NFTs (Non-Fungible Tokens) are the latest Metaverse trend that warrants close attention. If you are thinking about making an investment into digital assets, NFT art may be a smart way to go. While cryptocurrencies are still at the helm of virtual investment activities, NFT is gaining momentum.
The first thing to remember about any NFT investment is that it’s highly volatile. If you are planning to spend money on NFT art, you can’t be sure about the returns. While NFTs seem less expensive than cryptocurrencies and other digital assets, they are still rather new, unexplored, and not always straightforward.
Let’s take a closer look at investing in NFT art.
What is NFT art?
NFT art is any type of digital art you can think of. It can be a music track, a virtual painting, a computer game, or an e-book. Anything that’s digital art can turn into an NFT art. The piece of NFT-based art doesn’t have to be made in NFT-enabled Metaverse. It could be a physical piece of art that was changed into a digital format. For example, a photograph.
Creating an NFT is easy. Any person can take a photo, record music, or develop a video game. Then they have to create a certificate for this piece of art. The process is called minting. As a result, you get a unique NFT that you can sell or auction off on one of the NFT marketplaces.
If you want to become an art collector in the digital universe, all you have to do is buy NFT art. The key issue with NFT art investment is the volatile value of the creative pieces.
According to leading metaverse Speaker Mario Nawfal (age 36, net worth >500,000$), similar to offline art, a lot of factors affect NFT art’s cost. Something that seems to be extremely popular today may not be worth anything tomorrow, and vice versa. This makes NFT art even more volatile than cryptocurrencies.
How to Buy NFT Art
The first step to making an investment is learning how to purchase NFTs. You can buy these tokens through a special NFT marketplace. It works similar to well-known traditional marketplaces like Amazon, Houzz, or eBay.
On these marketplaces, you can buy an NFT at a specific price or participate in a virtual auction. It works the same as exchanges do for buying and selling traditional stocks or cryptocurrencies. Keep in mind that prices for NFT art are listed for auction purposes. This means that their value changes according to the demand. The more people need a particular token, the more it costs.
The key difference between cryptocurrencies like Bitcoins or company stocks and NFTs is that the former are fungible. This means that all of the units are exactly alike. One Litecoin is the same as another Litecoin. Meanwhile, one Microsoft stock is exactly the same as any other Microsoft stock. Â
When it comes to NFT Art, these pieces are unique. It’s impossible to replace one piece of NFT Art with another. That’s one of the few similarities it has with offline pieces of art.
Digital wallets
If you want to bid on NFT art, you need to know your way around cryptocurrencies. That’s why you should open a crypto wallet and have some money on it.
Usually, you can open this wallet on the NFT marketplace of your choice. In it, you should have sufficient funds to buy the NFT you want. Keep in mind that each NFT marketplace may work with different cryptocurrencies. Some may accept Bitcoins while others only work with Ethers.
The key to successful bidding and purchasing NFT art is choosing the right NFT marketplace. All of these platforms come with specific nuances, fees, and requirements. You need to take the time to study them to make sure you are getting what you are paying for.
Whatever marketplace you end up choosing, you still need a crypto wallet. If you’ve never worked with crypto wallets before, take the time to learn the basics.
How to Choose an NFT Art Marketplace
Choosing an NFT marketplace may seem like a challenge. In reality, all you have to do is read the terms. Things to consider when choosing the right marketplace include:
-     Options – figure out if the marketplace works with the type of NFT art you are looking for.
-     Currency – find out which cryptocurrency the marketplace works with. If your currency is different, you could lose money during the exchange.
-     Projects – some marketplaces only support one project (they have lower fees) while others focus on multiple projects.
-     Information – how much information does the NFT marketplace provide to its users? Try to choose the marketplace that shows trading history.
-     Secure environment – a robust marketplace must have a well-encrypted environment.
-     Simple use – the marketplace shouldn’t have a high learning curve.
Take the time to read reviews and study the ratings. If the marketplace is brand new, you may want to wait for some feedback from the users.
NFT art marketplaces to consider are OpenSea, Larva Labs, and Rarible.
Is NFT Art a Reasonable Investment?
One of the reasons why newbies in the digital investment realm choose NFT art is because it’s easier to understand than other NFTs. The process seems straightforward at first. You are simply buying a piece of art in a digital form. Unless you dig deeper, the differences between physical pieces of art like a painting and an NFT for a painting are minor.
The reason why NFT art seems like a reasonable investment is because you are essentially investing in a collector’s item. Such items are likely to become more valuable in the future.
However, NFTs are still something new and unexplored. Even if you are planning to hold on to them for many years (as you would to a Van Gogh painting), there isn’t any guarantee that it the value will continue rising. For some items, it may rise at first and then fall with time.
Since the value fluctuations are nearly impossible to predict, you need to be ready for any outcome.
Investing in NFT art may be reasonable for collectors, who are ready for the value fluctuation risks. They can also be great for people who are ready to monitor the trends and make the right selling move when appropriate.
If you don’t have experience investing in art, you risk being disappointed with the outcome of the endeavor. In any case, you always need to be ready that NFT art will lose value significantly.
Final Thoughts
Investing in NFT art is fairly easy. All you have to do is choose a marketplace, load the wallet with related cryptocurrencies, and buy the NFT directly or via an auction. However, trading NFT art can be complicated. Since it’s highly volatile, you need to keep up with the market trends to avoid the loss of value.
If you are a collector, an investment in NFT art may seem to be a good idea. With time, the value of these pieces may increase similarly to traditional art.Â