How to Invest in NFT: A Step by Step Guide to Finding Profitable Projects

When people are talking about the huge collection of NFTs in the market, you may be wondering how to buy an NFT and make a profit just by reselling it? Fortunately, there are a few tricks that can reveal the best digital asset projects using blockchain technology. We’ve compiled a step-by-step guide to the best tips on how to invest in NFTs. Please follow us.

What is NFT?

NFTs are the only assets that validate the digital ownership of something pegged to tokens. It can be images, audio, video, domains, etc. The Ethereum blockchain is the most used network for creating and selling NFTs, and has some of the most popular NFTs ever created.

The NFT revolution is like a breath of fresh air for artists. They can now display and potentially sell their work to collectors from all over the world. Artists, such as graphic designers, illustrators or musicians, should all learn what NFT is, create NFTs, and put their digital artworks on NFT marketplaces.

What do you get when you buy NFT?

How is NFT different from fungible tokens? The tokens are interchangeable for example 1 BTC is the same as 1 unit of another BTC. With an NFT, you receive a digital file for your funds, but that token represents your ownership of the digital asset, which is not a substitute for another NFT.

NFTs are not scaled to digital artwork. In fact, anything can be an NFT, such as concert tickets, music albums, in-game blockchain digital assets. Almost any real-world asset can be tokenized as a digital asset and stored in a digital wallet.

Similar to cryptocurrencies, the price of NFTs reflects supply and demand. The most popular places to buy NFTs are specialized platforms known as NFT marketplaces, such as OpenSea, Rarible, and Mintable, etc. If you are already a crypto investor, you will find it easy to learn how invest in NFTs. The general buying process is not too different from other crypto-assets.

What makes an NFT so valuable?

While NFTs do not have any intrinsic value, their value is not determined by the company or the artist that creates them. Just like in the case of cryptocurrencies, non-fungible tokens are only worth what people will pay for them.

For example, the most popular NFTs today are digital art NFTs, with the most popular ones selling for millions of dollars. As of 2021, one of the most expensive NFTs has been sold by Christie’s arthouse for a staggering $69.3 million. Artwork (Everydays: the First 5,000 Days) is a digital collage by artist Mike Winkelmann (also known as Beeple) consisting of digital works created over 13 years. This exceptional piece of art is the result of Beeple creating one piece of art online every day for 5,000 consecutive days, which is stitched together into one NFT. It went on sale on March 11, 2021 and caught attention around the world.

An expensive NFT work.

But not all NFTs are digital works of art. In 2019, the NBA started working on a project called NBA Top Shot in partnership with Dapper Labs, which sells the best basketball moments as NFTs. Fans can purchase these short videos as an NFT trading card. Or as recently, a LeBron James bookmark sold for $210,000.

Why should you invest in NFT?

There are several key reasons why you might want to invest in an NFT:

  • To complete an art collection.
  • To become an icon.
  • Invest for profit as an asset.

First, NFT is a way to prove ownership of digital assets or tokenized assets from the real world. Since art NFT became mainstream, many artists and collectors have joined the movement. They continuously purchase NFTs to complete their NFT art collection. You can view a wide variety of digital art collections using some of the top NFT tools. These platforms can give you more insight into a collection and its popularity.

Another reason why crypto enthusiasts might want an NFT is to show off and use them as symbols. This is the most expensive NFT case ever sold. Vignesh Sundaresan, a cryptocurrency investor and programmer, has chosen to display his $69.3 million NFT in a digital art museum in the Metapurse supermarket.

As with all investments, most people see the NFT as a way to generate profits. However, not all of these properties are the same. We’ll discuss that in more detail in the next section on how to invest in NFTs.

5 steps to take before investing in NFT

Now that you understand the basics of NFTs and how they come about, let’s tackle the most important question: how to invest in NFTs? There are many small details that one should look at when deciding to buy and sell NFTs.

