While some NFTs might be worth buying out-of-pocket, many are distributed for free and are granted access to their platform through the purchase of a product. For example, you can check the NFT Profit to get an automated trading experience by accessing the best-in-class trading bots and strategies. These platforms and their related (and sometimes complementary) technology offer a wealth of use cases and applications.
They allow users to track the ownership and validity of digital assets, from digital collectables to unique experiences such as concerts or video games. And because NFTs exist in the blockchain world, they’re also resilient against hacking attempts that could risk your wealth through theft—let alone lose money on a fraudulent activity like phishing.
In the NFT space, purchasing high-value assets can be risky because market makers aren’t always available. Turnover of an asset is critical, as it indicates a higher likelihood of liquidity—if a lot of users are trading your asset every day, then there is also likely more potential for you to sell at any time. There are currently hundreds of NFTs available on the market; most have minimal liquidity and, therefore, may not be worth buying until their value increases.
How To Invest in NFTs in 6 Steps?
- Choose the NFT that you want to buy:
Buying NFTs is similar to picking stocks: you want to choose the ones you think will perform well in the future. Generally, more popular NFTs will have a higher value. Most of these assets are also traded on centralized exchanges because they require too much infrastructure to be run as their own (and decentralized) blockchains. But don’t forget that traders can always create their tradable assets using smart contracts, so it’s essential to do your research and check out the technology behind each product before making a choice.
- Know the Consensus Mechanism:
NFTs are issued either through Ethereum’s ERC20 standard or through an alternative consensus mechanism like Swarm or PoA (Proof of Authority). Ethereum is the original blockchain of NFTs, but you should consult with a developer or lawyer to ensure that the experience matches your needs, as Ethereum isn’t perfect and there are growing pains with getting adoption.
Instead, each NFT comes from a blockchain protocol that governs its overall structure. It will help you understand how this protocol works and read codes related to these networks if you need to participate in their communities.
- Create a compatible cryptocurrency wallet:
When buying NFTs, you’ll need a cryptocurrency wallet that can support these assets. Diverse wallets will have diverse features; some wallets will interact with ERC-20 tokens in an easier way than others and may have more updated security protocols. Once you’ve picked what cryptocurrency wallet you want to use, make sure you have enough cryptos deposited into it before making a purchase.
- Connect your wallet to an NFT marketplace:
Most NFT markets are centralized, and their interfaces can be very different from one another. Luckily, their websites are designed to make the process of trading your NFTs as easy as possible. After you’ve connected your wallet to a marketplace (through a permissions system), you’ll have a place to buy, sell and trade your NFTs in one central location. In addition, it should make it easier to secure your assets and find new tokens for investment.
- Verify your account:
Verification is crucial for centralized exchanges because they need to protect themselves from any potential fraud by verifying users’ identities; the law also requires them to retain their client’s personal information such as name and physical address.
- Buy an NFT:
Depending on the platform’s process, you may need to send funds from the exchange to a “wallet” where only you control the private key for security. These wallets will send your purchase to your account on the exchange, where you can see it and trade it at any time.
- Keep track of your investments:
Once you invest in an NFT, you must keep track of its value over time. NFTs have a promising future, and more uses are being created for them every day. If you’re intrigued by the technology, take a moment to research the opportunities that crypto-economics and platform development bring.
NFT trading could soon become one of the most popular investments in the world—but it will only reach its full potential when enough people begin to understand what they can do with it and start buying them, not when they happen to be worth $1 million or more like some specific titles may end up worth. So get started by purchasing your own NFTs and exploring their potential.