What People Need To Understand About NFTs
So you have been reading a lot about NFTs and decided to get into the trend and buy your first NFT. That’s good, let me congratulate you on that, but you should understand what they are and how the markets work before making your first purchase.
Back in 2017, the were only Cryptokitties and CryptoPunks in the Ethereum Blockchain as NFTs. After that, people have started creating more variances, metaverses, and more iterations of different types of NFTs, but investors’ tools are not really developed yet.
As an investor in the crypto space, you invest in full markets. With market caps, where they are pretty liquid. You can get in and get out fairly quickly.
NFTs, on the other hand, are Non-fungible, meaning that every individual NFTs 1/1, 1/10, 1/100, 1/1000 (the scarcity 1/1 being the most scarce) are different types of markets, even within the same artist. For every piece of art, collectible, etc., you need to find an individual buyer that’s interesting in it if you want to sell it, and this it’s pretty hard unless it’s a Beeple, of course.
Once you buy an NFT, you need to understand that maybe there will never be a seller on the other side. It’s an early space to explore, where big amounts of money are being made every single day, but like anything, there is always a risk of losing all of your investment.
Below, I list the tips that I have learned about buying and selling NFTs as an investor.
- Never FOMO into a project and do lots of research prior.
- Your NFT might be worth $0 when you try to sell it down the road (meaning that you are not able to find a buyer)
- You will lose money on some, as value and scarcity vary between artist and edition amounts.
- If crypto dump, NFTs dump, even NBA Top Shots, as early adopters in Top Shops are crypto investors (maybe this correlation will change in the future)
- Most NFTs will lose their value. If you see artists and/or NFT collectibles as small startups or businesses, then you know that 90% of startups fail.
- Don’t invest more money than you are willing to lose.
Tools To Do Research On NFTS
- Nonfungible gives you a general view of the market.
- CryptoSlam is good when you are looking for data and trends about collectibles.
- CryptoArt lets you know the current artist ranking, and you can make your investment based on that.
To summarize, NFTs are a new type of asset class that has ties to the crypto space. Invest safely and really truly buy what you love.
That way, you never lose.