NFT investments can be extremely risky due to the overall volatility of the cryptocurrency market. Another unpredictability issue is that the NFT collection can become less valuable over time due to the weak community and general lack of liquidity in the NFT market. There is always the risk of not being able to find a buyer for your NFT. That means you won’t make a profit from that NFT.

But don’t worry. We will take important steps on how to invest in NFT to maximize your chances of profiting from your digital asset investments. Since we already have a step-by-step guide on how to buy NFTs, here we will focus on how to find worthwhile NFT projects with the potential to generate profits.

Step 1: Find new NFT projects using popular NFT tools

While successful projects are easy to come by, you may not be able to afford one of those NFTs. That’s why we recommend trying to find the next big potential artist and their NFT collection before it comes out. While this may seem like an easy task, it is not. This process requires a lot of time and research.

Since NFT collections have a greater chance of exploding than single NFTs, you should look for a collection with great potential. When looking for projects, keep in mind that the main goal is to buy cheap NFTs and move on to making a profit later.

While most NFT tools will give you insight into the available NFT collections, you want to focus on upcoming collections. For example, Rarity.tools and UpcomingNFT showcase the upcoming collection of NFTs, and these are great platforms to start your research.

For example, Rarity.tools will show you projects that have not been launched. Using this platform, you can find basic details like the blockchain on which they are built, the social media links of the project, and the starting price for the NFT.

Step 2: Check out the project’s community on social media

One of the most important aspects of an NFT project is the community that supports it. In a word, if the project has a lot of fans, then the chances of reselling the NFTs are higher. That’s why it’s important to check the project’s social media channels to make sure they have a legit community.

Like most crypto projects, NFT projects have social media accounts like Twitter and a Discord channel. They use these to post news related to their project. It’s important to find projects with medium-sized Twitter communities (around 10k followers). In addition, you also need to participate directly to evaluate the community’s interaction, avoiding projects that buy bot accounts to fake the number of members of the community.

Don’t forget to check the project’s Discord channel backer count and engagement. Do any team members and moderators interact with the community? Also, are they answering community questions? Such details will tell you more about the projects you are investigating.

Also, when it comes to social media following, the numbers can change quickly as a project approaches its launch date. That’s why you shouldn’t eliminate projects with low followings altogether. Continue to follow them and check their social media later, closer to the launch date, to see if their numbers increase. If that’s the case, it means that there’s attention around that certain project and that’s worth your attention.

Step 3. Check out the project website and the founders

All NFT projects must have a legit website that doesn’t cause any red flags like grammar or spelling errors, missing important information, or just poor generic design. A good NFT project should have all the important information on their website, such as their official report, founding team members, partnerships and other details.

The more information you have about the project, the better. We recommend that you do not invest in a project that chooses not to publicly display the identities of its founders. With the growing number of scams and rug pulls, this is not a risk you want to take.

Typically, you can find more details about the founders on the project’s social media channels, where they can post about the project from their own social channels where they are related. details of their other work (if any).

Moreover, if you want to invest in a certain project, you will need to consider whether the developers have the ability or expertise to do so. For example, if the project is about building a game, you would want to find out if the founders have relevant experience in building video games?

Step 4: Do you like NFT’s digital artwork?

As we mentioned before, most of today’s NFTs are digital tokens for art. If that is the case with your chosen NFT, then you should ask yourself if you really like this art. The ultimate goal of NFT art is to be acquired by art collectors.

Step 5: How is NFT different from other NFTs?

Today, most NFT collections are part of blockchain games, metaverse or other digital projects. NFTs can be in-game digital assets or have another utility. You can find the utility of the projects by reading the project website and whitepaper (if available).

For example, if NFT can be used in a blockchain game, it is always good to know what type of gamer it is and how big its community is. Furthermore, in some cases, celebrity-supported games is usually a good sign.

Epilogue

Buying an NFT is the easy part, but learning how to invest in an NFT requires a lot of research and time spent observing the projects’ community. If you want to really put in the effort to find profitable NFT projects to invest in, make sure to go through all the steps listed in this guide on how to invest in NFTs.

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