How to Invest in NFT?
What Is NFT?
Almost everyone has heard about the concept of cryptocurrency. A reliable digital infrastructure is essential for its existence and maintenance of all transactions. Blockchain, a special decentralized technology for storing data (in this case, transaction data) in the form of a continuous chain of blocks, does an excellent job in this role. All information is stored and calculated in a decentralized way by many independent users. You cannot change the information in the blockchain, you can only create a new record, for example, about the sale (what, to whom and for how much) or the purchase of some article.
Blockchain is maintained not by any special services, but by numerous miners, who:
- store copies of the blockchain;
- serve transactions (calculate new blocks of the chain);
- verify transactions;
- receive fees for their work (mining coins).
However, the potential of the blockchain is much wider. If you can make a deal with crypto, then why not make a deal with something else?
The good news is non-fungible tokens. NFTs have been known to crypto enthusiasts since 2017. Then, for the first time, the ability of the Ethereum blockchain to store unique sequences of data in blocks was realized. It was these fragments that made the tokens unique.
NFT turned out to be a very convenient tool for fixing ownership, primarily for digital assets.
Of course, the first area of their application was the recording of multimedia files (digital art). The main objects were author's works (of course, digitized or created in the appropriate format) or copies of famous masterpieces. The works themselves are not written into blocks, the token stores only information about their ownership.
Thus, the properties of NFT combine both unique advantages and those inherent in any blockchain product:
The information storage unit is unique.
The impossibility of block forgery, theft or loss of information is guaranteed.
The uniqueness of the record can be used to confirm various rights – not only ownership of digital assets, but also ownership of real objects, as well as various certificates of authenticity.
Since the tokens themselves are digital assets, they allow you to perform all the typical operations – decentralized exchange, purchase and sale, including using cryptocurrencies.
Currently, the main NFT art objects are:
- digital photographs and images, copies of paintings by famous masters;
- collections of images and their individual components;
- elements of computer games – codes, plots, characters, their ammunition;
- audio albums and individual tracks, singles.
What Are NFT Investing Options?
Getting Free NFTs
How to invest in NFT? The growing demand for NFTs and market dynamics make it possible to consider these tokens as a form of income with high profitability. Moreover, there are several options for its implementation, and some do not even require significant initial investments.
It is not necessary to buy expensive NFTs for further resale. In order to popularize resources, free distributions of tokens are held. In some cases, users get them for free, in some cases, you have to pay a commission. Most often, you need to subscribe to a resource in social networks or register on the platform. Free distributions of cryptocurrencies (not necessarily NFTs) are called airdrops.
Naturally, no one guarantees that you will ever be able to sell such a token profitably. Moreover, no one can guarantee that the project that hosted the airdrop will ever work. After all, free distributions of tokens are often used even before the launch to attract community attention to crypto startups. The more interest a token or NFT project generates, the more likely it is to appreciate in value.
Token giveaways are a common occurrence in the crypto industry. Often, as a result of an airdrop, you can also become the owner of an NFT. Here, there are several options:
Distributions For Token Holders (NFT Holder Airdrop)
As a rule, they are held by new projects to attract the attention of the audience and investors. To become a participant in the distribution, there is a prerequisite – you need to have project tokens. Sometimes such drops bring huge profits.
NFT Platform Airdrop
Basically, new trading platforms delight early users with gifts. At the same time, the frequency of receiving free NFTs depends only on the time of registration. A user may not have any sales, placements, or purchases at all, but if the account appeared among the first, developers will remember about it in almost every promotion.
It would seem that with the current number of operating platforms, it is already difficult to count on gifts. However, statistics say that at least 2-3 new ones appear in the world every month. It remains only to follow the news and pick the most promising tokens.
Giveaways For Everyone
As a rule, they are carried out by novice NFT projects, which count on the growth of user interest. To get their tokens, you have to work a little. Most often, you need to subscribe to Twitter and (or) Discord, retweet one or more entries, or invite a new user.
