Denizens of the cryptoverse didn’t talk much about digital art and non-fungible tokens three years ago. Today the tables have turned. NFTs are arguably the most interesting (and potentially lucrative) aspect of crypto and blockchain right now. Let’s be real; buying digital coins and hoping they increase in value isn’t exactly stimulating.
Why? Visual appeal for one thing. Humans are drawn to shiny objects and we’re collectors by nature. You can’t see bitcoin or ethereum but you can view, share and flip NFTs.
It is nearly impossible to ignore the millions of dollars invested by artists and NFT collectors and even the uninitiated have probably heard of Bored Apes. Affording one though is another matter, with the cheapest ape going for more than $300,000.
As a result, you may be searching high and low for an NFT project that will make you millions of dollars. Or, more realistically, an NFT project that is both profitable and sustainable.
Finding NFT projects to invest in isn’t rocket surgery-you simply need to take some practical steps and our quick guide will get you started.
Make sure the NFT is original
This may seem like a no-brainer but in the rush of excitement in finding what seems like a great deal it’s sometimes easy to be fooled.
Non-fungible tokens are distinguished by the fact that duplicate copies can be identified and distinguished from the original. You can perform routine checks to ensure that your hard-earned money isn’t being squandered on phony digital art copies.
Do some research on the contract address of the NFT you want to buy if you’re using an open marketplace. Before you click the buy button, double-check that the original contract address matches the one you have at hand.
Some marketplaces use distinct tags to distinguish original artists from imposters. This makes it simple to identify top artists and purchase directly from their collections. Even then most reputable platforms have a disclaimer warning that if an NFT has not been verified by them you’re assuming all the risk in purchasing it.
NFT projects with unique backstories are usually original. Fakers don’t have time to come up with original stories. Even when they have the time, they are at a loss for ideas. That is why they are imposters. On reputable sites like Open Sea and Rarible, you can find a variety of one-of-a-kind NFT art with compelling backstories. Before accepting digital uploads, the marketplace verifies sellers. This protects buyers from impersonating artists and creators.
Some rogue NFT traders pirate images from top curators and resell them on a different platform. Before you make a purchase, always double-check that the artwork you’re about to buy is available on the market. Buying counterfeit digital assets is as painful as putting coins in a leaking pocket, so always check the authenticity before purchasing.
Make Effective Use of Data and Metrics
Check the numbers. Make sound NFT investment decisions using them. Data on the sales volume of non-fungible tokens, the monthly increase in consumer interest, and so on can help you decide which digital art to buy. Most marketplaces have a data segment where users can find this information.
Furthermore, certain platforms display more useful NFT research and data analysis metrics. Platforms such as bnb.nftscan.com, Nansen.ai, and RyzeNFT provide users with information on top-performing NFTs, wallet activity, and collectible rarity. While this information does not tell you what to buy or what not to buy, it can help you make informed purchasing decisions. If you are flipping NFTs, you will only want to purchase a buzzing token. If you are a holder, you may be unconcerned about the current hype.
Scarcity / Rarity
The rarity of most non-fungible tokens adds to their value. As a collector, make sure that any digital token you invest in is a one-of-a-kind. If your digital art purchase is unique, you will have a competitive advantage in the market.
Many fantastic NFT projects release digital collections with varying degrees of rarity. Other artists may choose to exhibit their work as limited edition digital art. These kinds of digital items usually have a high resale value. From the standpoint of an investor, the goal is to find these rare assets at or near their floor price and sell when the token’s value has increased.
Twitter and Discord are the leading social platforms where collectors can find useful information about NFTs. If an NFT project isn’t active on Twitter or has low engagement, this could be a red flag.
Surprisingly, you can find active projects in the space by using hashtags on Twitter. The more followers and engagement a project has, the more likely it is legit. You can also join the Discord server of a project of interest. Ensure that the community is active and that members are enthusiastic about the project. However, being involved in the community is not a guarantee of success.
Be especially careful if most of the conversation is centered around when owners of the NFT can cash out or how much money they plan on making.
It can also be a good sign if established media personalities or celebrities create social media buzz around an NFT. Most high-profile people will not want to be associated with bogus digital collectibles. Aside from that, they increase the popularity of NFT projects. The more popular a project, the more willing collectors are to invest in it.
You will benefit more as a collector if you are involved in your community. Curators typically reward active members with a discounted whitelist spot or free non-fungible tokens. These tokens are typically valuable, and some are likely to appreciate over time.
It makes sense to invest in a project with trustworthy and open developers. It is easier to trust a project when the creators of an NFT collection are known and have a track record of diligence. Some creators create projects for short-term gain, while others do so for long-term gain.
It is also not enough to simply know the creators; you must also understand their intentions. It is your responsibility as an investor to follow these artists and monitor whether the project achieves its goals.
Should you buy NFTs? As you are probably aware, NFTs are largely unregulated, which poses some risk. This, however, should not be used as an excuse to avoid investing in non-fungible tokens.
The steps outlined above have proven to be effective for many digital token collectors all over the world, and they will most likely work for you as well.
Collecting NFTs is an enthralling endeavor and far more than just making a quick buck. NFTs are inherently collectible, and many have utility, such as providing access to hidden content or serving as access passes to exclusive events and activities, giving them a monetary value that can be difficult to quantify.
As with any investment, be it stocks, crypto or NFTs, do your own research, talk with trusted friends that have experience in the space, follow creators and NFT marketplaces on Twitter and engage with the community. That’s the best way to enter this fascinating realm. Of course, you can perform some research on your own, but the results of such an approach are more subjective. The best stock picking services have a proven track record of at least 10 years. Those with a track record of over ten years will be much more likely to find a winning investment.
Disclaimer: Pound_7 is the nom de guerre of the author.
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I write about blockchain, crypto, NFTs and other disruptive technologies and innovations.