If you’re interested in investing in NFTs, there are a few things you should know.
The jury’s still out on whether non-fungible tokens are a bubble or not. But buying the right NFTs at the right time can pay off big later on. For example, some NFT artworks originally sold for petty values have sold for thousands of dollars.
What are NFTs?
NFTs stand for non-fungible tokens. They can be digital items bought and sold online, such as art, music, virtual land, etc. They are created by tokenizing digital items on the blockchain, giving the digital collectible proof of ownership. The most common and recognized blockchain platforms for minting NFTs are Ethereum, Solana, and Polkadot.
When you buy an NFT on a marketplace like OpenSea, the ownership right is essentially transferred to you. The NFT, therefore, acts as a certificate of ownership of the item.
NFTs can be stand-alone or part of a collection, allowing their owners to feel like joining an exclusive online community.
How can I invest in NFTs?
High-priced NFTs like CryptoPunks can cost millions of dollars, but you don’t need to be a millionaire to invest in NFT. Just identify the NFT you want to invest, fund your wallet, and buy the digital collectible on the marketplace. You often need an Ethereum-compatible wallet containing Ether to buy an NFT.
Here’s how to invest in NFT
- Mint an NFT when it “drops.”
- Buy an NFT on a secondary marketplace and sell at a higher price
Minting refers to purchasing NFTs as soon as they are released before they are available on the secondary market. This is great because most NFT projects provide their collections at extremely low costs, or sometimes for free, allowing you to maximize your profit margin.
However, because of strong demand and limited availability, quality NFT projects are extremely difficult to come by. That’s why most NFT initiatives create whitelists, so early backers may be assured of minting access once the collection is live.
Join the project’s Discord group to learn about the project’s qualifying requirements as well as the date and hour the NFT collection will go live.
You may easily transfer the NFT to secondary marketplaces like OpenSea and sell it for a better price once you’ve minted it.
⭐️ Read more about NFT Minting
Buying on the secondary markets
Assume you’re running late for the show and won’t have time to mint. You can still purchase your preferred NFT on the secondary market. Top NFT marketplaces for buying digital collectibles include OpenSea, Robinhood, Crypto.com, Coinbase, Binance, Rarible, and many more.
Consider the case of OpenSea. Here’s what you should do once you’ve arrived at the website:
1. Select the NFT to buy
Explore the highest NFTs from the Trending tab or type within the name of the collection’s name if you have already got one in mind. Once you’re on the project’s page, Choose ‘Items,’ then select ‘Buy Now,’ and set Price: Low to High. This may show you all the NFTs that are available available.
Look for NFTs that you simply think will increase in value are currently undervalued. As an example, if the primary NFT you see after completing the step above is priced at 0.03 ETH and therefore the ones right at the moment are priced at 0.05 ETH, you’ll be able to tell that one in all them could also be undervalued. That’s your chance to shop for at 0.03 and potentially flip for the next price.
Select the precise NFT you’re reaching to flip and click on Properties. Here you’ll view the traits of your NFT and the way rare they’re. The rarer your NFT, the upper it’s value.
2. Connect your wallet
Next, connect your wallet to enable you to buy the NFT on the marketplace. You can create a free digital wallet via your phone or computer if you don’t already have one. You need a wallet like MetaMask, Coinbase Wallet, and Ledger to hold the NFT.
3. Fund your wallet
Your next step is to fund your wallet with ETH to purchase the NFT. Ether is the most popular cryptocurrency for an NFT purchase, but the specific NFT you want may only be available in another digital currency.
4. Buy the NFT
When you are ready, you can click the buy the NFT. If the NFT is available for auction, you may need to bid for it with the highest bidder purchasing the asset. Also, consider the “gas” fees (plus other transaction fees) that come with buying NFTs on NFT marketplaces.
5. Confirm that the NFT is in your wallet
Usually, It takes time for the transaction to get finalized before you can view the NFT in your digital wallet. Once the NFT has been sent to your wallet, you can list it for sale straight away or hold it to sell in the future.
How to sell (flip) your NFT
To sell your NFT, simply upload it to your marketplace of choice. Keep in mind that the marketplace must support the blockchain the NFT was built on. From there, you can choose to list it for sale at a set price or opt for an auction-style sale in which buyers place bids. If you are auctioning off the NFT, make sure you set the minimum acceptable price and the auction duration. In addition, you could add perks such as concert tickets or a special congratulatory message to sweeten the deal.
Here’s how to sell NFT on OpenSea:
- Visit your NFT and press Sell in the top right corner
- Set your selling price and currency, and view any potential fees associated with your sale. You can also choose to schedule your sale in advance.
- Once you’ve confirmed your sale details, click Complete listing
- 4. On the pop-up page, click Your digital wallet will send a prompt to you to sign the transaction on your end. Click Sign, and your authorization will be complete shortly after.
- Once the listing is confirmed, you’ll get a confirmation showing that your NFT is listed for sale.
Investing in NFTs: Is it worth it?
Investing in NFTs can be highly profitable, provided you invest in high-quality projects with enough liquidity.
But it is crucial to understand the risks of NFT investing, such as price fluctuations and volatility. If your NFT is priced in Ether and the value of Ether falls by 30%, then the value of your NFT could also decrease by 30% or more.
Furthermore, NFTs are only worth whatever someone is willing to pay for them. If you can’t resell an NFT you paid good money for, it will be essentially worthless. A high trading volume means that you’ll find it easy to get a buyer for your NFT.
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