NFTs have grown popular over the past year. This token represents real-life art, music videos, and game purchases.
The trading volume of NFT hit $10.67 billion in the third quarter of 2021, an increase of over 700 percent from the previous year.
Though NFT represents several items, its games are the most popular and are responsible for its increasing trading volume.
Though these games are in their infancy, they are already creating excitement, showing signs of generating more revenue in the future.
As a result, it is normal for a person to consider investing in it. If you’re new to the platform, you must know how to invest in NFT games before diving into it.
This is due to fraudulent activities, and you would not want to fall prey to them. Thankfully, I have written all you should know about how to invest in NFT.
Keep reading to get more information.
What you should know about NFT?
NFT is an abbreviation for non-fungible tokens. As I mentioned earlier, they are digital representations of real-world commodities such as artwork, music, films, and in-game items.
Each token is unique, making them fungible. In other words, it is impossible to exchange an NFT for another NFT that’s precisely the same.
Collectors of all kinds have flocked the platform. By utilizing blockchain technology, they can handle transactions and encode the identity of the NFT’s owner.
The NFT tokens convert a physical certificate of ownership into a digital representation that is safe and secure.
Even though most well-known NFTs are digital items, some NFTs show ownership of physical assets.
There are several NFT marketplaces where you can trade these digital items. Most NFT marketplaces employ the cryptocurrency Ethereum (ETH-USD).
Still, they can use other cryptos like Solana (SOL-USD), Polkadot (DOT-USD), and Polygon (MATIC-USD).
Steps on How to Invest in NFT games
Below are the major steps you should take when investing in NFT.
1. Do Research
Before venturing into any business or exchange, you must have a good understanding of its operations. This knowledge would help you determine the best strategies to use and also help you decide if you should go into it at all. It would be best if you also did the same before investing in NFT.
When researching upcoming NFTs, ensure you note the date of the sale, the cryptocurrency requirements, and the number of NFTs that will be available for purchase.
This allows you to understand better the limited availability of the NFT you’ve chosen. You should choose an NFT that you believe has the potential to increase in value in the future.
You should look into two things when it comes to the NFT: who is behind it and whether it is on-chain or off-chain.
It is important to note that off-chain relies on central servers, which means that if one of them goes down, you lose the property.
Discovering NFT is as simple as extracting information from the internet. You can search on Google or Twitter to get more information on any NFT.
If you want to learn more about an NFT project or get information about an NFT, you should join NFT social media platforms like Telegram.
2. Determine whether you want to purchase cryptocurrencies through a broker or an exchange
You need cryptocurrencies to purchase an NFT. NFTs are bought with Ethereum, although there are a few exceptions.
To acquire Ethereum or other cryptocurrencies, you’ll need a cryptocurrency brokerage or exchange. Good examples include Gemini, Binance.US, Kraken, Coinbase, etc.
A cryptocurrency brokerage is a corporation or an individual who serves as a middleman for customers.
They assist you in the acquisition and sale of digital currencies. On the other hand, an exchange is a web-based marketplace where buyers and sellers trade directly following current market circumstances.
When purchasing cryptocurrencies, service fees are a vital issue to consider before investing. Every brokerage and exchange platform has an amount they charge for the transaction, and these fees increase with the amount you are investing.
Fees might be either a fixed cost per trade or a percentage of an account’s total trading volume for 30 days.
Therefore, ensure that you analyze the prices of all transactions you intend to perform, and this will help you get a sense of how much you’ll be spending.
3. Store your cryptocurrencies in a safe wallet
Store the NFT you purchase in a crypto wallet on the same blockchain, another blockchain, or decentralized storage.
Crypto storage wallets for NFTs include Trust Wallet, Cybavo, MetaMask, and Alpha Wallet. With these wallets, you may keep both your cryptocurrencies and any NFTs that you purchase on the open market.
4. Select a marketplace to buy NFT
After you have acquired your digital currency, you’ll have to search for a trustworthy marketplace to buy NFTs. The NFT is available for purchase and exchange on the open market.
Once you have settled for the best place to purchase your NFT, you’ll need to register and connect your crypto wallet.
Note, every marketplace has its standards regarding crypto wallets. Depending on the market, the object might be for sale at a specific price or auction where the highest bidder carts away with the NFT.
Ensure that you have these terms clear before registering on any marketplace.
Below are some of the most popular marketplaces to purchase an NFT.
- Axie Marketplace
- NBA Top Shot Marketplace
Remember that the NFT is digital; therefore, it is only accessible through a screen as part of a website. While you may possess the NFT, you may not typically own the copyright to the original object.
If this is the case, you’ll be unable to reproduce it or sue someone for infringement.
5. Ensure you have enough crypto to make a purchase
NFT trading is like buying or selling commodities. In other words, you cannot purchase an NFT if you don’t have sufficient crypto.
Ensure that your wallet has enough to complete a transaction, including fees or commissions. Fees can include the cost of purchasing, transferring, and converting digital currencies.
Some of these fees are the cost of using gas to power a crypto exchange, and gas fees are the payments to miners in exchange for the computer power they use to record transactions on the blockchain.
How to sell an NFT?
Once you have acquired an NFT, you have complete control over the digital asset. Therefore, you can keep those items for others to see or use better NFT production, and you can put them on the marketplace for sale in the same vein.
Like all NFT transactions, NFT sales will incur service charges, and these fees can change due to several reasons on the blockchain.
You must first upload the digital asset you wish to sell to your favorite marketplace. However, the marketplace must support the blockchain technology of your NFT.
After that, you may either list it for sale at a fixed price or arrange an auction-style sale in which buyers place bids on the item.
Once you post the NFT online, the marketplace will verify it to ensure it is genuine. When you complete the sale, the marketplace will transmit the NFT from the seller to the buyer.
Frequently Asked Questions
The market for NFTs is still in its early stages, and many experts are unsure if they are a sensible investment. In other words, it’s unknown whether the NFT will retain its value even though they make use of blockchain technology. Therefore, investors should be careful with how much they invest.
The value of an NFT depends on its utility, ownership history, future worth, and liquidity. The utility is one of the most critical factors, and it refers to how players use the NFT. However, its value is due to its virtual world and easy transactions. NFT deals with many aspects of the entertainment industry, one of the largest industries globally. Thus, it’s only natural for them to have a high value.
You can exchange an NFT for cash or cryptocurrencies on several platforms. The blockchain keeps track of all transactions, which helps to safeguard the NFT’s claim to ownership.
NFTs are growing at a very fast pace. Therefore, it might be wise to invest in it while it’s still young. However, remember that there is still a possibility of a value fluctuation, just like most cryptocurrencies.