Guide to NFT Investing

Guide to
NFT Investing

NFTs are the latest blockchain innovation that has exploded out of the Ether, creating quite a frenzy in the virtual space. According to CB Insights, by mid-December 2021, NFT funding skyrocketed to $2.1bn for the year, witnessing a staggering increase of 6523% from 2020's total funding.

From art and music to toilet paper and tacos, NFT assets sell for millions of dollars. Is NFT here to stay, or is it a bubble poised to pop? While speculations are still on, many investors are ushering into this new arena to gain some profit.

If you want to expand your investment portfolio and take on a high-risk investment, NFTs might be a good option for you. This guide will cover the basics of NFT – what NFT actually means, how to buy NFTs, and more.

Read on.

What Does NFT Stand For?

NFT stands for non-fungible token. It is simply defined as a non-fungible and unique digital asset that reflects real-world value – from art to music to entire virtual worlds – in the same way, crypto coins do.

NFTs are one of a kind; they simply cannot be exchanged, one for another, and expect it to keep its value. This is essentially what gives NFTs value: their uniqueness and one-of-a-kind authenticity. And people are willing to pay huge sums of money for possessing this one-of-a-kind asset with a digital signature of authenticity.

An NFT represents both tangible and intangible items, including:

Art

Music

GIFs

Collectibles

Tweets

Designer sneakers

Virtual avatars & video game skins

Videos & sports highlights

A Bit Into the
History of NFTs

NFTs have been around since 2014, but in 2017, NFTs gained prominence with a game called CryptoKitties. This game allowed players to buy and breed limited edition virtual cats. The game developers then adopted NFTs to allow gamers to win in-game virtual collectibles such as digital swords, shields, and other items.

Tokenization of game assets became a real game-changer, enabling players to transfer tokens between different games or to another player via NFT specialized blockchain marketplaces.

How do NFTs Work?

1

To understand how NFTs work, you first need to know how blockchain technology works. Blockchain is a public ledger, distributed or decentralized, which records transactions of different kinds. Both cryptocurrencies and NFTs use blockchain technology. In the case of cryptocurrency, the transactions recorded are financial. However, for NFTs, the transactions or data records the location, nature, and ownership of tangible and intangible assets. When an NFT is purchased, the transaction is registered in a network of computers. The owner of the NFT is given an access code. Unlike cryptocurrencies like Bitcoin, an NFT has a unique digital signature, and therefore it cannot be exchanged for another.

2

However, even if you are the owner of an NFT, people can still view or make copies of it because it's available on the internet. However, an NFT buyer has exclusive ownership of the original asset. Additionally, the creator of the digital asset retains their patent, copyright, or any other IP right when selling the right for personal ownership.

3

Most NFTs are linked to Ether - the cryptocurrency of Ethereum - but other blockchains have also introduced their own NFTs. You can buy NFTs with cryptocurrency or even standard currency from NFT marketplaces, NFT stores, or individual creator sites where some of their digital assets are available as NFTs. But to store NFTs, you'll need a digital wallet.

4

The built-in data protection of blockchain technology makes the ownership and transaction records of NFTs much safer than physical ownership. You make money with NFT by buying and selling it for a profit.

Make expensive NFT investments more affordable.
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How is an NFT Different From
a Cryptocurrency?

The fundamental difference between NFT and cryptocurrency is that NFT is non-fungible, non-interchangeable, non-divisible, and unique. In comparison, cryptocurrency is fungible, interchangeable, divisible, and uniform. Some of the differences are outlined in the below table:

Non-fungible tokens.

They cannot be exchanged with the same type of
tokens.

Fungible tokens.

They can be exchanged with an equivalent type
of tokens.

Non-divisible.

If you wish to buy an NFT, you have to buy a
complete token.

Divisible.

Cryptocurrency is available in small units. For
example: You don't have to buy one bitcoin. You
can buy bitcoin in small units like 0.25.

Unique.

Each token is different and doesn't have the same
value.

Uniform.

Each token of the same type has the same value.

ERC-721.

ERC-721 standard is used for creating NFTs

ERC-20.

ERC-20 standard is used for cryptocurrency

Is NFT Art a
Good Investment?

