UNITED STATES—If 2021 was the year that NFTs made the breakthrough into the mainstream then 2022 could be the year that they boom to stratospheric levels. The non-fungible token is the hot topic for investments right now, with more people looking to get their hands on the latest digital assets.
While these digital assets are tokens held and authenticated using the same blockchain technology like Bitcoin and other cryptocurrencies, they cannot be interchanged or traded for another. Therefore, as these digital items have their own individual value, they are non-fungible, which in many cases makes them an excellent investment.
Recently, sportswear giants Adidas released their first NFTs and brought in over $23m, as 30,000 digital assets sold out in minutes. They’re proving to be very popular closer to home; according to Spectrum News, Los Angeles artist Jesus Martinez sold his first piece of NFT art for $ 38,000, but it’s now worth more than double that amount. It highlights that no matter if it’s an NFT associated with big business or the smaller independent creators, they are flying out of the doors of digital marketplaces. But before you consider getting involved, you must take some time and assess your options.
Understanding the market
While it might seem flippant or a little evident to state you need to understand the cryptocurrency market, an essential aspect of investing in NFTs is knowing that it’s different from other investment markets that are more familiar. The marketplace of the NFT and their value changes; unlike stocks, bonds, or even cryptocurrencies, their potential isn’t influenced by shareholders or company growth. The community drives the price of non-fungible tokens, therefore controlling their value over time.
Research available NFTs
There’s been no better indication of the community driving the NFT market up than in the world of sport. When talk of Lionel Messi, one of the world’s best soccer players, was to be traded to the French football club, Paris St Germain, the price of the Socios fan tokens branded to the club soared in value by 130% in a matter of hours. Similarly, the renowned DJ Steve Aoki, leveraged his fanbase when he sold his inaugural collection of NFTs, with one of the assets selling for over $888,888 as his total collection raised over $4m.
Selecting a marketplace to purchase from
Once you’ve researched the NFT you want to invest in, you need to find where it is sold and connect your crypto wallet to it. Each marketplace has its requirements and can hold flat-rate sales, auctions, or both, and have different fees to cover the purchasing and transferring process, converting one crypto into another and gas fees. Therefore, bear in mind that the listing price of your NFT may not include the fees, so you will have to check the final costs.
Like any investment, research will be critical to any potential gains if you are to push forward with investment into NFTs. However, it’s also prudent to remember that while the non-fungible tokens are linked to blockchain technology which has become such a growth area over the past decade, it doesn’t guarantee success from your investment.