Top 3 NFT investment tips for beginners
The advancement of blockchain technology has brought us a number of investable opportunities in recent years. One of them is NFTs, short for non-fungible tokens. These digital assets are completely unique, meaning that they can hold some value to collectors and traders. The NFTs are a very diverse group of digital goods, ranging from more traditional tradeable assets like music, videos, or virtual collectibles to exotic ones like tweets and memes.
Unfortunately, like cryptocurrencies, NFTs are rather volatile. As such, beginners who are determined to invest in NFTs should consider a number of tips before making a move.
NFTs are a risky investment option for a number of reasons. The market is largely unregulated, and NFT frauds are not unheard of. What’s more, expensive NFTs can quickly lose their worth and turn into financial loss. Because of that, it’s important to minimize the possible risks when buying these digital goods.
Choose a reliable marketplace
Non-fungible tokens are usually bought in one of many marketplaces available on the Internet. Reliable sites such as OpenSea can offer you hundreds of different NFTs from categories like digital art or collectibles. Because these stores rely on proven cryptocurrencies, the transactions tend to be easy and safe for their customers. In turn, their security and convenience attract those who decide to mint NFT for sale.
Unfortunately, distinguishing between a reliable marketplace and a fake site is not as simple as you might think. Many scam marketplaces are almost perfect copies of the true NFT websites, down to their graphical designs and layouts. As such, it’s crucial that you focus on elements much harder to imitate before you buy your first NFTs.
First of all, take a look at the URL of the site. If it’s not secure, your chosen marketplace might not be as legitimate as it looks. It’s also important to pay attention to the name, as sometimes scammers change it slightly. For example, a fake NFT website might look almost identical to OpenSea but be called OpenSee. Also, look for specific contact information and ask about the marketplace on various NFT-oriented communities and forums. You’re not paranoid here, but rather protecting your investment money.
Be wary of celebrity-backed NFTs
Non-fungible tokens that are promoted by pop culture icons may seem like a great investment at first. After all, if celebrities or influencers get involved in certain NFT projects, these digital assets will be very valuable, right?
Sadly, it’s not as simple as that. Most popular non-fungible tokens such as Bored Ape Yacht Club (BAYC) are often purchased by famous persons such as Justin Bieber, Madonna, or Snoop Dogg. Unfortunately, just because the person is well-known doesn’t mean that their NFTs will be a success.
Logan Paul’s activity is one of the best examples here. Although widely known for his Youtube activity, his NFT plan didn’t pan out as expected. Logan Paul’s brand CryptoZoo launched with a rather high price, but started to drop quickly and now averages below 0.15 ETH. What’s more, many investors that decided to back up the project early on are now calling it both a scam and a rug pull. His also-famous brother, Jake Paul, similarly tried to enter the NFT market only to fail.
Before you decide to invest in particular NFTs, do your research and find out if there were any previous projects made by the seller, celebrity, or not. How they fared might be a good indicator of any future projects.
Look for opportunities
Investing in NFTs to make a profit can go beyond the simple buying and selling process. There are many other opportunities that can be exploited here.
Renting your NFTs is a less-risky move
These days, there is a growing number of video games that decide to implement an NFT model for certain unique items such as equipment, skins, or creatures. In most such games, these unique items can be then traded for profit, but some of the titles go even further. For example, Axie Infinity allows users to rent their NFTs to other players so that they can take part in pay-to-earn games without having to pay upfront. Those who lend these NFTs are then given money based on the amount of time the item was rented for.
It’s quite possible that such a gaming model will catch on even in mainstream titles, and this form of NFT business will become more viable.
Investing in NFT companies
This is more of a traditional approach, but also riskier than the previous scheme. Investing in the right startup can give you great gains in a short time, but can also leave you financially drained if your scheme doesn’t work out. To minimize the risks of choosing the wrong investment opportunity, research your target first.
A good idea would be to check if there’s any public interest in your chosen startups and see how they fit in the bigger NFT market. You might also want to look at their roadmap closely. However, don’t be swayed by quick timeframes and a giant list of promises. Many such startups tend to underdeliver in the end, so focus on ones with an ambitious but ultimately realistic plan. It’s a sensible approach, and the possible returns should be more than worth the initial effort.
Non-fungible tokens are a lucrative opportunity for those interested in them but are also quite risky. Fortunately, by following the above tips, you can make your NFT-related investments less likely to generate giant losses.
First of all, you should always pay attention to the marketplace you’re going to use – fake websites exist, and you need to know how to stop them beforehand. Don’t put your blind faith in NFTs promoted by celebrities and influencers any more than you do in normal NFTs. Finally, look for opportunities beyond typical NFT trade and consider investing in video game rentable NFTs or simply backing up promising NFT startups. Fortune favors both the brave and cautious. Good luck!