The NFT market is still ripe for the picking and will probably continue to be so for a while to come. You might have already started to ask yourself how you can start selling NFTs, or you might have considered investing in them as assets whose value might increase with time.
Doing these things is both easy and complicated, depending on how much prior knowledge you have in this sector. As with any investment, you have to act with caution, especially with these kinds of assets, which belong to a market that is sometimes volatile enough to change from one day to the next.
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The name is perhaps the most confusing aspect when it comes to NFTs: Non-Fungible Token, so a little explanation is needed. Fungibility refers to things that are used every day such as physical money or bitcoin.
Non-fungible however, refers to things that are unique and cannot be replaced with something else.
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Think of the Mona Lisa for example: you cannot exchange it with any other painting in the world, simply because it’s a unique work of art that has not been replicated by Leonardo DaVinci twice. You can sell the painting for money, of course, but not for another Mona Lisa, because another one does not exist (save for fakes).
Now, NFT tokens are “one of a kind” assets in the digital world that can be bought and sold like any other property, but they have no tangible form of their own. Digital tokens can be thought of as certificates of ownership for physical or virtual assets.
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Most people who invest in NFTs treat them in the same way others deal with stocks or real estate. The NFT tokens don’t have any use in the real, tangible world but that doesn’t mean they are worthless.
There are platforms out there which allow lenders and borrowers to get loans with NFTs as collateral. Lenders can also rent out the NFT to a third party and enjoy some of the profit the NFT in question generates.
If this sounds a bit strange, think of it this way: an NFT that represents a weapon of some kind for a popular game. This NFT is rare and in high demand so someone offers it for a limited period of time, in exchange for a renting fee.
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This only works with an NFT that is demanded by the market and for which there is a demand, so it is very important to understand the market before buying.
Much of the value of the digital asset therefore derives from the possibility of certifying its ownership and the rights deriving from it. On the other hand, one of the obstacles NFTs face is the perception the general public has about them: that, because they are digital items, they have less value than a physical version. But that is for collectors to decide.
By purchasing the NFT of a digital work, the ownership is held and registered on the NFT blockchain – however, this does not mean that you acquire the copyright. It actually means that the work is connected to your digital identity – you are now part of the work via the data stored by it.
Is There Any Future In Investing in NFTs?
NFTs are still blockchain experiments, so that’s something you need to keep in mind at all times. It’s doubtful they will be going away any time soon however, and there are plenty of wealthy investors out there who are buying them left and right, which only means they will continue to be relevant for years to come.
One of the main advantages that NFTs have over other forms of media is that, once created, it is difficult to modify the contents. Music you’ve recorded, photos you’ve taken, important accounts on various websites and forums, and pretty much anything else you can think of could be a non-fungible token and could someday generate profit.
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NFT trading volumes are mostly driven by collectors and fans of certain artists who want to support them, so it wouldn’t be far-fetched to say you will need, as an investor, to have, when purchasing, sensibilities similar to those of an art dealer: recognize an undervalued work of art, buy it at a lower price and then sell it for a profit.
Where To Invest in NFTs
To begin with, you will need a crypto wallet and use platforms like eToro, Kriptomat, Bitpanda, Coinbase or Youholder to purchase Ethereum.
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The next step is to go to an NFT market like Crypto, Rarible, OpenSea, or Hoard Marketplace and have a browse. Once you find the NFT you want to purchase, the platform of your choice will guide you through the purchase process.
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It’s also a good thing to try and buy NFTs directly from the sellers. With secondary sites, it might be a little difficult to verify the authenticity of the NFT, especially if you are new to the whole thing. Needless to say, this would also keep you safe from scams, of which there are a few.
Keep in mind that many NFTs offer a royalty option to their creator, so you may not be able to recoup the full purchase price when you go to sell it, especially if the market hasn’t moved in your favor.
It’s also worth keeping in mind that, unlike regular cryptocurrency tokens, NFTs don’t have a lot of liquidity and can be traded in a limited way. This means that you need to think of them as a long-term investment.
If you’re a collector of physical items however, you should already be used to this mindset.
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