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How to Invest in NFTs: the Guide for Newbies

How to Invest in NFTs: the Guide for Newbies

The current trend in the world of cryptocurrencies is NFT. Non-fungible tokens have created a new wave and attracted a huge audience. They hooked gaming and several other industries. Thousands of creative people, speculators, and many investors who are ready to buy promising assets have come here.

How to invest in NFT tokens, projects, and metaverse and how much can you earn? It is necessary to invest in such assets carefully because not all projects have prospects. Becoming an investor is not difficult, it only requires a crypto wallet. And as for revenue, there are already examples when NFTs have risen in price to millions of dollars.

Investing in NFT tokens, is it profitable?

The acquisition of any assets can bring a decent profit. The most difficult thing is to determine the best offers on the market. This requires certain knowledge, it is impossible to rely only on the recommendations of experts.

In the world of cryptocurrencies, the same rules work, you will have to delve into the topic, conduct research, analyze trends, and do other work. Given the fact that NFTs appeared relatively recently, money is being invested in new projects. Therefore, it is not always possible to obtain important data to assess the potential. For the most part, beginners meet with failures.

Now let’s look at the important points for novice investors

NFT Storage Wallet

Most of the tokens are located on the Ethereum blockchain. As a rule, the wallet is registered in a couple of minutes and can be installed in a video browser extension or mobile application. Here you can first top up your balance to buy NFT, and then store all tokens on it. You may need wallets for other blockchains.

How to choose promising NFTs for investment?

Novice investors do not bother, they buy up all the tokens they have heard about somewhere. This is a common mistake because most of the projects from this niche are unsuccessful. You will have to analyze and compare offers, paying attention to the most important indicators. You need to make sure that the project has a large community, they have a practical application and the creators are proven and reliable persons. It is impossible to be 100% sure that the chosen token will grow, this is the main risk of investment. Many customers are afraid of what will happen in case all the quantity of bitcoin will be mined. As Buidlbee.com states, you still will be able to get perks in the form of rewards, so there is no need to worry.

Where to buy NFT tokens?

Transactions should be carried out through the best trading platforms. This is the only way to protect yourself from trouble as much as possible. In addition, the largest platforms offer a huge assortment, useful functionality for analytics, and detailed information on assets. The more platforms are used, the higher the chances of catching a really good offer.

Buying an NFT is the easiest way to invest. It is impossible to predict how long it will take for the value of the token to rise. If you are far from analysis and evaluation, focus on the most popular NFTs, perhaps they will not give big profits, but with a low probability, they will fall in price.

Purchase of ERC-20 tokens from NFT projects

In addition to projects where NFT is directly used, developers launch additional tokens (usually of the ERC-20 standard). They perform certain functions and their cost increases with the development of the project. Such tokens are divided into three types:

  • Managers – allow holders to manage the project and at the same time own part of it.
  • Service – holders of such tokens receive additional opportunities in closed services.
  • Equity – also called tokens with shared ownership. With their help, it is possible to buy parts of the NFT or break them into components for further sale. This is done to increase liquidity.

In addition to the fact that such tokens can be considered assets for investment, some of them also bring dividends. The prospects for their growth directly depend on the promotion of projects, the more popular they become, the more solid the demand becomes, and, accordingly, the price rises.

NFT lending

Lending secured by NFT is also actively gaining momentum. The scheme is extremely simple, token holders can borrow cryptocurrency from investors and then pay it with interest. If there are problems with payments, the lender simply takes the token for himself. While this topic is not so hyped, loan rates are 15%-20%, but they are actively used.

Investments in index funds

It is a difficult option for beginners to understand, but with it, it is possible to diversify risks. The bottom line is that NFTs are converted into ERC-20 tokens to increase liquidity. Platforms that help to do this have now become mega-popular. Investors can turn NFT tokens into the ERC-20 standard themselves, thereby creating indexes.

In recent years, the turnover of NFT tokens has increased several times. Experts unanimously declare that this market will continue to develop.

They note that to a greater extent this will affect the sphere of business, sports, and art. In the wake of the popularity of new assets, there is a real chance to invest money profitably, however, it is important to take into account the risks. Buy only what you are personally confident in and spend as much as you are willing to lose.

 

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