How to invest in NFTs

About three years ago, members of the crypto ecosystem hardly talked about digital art and non-fungible tokens. Fast-forward to today, a lot has changed. NFTs now seem to be the most exciting aspect of crypto and blockchain.

It is almost impossible to turn a deaf ear to the thousands and millions of dollars artists and NFT collectors have made. As such, you may be wondering how to invest in an NFT project that will make you millions. Or, more realistically, an NFT project that is sustainable and at least profitable.

Catching suitable NFT projects isn't as difficult as understanding rocket science. It can be achieved by simply taking some practical steps.

Confirm the Originality of the NFT

What makes non-fungible tokens unique is that duplicate copies can be identified and distinguished from the original. You can carry out routine checks to ensure that your hard-earned money isn't wasted on imitation digital art copies.

If you’re using an open marketplace, do some research on the contract address of the NFT you want to purchase. Before clicking the buy button, ensure the original contract address matches the one at your fingertips. Some marketplaces have unique tags that distinguish original artists from imitation sellers. This makes it easy to spot top artists and buy directly from their collections. 

In most cases, NFT projects that have unique backstories are original. Fakers hardly have time to create unique stories. Even when they have the time, they lack ideas. That's why they are fakers. You can find a lot of unique NFT art with resonating backstories on enter.art. The marketplace verifies sellers before accepting digital uploads. This helps to protect buyers from fake artists and creators.

Some fraudulent NFT traders steal images from top curators and sell them on a different marketplace. Always ensure you confirm that the art you are about to buy exists on the marketplace before you make the purchase. Buying fake digital assets is as painful as putting coins in a leaking pocket, so always confirm the originality before buying.

Use Data and Metrics Effectively

Numbers don't lie. Use them to make sound NFT investment decisions. Valuable data related to the sales volume of non-fungible tokens, the monthly increase in consumer interest, and so forth can help you determine the right digital art to purchase. Users can find this information in the data segment of most marketplaces.

Additionally, specific platforms display more valuable NFT research and data analysis metrics. Platforms like bnb.nftscan.com, Nansen.ai and RyzeNFT provide users with data regarding top-performing NFTs, wallet activity, and the rarity of a collectible. While this information does not tell you what to buy and what not to buy, it serves as a helpful guide for making sound purchasing decisions. If you flip NFTs, you will only want to buy a buzzing token. However, if you are a holder, you may not care about the current hype.

The Rarity of the Digital Collectible

The value in most non-fungible tokens lies in their rarity. As a collector, you want to ensure that any digital token you are investing in is a rare one of its kind. You will have an edge in the market if your digital art is rare.

Many great NFT projects launch their digital collections with varying levels of rarity. Other creators may also decide to exhibit their art as a limited edition digital art. Digital items like these usually command high value. From an investor's perspective, the goal is to find these rare assets at their floor price or close to it and sell when the token's value has appreciated.

Social Media Activities

The leading social platforms where collectors can find helpful information regarding NFTs are Twitter and Discord. It could be a red flag if an NFT project isn't active on Twitter or has low engagement. Interestingly, you can use hashtags on Twitter to find active projects in the space. The more followers and engagement a project has, the better the chances of the project being legit. You can also join the Discord server of projects that interest you. Ensure the community is active and members are excited about the project. Although, community activeness is not a guarantee that you will be profitable.

It can also be a good sign if established media personalities or celebrities create hype around an NFT on social media. Most high-profiled individuals will not want to be affiliated with fake digital collectibles. Aside from that, they make NFT projects more popular. The more popular a project is, the more willing collectors will be to invest in the project.

As a collector, you will benefit more if you are active in communities. Curators usually reward active members with a whitelist spot at a discount or with free non-fungible tokens. These tokens typically have worth, and some are prone to appreciate with time.

Who are the Creators of the NFT?

It is logical to invest in a project with reliable and transparent developers. When the creators of an NFT collection are known and have a track record of diligence, it becomes easier to trust the project. Some creators make projects for short-term gains, while others have a long-term perspective.

It is also not just about knowing the creators; you need to know their plans. As an investor, it is your responsibility to follow these plans and monitor whether the project does what it set out to do.


Should You Invest in Non-Fungible Tokens?

As you likely know, NFTs are largely unregulated, which carries some risk. However, this should not be a reason to shy away from investing in non-fungible tokens. The steps highlighted above have worked effectively for many digital token collectors all over the globe and will probably work for you too. Collecting NFTs is also about much more than making a quick buck. NFTs are inherently collectible and many have utility and can give access to hidden content or serve as access passes for exclusive events and activities, thereby giving them a value that can be difficult to measure in dollars.