You are either completely off the grid or completely uninterested in blockchains, and all that has to do with them if you haven’t heard of NFT in the past year. If you have been remotely active online between 2018 and now, you would have encountered the term NFT one way or the other. If you are still uninterested in the NFT discussion, it would be interesting for you to know that between 2017 and now, over $174 million has been spent on NFT’s globally. This number is only on the rise.
I am sure that caught your attention. By the end of this, you will have a basic understanding of NFTs, how to evaluate them, and why you should.
We’re going to cover :
- What are NFT’s ?
- Where Can You Get Your Hands On NFTs?
- Why Should You Be Interested In Crypto Based NFT Projects?
- How Can You Properly Evaluate Crypto-Based NFTs?
What are NFTs?
If you have been seeing this term passed around, you obviously have questions about what NFTs are, where they come from, and why they have been gaining traction online.
An NFT is a digital representation of real-world objects, including art, music, in-game items, and video. Their purchases and sales often occur online, frequently with cryptocurrency. Usually, they are encoded with the same software used by most cryptos.
You might wonder, “how on earth did the idea of digitally owned assets come from?” Initially, the concept of NFTs was inspired by a “coloured coin” first released on the Bitcoin blockchain in 2012-2013. On the blockchain, coloured coins represent assets in the real world and provide proof of ownership for various assets, from precious metals to cars to real estate to stocks and bonds. It was designed to be used for assets such as digital collectables, coupons, real estate, company shares, and more, even though it wasn’t as sophisticated as Bitcoin’s blockchain. The technologies were described as new technologies and offered raw possibilities for future use.
Where Can You Get Your Hands On NFTs?
Obviously, you do not expect to see NFTs being peddled in a marketplace in Mumbai. So instead, various marketplaces are built to either buy and sell, mint, transfer or convert and store NFTs. Popular marketplaces include OpenSea.io, Foundation.app, SuperRare.com, and Rarible.com
Why Should You Be Interested In Crypto Based NFT Projects?
There are a couple of reasons why getting into the NFT space could quite well be one of the best decisions you could make.
The space is still growing. If Ananya had chosen to buy Apple stocks 10 years ago, she would have seen a profit of proportions beyond her expectations. But, like bitcoin some years back, there is still a whole lot of growth in the NFT market, and getting a piece of it now could mean a lot down the road.
The uniqueness of the pieces. When you purchase an NFT from the right marketplace, you receive exclusive access to that piece. Thus, you become an uncontested owner of that piece of NFT. It is pretty similar to owning an original piece of artwork. Other people may possess copies, but you would own the actual unique piece.
There is a level of guaranteed security. Since the basic building blocks of NFTs are like that of cryptocurrencies using the blockchain, there is a level of assured security.
By implementing smart contracts, which are coded commands in the blockchain, artists and creators can be guaranteed that their work will be paid for when used and resold. This means you will also be helping the original creator of the NFT remain profitable.
How Can You Properly Evaluate Crypto-Based NFTs?
Viraj has been reading through and is interested in buying himself some NFTs. But, would he jump into the market with the hopes of snagging himself a good deal without any preparations? Although getting a good deal on the NFT marketplace may not seem as challenging as picking a great long-term stock. You can make a much more informed purchase on the NFT marketplace if you follow these pointers.
Every NFT has a brand, something they stand for and marks them out different from other NFTs. Finding an NFT with excellent and consistent branding is the first step to getting a valuable and noteworthy NTF. For example, suppose you see an NFT collection with a history of active trading and an increase in the value of its individual NFTs. In that case, you may have found a legitimate NFT project. You do not simply look at an NFT in isolation. Its entire brand is essential.
Look out for the community behind an NFT before purchasing that NFT. Often, the community determines the stability of an NFT. An active and vibrant community would be a good sign of a sustainable NFT.
While creating an NFT is not an exclusive right, a creator’s personality and brand often affect the value of his NFT. For example, when NFT collections are endorsed or promoted by major brands, athletes, or celebrities, you can be sure you’re dealing with an actual NFT project. One reason creators and established brands are venturing into the NFT space is that the authorship of an NFT can always be traced. Besides knowing who created the NFT, you can see when it was minted, how many different people traded it, and how much was sold each time. This will prevent you from buying fake NFTs from scammers who download JPEGs and sell them as “originals” to unwitting buyers.
All NFTs are built on blockchain technology. Ethereum has always been the standard blockchain used for NFT’s. However, due to its increased gas fees, other blockchains are springing up. Some of these new blockchains might not stand the test of time, and NFTs built on them would eventually suffer. Therefore, conduct proper research on the blockchain housing your NFT before proceeding to buy.
NFTs are untapped potential for making the digital economy work for more people and represent an early demonstration of that potential. A lot of creators might benefit from creating and selling digital assets. However, they are a speculative investment if you plan to buy NFTs as a collector’s item. When it comes to determining which collectables are likely to increase in value, there’s no specific formula. Nevertheless, finding a new NFT trend early can pay off handsomely down the road. In recent years, some digital works of art that were initially sold for comparatively small amounts have sold for thousands of dollars. Investing in NFTs may be a good idea for anyone who appreciates art, music, etc., and who enjoys collecting.
If you can adequately evaluate NFT projects, the payoff is quite good in the long run.