5 Factors to Consider When Making NFT Investment Decisions

NFT Investment Decisions

Wouldn’t life be easier if we could apply a foolproof investment approach? Unfortunately, that’s not how the vague-ridden investment world works. The Hungarian-born American Investor George Soros echoes the same: Making an investment decision is like formulating a scientific hypothesis and submitting it to a practical test.

Fortunately, we have different forms of investment options available in this digital world. This article will deal with one such investment option – the non-fungible tokens (NFTs) or NFT Investment Decisions.

Non-fungible Token, Ain’t it?

A non-fungible token is a blockchain-linked digital asset that has been relevant since the mid-2010s. Ironically, the past year (2021) saw the investment side of it, enabling people to plunge money. Also, the lucrative side of it saw Collins Dictionary claiming the term ‘NFT’ as the word of the year 2021.

What makes it so value-driven – you may wonder? Scarcity and limited-edition is the ultimate reason behind it. Each token has immutable characteristics that make it a unique, one-of-a-kind identifier. NFTs are safe and irreversible because of a decentralized tamper-proof record system. Smart contracts serve as the foundation for NFTs. It is capable of keeping track of all transactions.

Investors can accommodate their NFTs in wallets, just like cryptocurrencies. The wallet has a unique link to each token that grants access to the content. When it comes to trading, it’s possible to trade NFTs from one marketplace to another as long as the platform is multi-chain compatible. NFTs can be used to represent a physical or a digital asset. It can range from intellectual property to a title to a valuable investment. Gaming, retail, real estate, sports, and other industries have all seen an increase in NFTs.

Is NFT an Investment-friendly Option?

Have you heard of the popular investment axiom – Buy low and sell high? The same applies to the NFT space (as well). NFTs are not like stocks or bonds, where you know the investment’s intrinsic value. Remember – some NFTs you can buy – some you can flip – others you can hold. The NFT project (you invest) decides what you can do! Their market value is determined by how much the cryptocurrency community is willing to pay for them.

Factors to Consider While Making Any NFT investments

NFT investment wasn’t one-dimensional – it never will be! There are a number of NFT investment options available – buy & sell NFTs, custom NFT development, NFT marketplace development, NFT gaming platform development, and much more. While different NFT ecosystems come with varying considerations, the fundamentals of investing are the same.

Here is a rundown of the general things to consider before making any NFT-related investment decisions:

NFT

Investments always come with risks. The same applies to the NFT investment. But then, bypassing those risks requires a great degree of exposure. Investors (like You) would need a level of exposure to cryptocurrencies first, which can serve as a subset to the NFTs.

Learn about the elements that constitute the NFT market and figure out the forces that drive it. Doing so would help you perceive every intricacy of the NFT space or blockchain (in general).

  • Risk Tolerance

It is critical first to understand one’s current financial situation, followed by understanding one’s risk tolerance. Whether your investment decisions are tied to buying or selling, you must first define your goals. That is, what are your long and short-term objectives? Are they solely concerned with ensuring rapid money growth while ignoring risk aversion? Or are you worried about preserving your assets and providing that they do not depreciate?

  • Diversify

Diversifying bestows you with an opportunity to create an investment balance. If you involve only in buying and selling NFTs, you may get value one time not the other time. To overcome that ‘uncertainty’ level, diversifying your NFT Investment portfolio might help you (in the long run).

Remember the famous saying – don’t put all your eggs in one basket? If you buy NFTs one time, then you can build an NFT minting platform next time. As there is a huge demand for minting operations, it shall be a good option.

  • Beware of Rug Pulls

The crypto space encountered a lot of rug pulls as a result of project owners absconding with investors’ money. As the NFT space is in its infancy, there aren’t many complaints (yet). However, there is no guarantee that rug pulls may not impact the token assets.

Exercise a great deal of care while choosing the project (to invest). In such a situation, the best thing to do is to ask questions and then verify the answers with an unbiased source before investing.

  • A Flair for Marketing

You don’t buy NFTs to embellish your investment portfolio, do you? Nine in every ten investors see non-fungible tokens as a utility-driven investment source. But then, you can’t drive value (to your NFT) just like that. Publicizing your token, enlisting in the marketplace, and driving long-term value is the process.

Of course, most of the traditional marketing strategies still hold significance to go along with the Discord marketing.

Conclusion

Now that you know the prerequisites of NFT investment decisions, it’s time to get started. Start with hiring well-equipped NFT development solutions or NFT consultants.

What if you need assistance in hiring an ideal tech partner? Let me know in the comments section.

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