Understanding NFTs | How and Why to Invest

Non-Fungible tokens

Everyone knows about NFTs, but probably not everyone has the most useful information in order to buy, sell or create them.

So, here are the main points to pay attention to in case you are interested in non-fungible tokens. 

What is NFT in the simplest words

Non-fungible tokens, also known as NFTs, are digital assets you can only buy or sell with cryptocurrencies. They represent objects like art, music, videos, GIFs, in-game items, real-estate and even designer sneakers. Similarly, NFTs are only online, and despite anything online that can be copied, each NFT is the original version of the digital item. 

Moreover, each NFT is as unique as a work of art and therefore the spendings on them has increased since 2017. 

Completed NFT sales in million U.S. dollars
From Dec 2017 to Jan 2022

As a result, more and more artists, authors and even brands have started to create their own collections of NFTs. 

NFTs and Cryptocurrencies

NFTs can be bought and sold using blockchain technologies such as cryptocurrencies, but that’s all what makes NFT and cryptocurrency related. 

Above all, you have to know that NFTs are non-fungible unlike bitcoin or physical money that are fungible. Bitcoin, Ethereum or any other cryptocurrency can be traded or exchanged for another unlike non-fungible tokens which can’t be traded or exchanged because of their digital signature. 

NFTs as a New Investment Option

As NFTs work on blockchain technologies they provide artists and other creators an opportunity to monetize their wares. For instance, they can sell their art by creating non-fungible tokens. In addition, they will receive a percentage each time when their art is sold to another owner. It should be noted that this is an attractive feature as artists generally do not receive future proceeds after their art is first sold.

In the same way, brands also use NFTs to make money. For instance, the Charmin brand has created non-fungible toilet paper and it has been sold out in minutes. 

In short, non-fungible tokens become a great platform of investing for crypto and digital enthusiasts, artists, famous brands etc. So we can listed some strategies of NFT investment:

  • Digital Art Investment
  • Real Estate Investment
  • Games Investment
  • Marketplace Investment

Where to find NFTs

While interest in NFTs grows, there are various marketplaces to sell and buy them. So we have listed just some of them to take a quick look. 

OpenSea

OpenSea is founded in 2017 and now it’s the largest NFT marketplace. Currently it has all kinds of available digital assets, free to sign up and supports artists and creators. In OpenSea buyers can buy NFTs directly from sellers or bid on NFTs in auctions by connecting their wallets Ethereum, USD Coin, or Dai and over 150 other crypto tokens.   

Similarly, it has various categories: Digital art, music, games, domain names, virtual worlds, sports, collectibles.

NBA Top Shot

NBA Top Shot allows fans to collect and trade digital “moments” from the basketball matches. In this marketplace collectible moments such as video clips and play highlights can be purchased from the world’s premier basketball leagues.

In addition, NBA Top Shot has only one category: Sports collectibles.

Rarible

Similar to OpenSea, Rarible is another big marketplace of NFTs. In this marketplace you can create, buy or sell all kinds of art, videos, collectibles, and music. Most importantly,  you’ll need to use the marketplace’s own token Rarible to buy and sell on the marketplace. 

Steps and Risks while investing in NFTs

Have you already decided to buy NFTs. So, here are the simplest steps to do it: 

  • Open an NFT Marketplace account
  • Create a digital wallet
  • Fund your account
  • Buy NFTs

However, it should be noted that there are risks NFT investment involves:

  • Investing your life savings
  • Losing some or all your money
  • Treating many NFTs as more than collectibles

NFTs and Big Companies

  • Nike has created limited edition pair shoes which are usable for characters in video games like Fortnite.
  • Taco Bell has created a series of NFT gifs on the Rarible and sold them in 30 minutes. 
  • Coca-Cola has created a collection of digital collectables in the International Friendship Day to re-imagine some of their iconic assets for the metaverse.
  • Ubisoft has created an Ethereum-based Rabbids game that lets players buy characters from this popular game. 

There is no doubt non-fungible tokens which use blockchain technology just like cryptocurrencies, are unique and this is why they can be bought in million dollars for instance. Currently, NFT is in the top of Digital Asset Investment and not only artists or authors but also big companies are more likely to create their own NFT collections for different purposes.

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