Blockchain technology and Non-fungible tokens (NFTs) offer a unique opportunity for you to monetize your digital investment. Historically, investing in art is something that is reserved for the wealthy. However, with the emerging NFT art market, more and more auction houses, companies, celebrities, artists, investors, and collectors are jumping on the NFT art investment bandwagon and are seeing their investments getting considerable returns.

NFT art mimics the world of art stores, galleries, and museums without the intervention of risky and expensive mediators. NFTs can be compared to physical collector's items, but instead of the painting being on the wall, it is in the form of a digital file with the monetary/financial value attached to it.

How a relatively small art investment has the potential for huge returns: An Example

Trevor Jones, a traditional artist, started investing in NFT art in 2019. He bought his first NFT piece, EthGirl, a digital painting, an animated collage of the Ethereum logo, revealing a face. This particular art was initially sold for 70 Ether (ETH), equivalent to $10,000 at the time. In 2021, two years later, this digital artwork was valued at over $8 million.

Experts believe that NFTs can change the world of art as much as Bitcoin and Ethereum are set to change the financial system.

So if you're asking if NFT art is a good investment, then you need to realize that NFT investing is not a science. The profit isn't in NFT investing but in the ability to see the appeal and value of a particular artwork and predict its potential to increase value.

However, like all investments, as an investor, you need to research the NFT market well before investing.

Secure and easy way to invest in NFTs.

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What do You Need to
Consider Before Buying an NFT?

Converting your digital assets into profitable investments isn't easy; there are plenty of small details you need to look at before deciding to buy NFTs. In this section, we'll focus on things to consider to determine the worthiness of NFT projects and their potential to generate profit:

1 Check the NFT Project's Community on Social Media

1 Check the NFT Project's
Community on Social Media

In order to determine if the community is legit, it's essential to check the project's social media channels. If the project has many fans, your chances of reselling NFTs are higher. NFT projects like cryptocurrency projects have Discord channels and Twitter accounts. They use these channels to post news related to their projects.

What to check on social media?

Find projects with medium-sized Twitter communities (around 10k followers) and check the engagement level.
Ensure that your chosen project does not use bot accounts to fake an online community. You will be able to spot legit accounts more easily as you keep checking more of their projects.
Make sure the accounts that interact with the projects belong to real people.
Check the number of supporters on the project's Discord channel, as well as the engagement level.
Ideally, the number of followers of the project's social channels should change rapidly as the project approaches its launch date. Keep a close watch on the social channels of the projects closer to their launch. If the number goes up, it means there's a hype around that project, and it is, therefore, worth your attention.

2 Check the Project's Founders and Website

With the increasing number of scams, you wouldn't want to take the risk of investing in a dubious NFT project. A legit NFT project should have a website containing all the important information such as their founding team members, whitepaper, and other details. If the project chooses not to display information or the identity of its founding members, it's a red flag; don't invest in the project.

You can find more information about the project and its founding members on the project's social media channels, where they:

Post updates and news about the project
Share links to their other profiles and details about their work

Additionally, consider investing in a project that the developers have the expertise to build. For example, if the project is about building a game, figure out whether the founders have the relevant experience or expertise in building video games.

3 Do You Find NFT Artwork Interesting?

Most NFTs are digital tokens for art. Before you invest in NFT art:

Ask yourself if you really like the art. In that case, even if your NFT investment isn't profitable as predicted, you will at least end up owning an artwork that you like.
Figure out if NFT art is authentic and not a copy of another project.

4 How is the NFT Different From other NFTs?

Most NFTs are part of a metaverse, blockchain game, or other digital projects. They can be listed as digital assets within the game or have a different utility. The project's website or the whitepaper can give you information on the utility of the projects.

For example, if the NFT can be used within a blockchain game, knowing what kind of people play the game and how large the game community is can help. If celebrities endorse the games, it's always a good sign.

How is the NFT Different From other NFTs?

How to Buy NFTs

If you're keen to indulge in buying NFTs, follow these steps:

1

Open an NFT Marketplace Account

The NFT marketplace allows you to browse their collections without an account. But if you are planning to buy and sell NFTs, you need to have an NFT marketplace account.

2

Create a Digital Wallet

A digital wallet is like a typical wallet where you put your money to buy things you want. But instead of being physical, it is digital. You have to fund your digital wallet with cryptocurrency in order to buy NFTs.

While creating a digital wallet, consider these two things:

NFTs are relatively new in the market, and there is not much historical data on their performance. This means it could be a risky investment.

