NFT has made a buzz in the crypto world. The attention it is receiving is alarming. It has now become the hub for investment. It seems like its launch was just today. But did you know, NFTs have been around for a decade? According to cryptoslam.io , NFT, which means non-fungible token, received investment raking up to $1B as of last month. Crytoexpert believes that the surge is due to several reasons, including the pandemic. However, the rise of Bitcoin is the main reason that led to its widespread popularity.
Before delving into investing in NFT, let’s first understand what they are.
NFTs: What they are
NFT is an acronym for non-fungible tokens; they are unique digital assets with quirky codes and metadata, stored on the blockchain. NFTs should not be confused with cryptocurrency as they don’t have their equivalent when traded or exchanged.
They range from artwork, videos, sneakers to Gif, avatars, collectables, and games sold online using cryptocurrency. Recently. NFTs have been gaining popularity because they are now becoming conventional for trading artwork.
The Future of NFTs
From the statistics we have seen, investing in NFTs will be profitable. According to non- fungible.com, NFTs had a market capitalization of $210 million as of 2019. In 2021, it reached $41 billion, and Expert predicts it to increase by $35 billion by the end of 2022. Its exponential growth shows the future hub for investments with high rewards. Like DeFi, NFTs help to eliminate the middleman. You can sell your artwork directly without selling tickets to anyone.
NFTs are also advantageous to content creators as it solves the issue of digital ownership, licensing, and copyright. It will also help revolutionize how we communicate with one another.
The future of anything on the blockchain is uncertain, but experts predict that NFTs will be around for a long time. Aside from the gaming industries, big tech firms like Meta, Twitter, and Visa are doing all they can to ensure they don’t miss out on the NFT boom. The potentials of NFTs are endless; some predict that NFTs will accompany all purchases in the next decade and replace paperwork with smart contracts. Mark Zuckerberg, CEO of Facebook, recently changed the Company’s name to Meta, stating that the Company wants to provide Metaverse services. But what does this change have to do with NFTs?
There is a need for privacy, security, and correspondence in the Metaverse. So, the more we migrate into the Metaverse, we will need a secure and authentic way to prove our identities and digital assets, which is where It comes to play.
NFTs are now mainstream, leaving potential investors confused on how to go about it. I know we are all aware of the different persons that sold NFTs and earned over $1million from a single sale.
So, let’s talk about investing in NFTs.
Investing in NFTs
Before joining the trend, it is essential to know all there is to know about that investment. So, if you’re still enthusiastic, let’s delve in.
You must know that investing in an NFT is not a get-rich-quick scheme. But like other investments, it yields with time. However, a few recorded for $1million in a single sale, but there is no guarantee that it will happen every time.
Here is what you need to get started
- Get a suitable wallet: Not all wallets are compatible with the cryptocurrency you need to purchase NFTs.Creating one is not difficult in case you don’t have one. All you need is a PC or a smartphone with a steady internet connection. The Metamask and Ledger have wallets that support NFT.
- Decide on the NFT you wish to purchase: You can search on the NFT marketplace like Opensea and Axie and make your choice. You can check the top marketplace for NFTs here. All purchases are with cryptocurrency, so you must note which coin you will use to make your purchase.
- Fund wallet: Next is to fund your wallet to buy the cryptocurrency you need to purchase the NFT. You do this using your Fiat currency. The Euthreum is used majorly for NFTs, but you can equally use other cryptos on the blockchain.
- The link you’re to the marketplace: Once you fund your wallet, you can link up to the marketplace to see the price list for the NFT and check if your wallet balance is sufficient to make any purchase.
- Purchase an NFT: If your wallet balance is sufficient, go ahead and buy. If you use the ether for transactions, you will be required to pay a gas fee.
- Confirm if the transaction was successful: Blockchain technology does not reverse transactions. So, you must be careful. After the transaction, ensure it is in your wallet before it is considered successful.
Consider the following before buying an NFT
- Features of the NFT
- Check for Seller’s Verification
- Transaction fee
- Market volume
The Pros and Cons
Investing in NFTs might be advantageous as it can create a store of wealth. It gives exposure to the latest technology. However, the cryptocurrency market is very unpredictable and volatile. Hence, it would help if you tread with caution. Asides from this, NFTs are for those who are tech-savvy. You will struggle with it if you don’t have basic computer skills. Again, there are extra costs that come with procuring NFTs. With the high rate of cybercrime, you have to be extra careful investing in NFTs.
Finally, selecting the appropriate NFT for you and your long-term investment portfolio is critical. Remember to follow these three basic principles before deciding which NFT is suitable for you:
- Find what you enjoy.
- Do your homework.
- Never end up spending more than you can stand to lose.