NFT is a widely-discussed topic, along with metaverses and DeFi. NFTs were first created to help artists present their art to the world and record their ownership in the blockchain. As data in a blockchain can’t be changed, artists could be sure their ownership couldn’t be questioned.
Nowadays, NFTs can be created by anyone. Some NFTs cost thousands of dollars but don’t have any value. However, it doesn’t mean the NFT market shouldn’t be used for investments. Read on to find out how to invest in NFTs in 2022.
What are NFTs?
Although some believe NFTs are new because their popularity spiked in 2021, the first token was minted in 2014. Kevin McCoy created the non-fungible token “Quantum” on May 3rd, 2014. In June 2021, it was sold for $1.4 million.
You might wonder what makes it unique to be sold for a million dollars. It’s a pixelated image of a pulsing octagon. You can decide for yourself whether it is worth $1.4 million.
An NFT (non-fungible token) is a digital asset that represents objects from various sectors, including art, video, games, and even real estate. Although NFTs can present things that exist in the real world, most exist only online.
The development of the NFT sector allowed artists from around the world to show their creations. Today, anyone can create an NFT for low commissions.
The key NFT feature is that every token is unique. While, for instance, one stock or one Bitcoin can be replaced with another stock or another Bitcoin, an NFT can’t be replaced with another NFT, the same as one painting can’t be replaced with the equal one. This means that stocks and Bitcoins are fungible, and NFTs are non-fungible. This feature makes NFTs valuable. Supply and demand also determine the value of an NFT.
Why invest in NFTs?
Although it may seem that NFTs have no value, there are some reasons why you may want to invest in them.
A growing market
While skeptics appeal to NFT’s uselessness and lack of value, the market is growing. More and more people are creating NFTs—and more people believe in the market, supporting it with their investments. As there are still many NFTs with low prices, it may become an opportunity to buy low and sell high over time. Also, you have a chance to be among the first people who learn how to invest in NFT technology.
Access to an elite community
Although numerous cheap NFTs go unnoticed, some are sold for thousands of dollars. Investors who buy such tokens become a part of a so-called elite group. Many famous athletes, artists, and singers create their own collections. Also, many buy popular NFTs, including those of Bored Ape Yacht Club or CryptoPunks collections.
An easy way to become a collector
To become a collector, you don’t need to visit auctions and spend thousands of dollars. All you need to do is to open an NFT marketplace and buy a token. The uniqueness can be checked immediately, as the information is recorded in the blockchain and can’t be changed.
How to invest in NFT art: step by step
To buy an NFT, you need to go through the following steps:
- Open a wallet. NFT marketplaces have different requirements. Therefore, before creating a wallet, check which one can be used on the marketplace with your desired NFT.
- Fund your wallet. To buy an NFT, you need cryptocurrency. Check how much the desired NFT costs and in what cryptocurrency it’s sold.
- Connect your wallet to the marketplace. After you create the wallet, you can connect it to the marketplace, where you will purchase an NFT.
- Click on the desired NFT to purchase. Some NFTs have a fixed price, while others can be sold on auctions. If your bid price is the highest, you will buy the NFT. When purchasing an NFT, you will have to pay a commission.
After the transfer is completed, you become the NFT owner, which is recorded in the blockchain and can’t be changed.
How to invest in NFT without buying an NFT
Another option to invest in NFTs is to invest in companies operating in or exploring the industry. These can be firms that have created their own NFT collections, NFT marketplaces, entertainment companies, and those developing NFT technologies. They can do it through stocks of companies that develop those technologies.
How to invest in NFT companies?
It’s enough to buy their stocks. However, when choosing firms for investments, you must remember that the stock market is highly volatile. Companies operating in the NFT industry imply additional risks as the NFT industry is young.
To choose the right stocks, you need to research a company’s financial stability, including its market share, its primary industry, and recent financial reports.
Should you invest in NFTs?
The NFT market is big enough to be sure it won’t disappear. However, your challenge is to choose NFTs that will rise in price. Invest in NFTs but only after a comprehensive analysis or you can learn better how to invest in NFT stocks.