Creating Your Own NFT
Today, this operation is available to almost everyone. It is only necessary to:
register on one of the many NFT platforms;
create an object;
transfer it to the blockchain;
put it on auction.
It should be noted that the procedure is not free you will need at least ERC-20 coins to pay for minting (creation and recording). Participation in auctions, where you can get a good price, also needs to be paid for. However, no one will give a guarantee that the token will be bought – there are already millions of objects on the sites that have not found demand. Success requires a fresh idea and high-quality execution. There is a lot of interest in the top collections.
Earnings Via Games
There are many games online where gamers can get NFT items. You can buy a character, his skin, weapons, plot of land – anything, including in-game currency.
In the same way, unique items can be sold, sometimes for a better price than they were purchased. If some unique gaming asset was bought at an early stage, then with the popularization of the game and the growth of participants, its value can increase significantly.
This type of earnings, although it is quite common (according to some estimates, more than 10 million participants have stable earnings on blockchain games), however, it remains specific and is not suitable for everyone.
Modern games often use NFTs for asset turnover. The profit received in the form of one or another cryptocurrency can be withdrawn to your crypto wallet. However, in order to make a profit, you must first transfer some assets from this crypto wallet to the creators of the game. Then you can play, develop, trade and, possibly, grow rich. Storing assets in NFT gives a certain guarantee that they will not be lost after a sudden downfall of the game server.
Indeed, NFT trading is the most massive and popular way to make money. Often participants receive several thousand percent of their own investments. However, the risks are also high. Therefore, those who are just starting work in this direction should focus on objects that have already changed owners (several times is better). True, in this case, you will have to invest in NFTs seriously – if the price of the first purchase may well lie within 0.05 ETH, then the cost of popular lots at auctions reaches hundreds of thousands, or even millions of dollars.
NFT staking is one of the types of passive income associated with NFT. This way of earning is suitable only for NFT owners. In order to receive passive income, the holder pledges the token by placing funds in staking pools or by buying/renting full nodes. The yield is low and can be up to 15-20% per annum. However, there are undoubted advantages here – the invested capital does not lie idle, waiting for the further resale of the object, but brings a stable income.
The so-called fractional NFTs have become a new trend for the NFT market, where the indivisibility of the token previously reigned. If there is no money for an expensive crypto asset, now you can buy a part of it.
It must be borne in mind that there may be risks with the purchase of NFTs associated with the widespread dishonesty of the authors of the collections. First you need to look at the collection, check if the NFTs in the collection are really unique or if the author tries to sell the same lot many times. It is also worth checking the name of the lots through the platform search to exclude the possibility of duplicates on the platform when the author of the collection copied other people's works and does not have copyright on them.
As far as the question, how to invest in NFT stocks is concerned, there are currently no active NFT stocks on the market. In other words, by investing in NFT stocks, the user buys shares of companies that are involved in other lines of business.
Other Ways to Make Money on NFTs
Oddly enough, you can get dividends not only by investing in NFTs. As in any popular field, training and ideas are in demand here. If you have gained some unique experience in the field of NFT, you can share it for money by conducting master classes and seminars.
What Risks Are Associated with Making Money on NFTs?
How to invest in NFT technology safely? As in any area where there is no clear legal regulation, risks are inevitable in the NFT business. Copyright infringement is just as common here as it is in real life. Putting an equal sign between an NFT (digital certificate) and a digital object is not worth it. Judicial practice in relation to NFT has also not been developed.
There are risks with cryptocurrencies, for which purchases and sales are carried out. Here, the main factors are possible restrictions on the part of the state, difficulties with the withdrawal, stability of the exchange rates.
Please note that large and high-profile deals are often not carried out by end users, but by companies trying to draw attention to the market. Their task is to attract a maximum of real funds: commissions for transactions, purchases of tokens, etc. At the same time, no one can guarantee that the NFT investing hype will not end as suddenly as it arose. NFTs remain a risky asset, albeit a very promising one.