Over the last couple of years, the popularity of Non-Fungible Tokens (NFTs) has risen to such a point that is very difficult not to sit up and pay attention. Not only have NFTs become an internet sensation, but they have also emerged as good investment opportunities.
A lot of well-known individuals have made headlines by investing millions of dollars in various new, exciting, and rare NFTs in the digital art, and music industries. Considering the huge sums of money that these investors are paying for NFTs, it is safe to assume that they consider it to be a worthwhile investment.
Once you understand the basics of what NFTs are, the benefits of investing in them become clear. This step-by-step guide will cover the process of how to invest in NFTs in the easiest way possible.
Contents
Is It Worth Investing in NFTs?
From the time NFTs first began making headlines online, until now, the value of NFTs has drastically increased. People who bought NFTs at very cheap prices, when the concept of investing in NFTs was still very new, have seen their investment grow at a very fast rate.
Judging by the way the internet seems to be gradually moving towards the creation of a multiverse, and how more and more people are beginning to realize the value of cryptocurrency over fiat currencies, now is the best time to invest in NFTs. Very soon the average prices of NFTs will be much higher than they are today.
Why Invest in NFTs?
The reasons that people chose to invest in NFTs vary from one person to another. Like all investment decisions, before deciding to invest in NFTs, you should first be clear on why you want to do it, and whether it is the right decision for you.
Investing in NFTs carries the inherent risks associated with all online investments, such as cryptocurrency, stocks, etc. It is not easy to predict how the market will turn, so it is wise to only invest money you can afford to lose. Some reasons for investing in NFTs are:
- They are a unique digital token, which makes them very rare, and means you will be the owner of the only copy in existence. This means that no matter what happens, you will always be the owner of that token until you decide to sell it.
- They are collectible items, just like baseball cards, whose true value is based on the industry. Due to market fluctuations, this makes NFTs a high-risk investment, but there is definitely potential for a return on investment.
- Some people invest in NFTs simply for the love of the art or the music. An example is investing in an NFT of musical compositions from your favorite musician.
Best NFT to Invest in 2022
There have been a lot of new and exciting NFTs minted since the start of 2022, and a lot of them have offered great investment opportunities. Many of these NFTs have made headlines, not only because of the people who bought them but also because of how much their prices have increased since the time they were minted.
The following is a shortlist of some NFTs that have proved to be great investment options for 2022:
One of the most easily recognizable NFTs of 2022 is the Bored Ape collection, by developer Yuga Labs. It is a collection of over 10,000 depictions of various digital ape artworks that have collectively sold for millions on the NFT market.
The Bored Ape Yacht Club NFTs have grown so popular, that the developers have decided to create a Bored Ape Metaverse for use by owners of these tokens. When the deeds to land on the Bored Ape Metaverse were dropped, the response was so huge it caused a crash on the Ethereum blockchain.
One of the most interesting, and versatile, NFTs to own in 2022 is the Lucky Block, which offers owners unique access to a lifetime daily lottery jackpot price. Not only is this vastly different from what other NFTs have to offer, but Lucky Block owners also have the chance to win prizes from draws conducted safely and transparently.
As one of the most valuable NFTs around, CryptoPunks has become a status symbol in the world of NFTs. They were one of the first NFT collections to be minted back in 2017 and consist of 10,000 unique human pixel images. Since they were bought by Yuga Labs in 2022 they have become increasingly popular due to the limitless possibilities for their future.
NFT Investment Tips
Now that you have decided to invest in NFTs, there are a few things you need to know about the best way of acquiring NFT tokens. The process can be a bit complicated, especially for beginners, but by following these simple steps, investing in NFTs will become easy and enjoyable.
Just like any other investment, before investing in NFTs, it is very important to research properly and find out all there is to know about the NFT of your choice. There is a risk associated with NFT investment, and blindly investing in any available token, without knowing enough about it, will only increase the risk.
Luckily, all the information you need is readily available online. All the information about NFTs, including creators, date of mint, owners, and prices, is stored on various Blockchain, which is accessible to the public. By reviewing this information, you can have a clear picture of how well the NFT is performing in the market, which gives you a better chance of predicting its future price fluctuations.
The world of NFTs and Blockchain, is a closely-knit community of millions of members from across the globe, in constant communication on various platforms. Whenever anything notable happens regarding NFTs, the news spreads rapidly, and this has a drastic impact on the price of NFTs.
When the Ethereum Blockchain crashed, for example, after the launch of the Bored Ape Metaverse land deeds, the news sent shockwaves across all trading platforms, which increased the risk for traders who were not aware of what was happening.
The value of NFTs lies in their rarity and uniqueness. In this regard, certain tokens have proved to be very valuable, due to the availability of the option to add special features to individual tokens to make them more unique.
Owners of CryptoPunks NFTs have the option to add up to seven additional features onto their tokens, such as hats, glasses, cigarettes, etc. These extra features make each NFT more unique and valuable, and to date, only one token has all seven features, making it the rarest and most valuable NFT of that collection.
It is very important to know who the founders of a specific NFT collection are. Not only will this give you more vital information about the NFT, but based on how other collections belonging to the same founder have performed, you can gauge the overall potential of your NFT.
Certain founders have become so trusted, that people are willing to invest in whatever tokens they mint because they know that they are likely to increase in value. An example, is Yuga Labs, the creators of the Bored Ape. Due to the huge success of the Bored Ape collection, when Yuga Labs acquired CryptoPunks in 2022, the price of the NFT collection skyrocketed.
Just like artists in the real world, certain NFT creators have made a great reputation for themselves, meaning that whatever they create is bound to do well in the NFT marketplace. This means, for traders who are looking for a safer option, especially beginners, then it is highly advisable to choose NFTs from a well-known artist, whose work has done well in the past.
A great example, is the well-known artist, Beeple, creator of the famous artwork “5000 days.” This artist is so popular that any news of him launching a new collection is greeted by a flurry of investors, even before people know what type of NFT he is dropping.
All relevant information that you need about any NFT that you intend on purchasing, is readily available online on various Blockchain. The transparency and accessibility of NFT platforms are one thing that attracts a lot of potential investors.
It is, therefore, up to you to take the time to go over important information, such as the floor price, and volume of the NFTs, which is important in making future projections of the price. You can also look at who the other owners are, for example, NFT collections that have a lot of high profile owners such as celebrities, are bound to do well, due to the huge publicity those celebrities bring.
NFT Investing Strategy
The overall success or failure of any investment project is highly dependent on the choice of the strategy employed. There are a lot of different ways to go about investing in NFTs, but the intention of any trader is usually to invest in NFTs at a low price and then sell them later on at a much higher price.
In order for this to work, it is best to know a lot about what is happening currently in the world of NFT trading, so that you can be able to invest in new NFTs soon after they are minted, and while the floor price is still low. If you calculate properly and invest in NFTs from reputable artists, then there is a good chance that the price will increase.
NFT Investing for Beginners
Online trading is always a bit difficult for beginners, and the risks are increased due to their lack of experience. It is a good idea, if you are a beginner, to choose a trading platform that offers copy trading and has a demo account; two very essential tools for traders with no experience.
Another good strategy is to stick to well-known artists, at least until you know more about the industry.
Conclusion
Even though there are a lot of risks associated with NFT investments, the potential for gains is also there for those who can follow the steps in this guide.
Visit our website, for more important information, and all you need to know about investing in NFTs.