investment.
Meaning, the value is UNCERTAIN, and it will fluctuate based on the demand.
If you can identify an NFT trend earlier, then this can pay off BIG in the future.
If you have a knack for art, music, and you enjoy collecting, then investing in NFTs is for you!
NFTs are still under development.
Despite this, some government agencies and even large investment banks are now adopting cryptocurrency and its technology.
The growth has been welcomed by some, and these tokens are now trusted assets to buy.
REMEMBER: Tread lightly as you maneuver around the NFT marketplace.
Stay diversified with your investments to limit the risk of any single asset derailing your wealth-building progress!