For some time, a term on digital financial platforms: NFT. This online investment is gaining more and more ground, so much so that significant companies worldwide are interested in this new asset. In this article, you will learn how to invest in NFT.
How to take your first step?
You must be clear that there is no regulated market to invest in NFTs and that the value asked for investing in these digital images may seem crazy. Still, the truth is that many investors are betting on NFTs. Let’s see how to invest in NFT art. The most complicated process of this type of asset is to set a value or growth potential for either a particular asset or a collectible.
However, blockchain-related investments can easily be related to trading, a short-term investment. Still, when talking about art NFTs, it is about revaluation over time. Before looking at how to invest in art NFTs, the following points should be taken into consideration:
- Research. This is one of the most critical steps to consider before starting in this digital universe with NFTs.
- Select the platform to buy NFTs. There are several options, such as Opensea, Rarible, Sorare, Minthana.
- Study every detail of what you want to invest in and know how the process works. Also, analyze who is behind the project: developers, community, and the interest it generates.
It is essential to know how much people are willing to pay. The strategy is also to know how long the NFT will be maintained since its revaluation over time is highlighted here. Once these steps have been defined, the investment can be made in the selected platform through the steps indicated.
What is certain is that you must connect the wallet to proceed with issues such as payment and auction. Also, you must look at aspects such as price history and current bids for the work. It is vital to check all the information concerning the creator. What usually happens on many platforms is the following:
- Make a bid to enter the auction. When accepted, the wallet is charged directly.
- Buy the work for the value that appears on the platform.
Other mechanisms or business models to earn money with NFTs are being an artist and directly uploading the works or as a project developer. The tradability feature of this type of token is attracting the attention of investors. All transactions made in the NFT market have already reached more than USD 200 million in the first months of 2021.
Although these figures can generate alertness to all investors, the NFTs market is still tiny compared to cryptocurrencies. That is why financial specialists cannot accurately measure the success of this asset. NFTs are considered stores of value, and exchange platforms are used. Still, the number of ERC721 intelligent contracts is overgrowing. For many, this pandemic has accelerated the digital transition and made itself noticed as a new trend.
How to keep track of NFTs?
There are websites and various information sources that can provide everything you need. The Nonfungible portal is the largest database on the web where you can see the history of transactions. With a well-trained eye, you can quickly define projects worth investing in.
The art sector is reserved for those who really know the market. Knowing the whole market and the various nonfungible assets that can be traded is crucial in addition to data relating to sales. For this reason, it is essential to be a true connoisseur of the area, and investment with NFT does not escape from this process.
Remember that buying shares in a company like Apple is not the same. This is because you do not have to evaluate each share individually, unlike NFTs, which require a precise valuation. Some specialists assure that in the future derivative instruments on NFTs will emerge, as usually happens with many assets. In this case, CFDs or financial futures on NFTs could come into play.
Trading this asset using new tools would be an advantage. This is because the trader accesses a market in which he will not physically buy the nonfungible tokens but will maneuver on the fluctuations in their price. This arises because financial derivatives provide greater liquidity and ease of trading. In addition, they can take advantage of upward and downward price movements. In addition, they are leveraged instruments, so if an investor knows his risks, this option can be beneficial.
Currently, the market for trading NFTs is the physical trading market without the intermediation of a broker. The price of the assets is determined more accurately according to the sales made. At the time of purchase, it will be known if the price is in line with the market. This market can be complex, but it is not impossible to invest in. The only way is to study these new digital assets.
Curiosities of NFTs
There are some curious aspects of NFTs that are always good to know. As we already told you, sales totaled USD 2 billion in the first quarter of 2021 alone. The most expensive one sold is Everyday: the First 5000 days, coming from the artist Beeple. The buyer was Vignesh Sundaresan, who acquired his certificate at a Christie’s auction for USD 69.3 million, ten times more than any other NFT sold. A price that makes it the most expensive piece of art in history.
Among other curiosities, there is the rarest NFT. Although it has been challenging to determine this category, the prize goes to the actor William Shatner who sold some stickers starring himself. One of them has an X-ray of his teeth. Also on the list are digital baby artworks by WarNymph de Grimes. The list can be extensive and striking. This is a market where eccentricities are part of its characteristics. Here we go with some more:
- Lindsay Lohan’s electronic single Lullabye was accompanied by a GIF with the artist’s chest adorned with butterflies.
- The digital vest with gold details of singer Shawn Mendes.
- The video of Banksy’s artwork burning sold for USD 380 thousand.
- The viral video “Charlie Bit My Finger” that the YouTube platform removed sold as NFT for USD 693 thousand.
- Twitter co-founder Jack Dorsey’s tweet saying: just setting up my Twitter, sold for almost USD 3 million.
It may seem complicated to acquire this new digital asset. If the investor studies, reads and analyzes the market carefully, he will find that investing in NFT art is a simple process from which profits can be received. NFTs are in continuous growth, and that, for specialists, is a good indicator of projects with good prospects. Investing in NFT is a personal decision, but it is worth experimenting with this new tool that can bring positive results to the investment strategies planned for this new year, 2022.