NFT, the acronym for non-fungible tokens, is a digital asset that can not be replaced and is unique. You can see it as a one-of-a-kind trading card.
‘Non-fungible’ describes its key attribute which means it can not be traded to get the exact same thing. For instance, you can trade a cryptocurrency or that same cryptocurrency.
However, in the case of NFTs, it is a single piece and when you trade it, you can not get the same thing back. You can only trade it for something else.
Currently, the world is in an NFT trend. 2024 is witnessing crypto and NFT adoption like never before. More people seem to be flocking towards digital assets. And it is not just a generation; we can see millennials, Gen Z as well as seniors showing interest in investing in crypto.
NFT stays as a different marketplace, as of now, the developments and advancements in tech and innovations suggest that NFT marketplaces will be integrated with cryptocurrency exchanges so that you can make your crypto and NFT purchases at the same place.
A Guide To NFT Investments
Here, we are about to look into the most important things that you know before investing in an NFT.
Know that NFTs have high volatility
Just like cryptocurrencies, NFTs are also digital assets with high volatility. Before buying an NFT, you should know this.
Note that, the price of a particular NFT can change at any time and they are susceptible to intricate price fluctuations.
You should be aware of the various faces that can induce the market price of NFTs such as rarity, popularity, appealing factor of the NFTs, reputation of its creator, and more.
Accepted Currency for NFT Purchase
Typically, NFTs are bought using cryptocurrency, buying an NFT involves trading with cryptocurrency. At the same time, a few NFT marketplaces let you buy NFT using fiat currency as well.
Therefore, it is advised that you research in advance the mode of purchase available for the NFT that you wish to buy.
You can find out whether crypto is the only accepted payment by digging more into the accepted payment method of the particular NFT marketplace.
Plan Ahead
You should know all the details related to the NFT that you are planning to buy before you proceed to buy the NFT.
Make sure that you have enough crypto funds to cover the cost of the NFT, plus the gas fees. If you do not have the required amount of crypto in your wallet, then it suggests that you do not proceed to make the NFT purchase.
You can enquire about the gas fees of the purchase before you proceed and make plans accordingly. If you try to make the purchase with insufficient funds in your account, you will fail the attempt and lose a chance of buying the NFT
Different Kinds of NFTs are there
This is something that you should definitely know if you have a plan to invest in NFTs. There are gaming NFTs, music NFTs, art NFTs, and more.
Most of the NFTs are available on the blockchain. At the same time, some NFTs are not available in the blockchain rather they are predominantly present in the e-commerce blockchain. These NFTs are referred to as intrinsic tokens.
Do not rush
Know that investing in an NFT can be a tiring procedure. Especially, the stage of choosing the particular NFT that you want to invest in.
There are different kinds of NFTs and NFT investments are not entirely like crypto investments. You may feel overwhelmed when you try to find the right NFT for you to invest in.
We recommend you take ample time and not make any impulsive decisions.
Be ready to face a loss
It does not mean that you are going to lose your money, anyway. However, as we mentioned before NFTs are highly volatile as well as the NFT marketplaces.
The value of an NFT can collapse even if unfavorable news regarding the creator of the NFT appears in the market.
Therefore, you should be ready to face the losses as well. Know that loss is part of the NFT business. And, as well, please do not invest more than what you can potentially afford to lose.
Look out for the NFT scams
The increasing popularity and attention the NFT sector has received has led to the appearance of NFT scams.
Some bad actors may try to create tainted versions of the already existing popular and legit NFTs, so you need to be very sure that you are investing in the right and authentic version of the particular NFT.
Also, some fraudulent sellers may try to deceive you by selling you NFTs that don’t exist in the marketplace at all.
The Bottom Line
In this article, we discussed the major factors that you should be aware of when you are about to invest in an NFT.
Know that all NFTs are suitable for high and unpredictable volatility and also be aware of the presence of NFT frauds happening out there.
It is suggested that you do your own research. You can also take opinions from top NFT experts and legit NFT personalities.
If there is anything more that you need to know, please do not hesitate to reach out to us using the below comment box. All the best!