NFTs are expensive. You might not be able to afford them.

This is where Mesha comes in.

Mesha is an online investing platform that allows you to co-invest in NFTs and your friends/family. Once you create a team on Mesha, all the team members are given access to a digital wallet to make contributions for buying NFTs. Through this feature of co-investing, Mesha helps you:

Mitigate the risk associated with NFTs.

Make NFTs more affordable.

3

Fund Your Digital Wallet

Once the digital wallet is created, fund your account to buy cryptocurrency in order to buy NFTs.

The best way to make NFTs affordable.
Invest as a team and divide the cost.

Also join our discord server here

Reasons Why You Should
Use Mesha to Buy NFTs

The top reasons why Mesha is the easiest way to invest in NFTs:

Creating teams is easy.

Create a team on Mesha within just a few seconds.

Buying NFTs is affordable.

Divide the total price of the NFT among your team members.

Funding the wallet is easy.

Use your debit or credit card to fund your digital wallet.

Best NFTs Marketplaces:
Where to Buy NFTs?

Before choosing an NFT marketplace, you need to first decide the kind of digital asset you want to buy and sell. Narrowing down your interest is a good place to start. Next, you need to consider the type of tokens supported in a marketplace. While some marketplaces support a variety of tokens, others may be closed, utilizing only a specific proprietary token.

When opening an NFT marketplace account, you need to:

1

Check the security of the marketplace and find out if it had any issues in the past.

2

Fund your digital wallet with the right cryptocurrency required to buy the NFTs.

3

Link your wallet to the NFT marketplace once you've opened the account.

Now that you are aware of what things to look for in a perfect NFT marketplace, our list of the best marketplaces for buying NFTs will help you choose your best NFTs marketplace:

OpenSea

This is the largest NFT marketplace for discovering, collecting, and selling extraordinary NFTs. Once you create a team with Mesha, you can buy NFTs from OpenSea without even visiting OpenSea. This is how you and your team can buy NFTs from OpenSea through Mesha:

Create a team on Mesha within 10 seconds.
Fetch details of the NFT you are interested in buying.
Propose the team to buy the NFT.
When the majority of the team members accept the proposal, each member
contributes money to buy the NFT from OpenSea.

Continuing with the list of the best NFT marketplaces:

We make it easier and affordable for you to
invest in your favorite NFTs.

Also join our discord server here

Best NFT Projects:
Profitable NFT Investments

So, if you're looking to invest a significant chunk of your money on an NFT, it's important
that you check a few things before making a purchase:

The Unique Properties of the NFT

Check the rarity of the properties of your chosen NFT. The NFTs with the lowest percentage of commonness is the best NFTs to buy.

Performance of the Seller's Other NFTS

Check the seller's account for their previous sales to get an idea of what prices their NFTs are selling for.

Transaction Fees

Before you make any purchase, make sure you are aware of the fees the chosen NFT platform charges you for the transaction.

Seller Verification

Check for the blue tick and follower count on NFT platforms' social media channels such as Instagram or Twitter.

NFT Liquidity and Market Volume

If you are investing in an NFT for a profit, the fact that NFT cannot be liquidated into traditional currency can be a problem. However, you can consider fractionalizing your NFTs to increase their liquidity rate. Also, consider the fact that the NFT market is still new, and there is a lot of uncertainty around it. If you want to buy NFT, think of it as a long-term investment rather than something you can buy and sell in a few months.

Now that you know what to look for before buying NFTs check our list of
the best NFT projects you can invest in:

The best NFT investment ecosystem
you can count on.

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A non-fungible token (NFT) is an intriguing digital asset representing a one-of-a-kind creation. Investing in NFTs is largely a personal decision; if you have the money, it's worth considering making the investment, especially if a piece holds meaning for you. However, if you won't make the most out of your NFT investments, you need to understand how to buy NFTs and what factors to look into when buying NFTs, which hopefully, this guide covers for you.

That said, you need to keep in mind that an NFT's value is entirely based on what someone else is willing to pay for it. Some NFTs can turn out to be profitable, while some can provide you less value. Since there is not much history, it's difficult to judge their performance, and hence they can prove to be risky investments. That said, approach NFTs just like you would any investment – do your research and understand your risks. If you decide to take the plunge, Mesha can make it a lot easier and more affordable for you. Download the app and see it for yourself.

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