How To Invest in NFT Art
Follow these five tips before buying into the NFT art craze.
Want to invest like a pro in NFTs, but don’t know how to begin? No worries—dive into these five “need-to-know” concepts to guide your NFT art strategy.
Be Patient—Play The Long Game
If you are thinking about NFT Digital Artwork as a speculative investment vehicle, start by setting a practical budget allocation. Plan on minimizing your exposure to risk from the outset. The total sum should represent only a small percentage of your entire asset portfolio. Remember, this is uncharted territory so start off slow.
Since the crypto-world is highly volatile, beginners should approach the NFT marketplace with patience. By way of example, in November 2021 Bitcoin reached its all-time high of $68,000 but by early December tanked to $46,000.
Invest in NFTs with a “buy & hold” vision—stay in the market for the long-term to outpace the regular fluctuations. Consider a contrarian approach during these choppy times—buy on the dip and sell at the top of the wave.
Insider Tip: Keep some cash on the sideline to prepare to buy on the dip.
Research NFT Artwork
Fortunately, NFT Digital Artwork is fairly ubiquitous, and accordingly, appeals to most. Consider your interests, hobbies, and knowledge and then dive into the various NFT marketplaces. Invest in art you love and would love to live with.
If you’re a sports fan, think about visiting NBA TopShot. If music is your thing, consider Paradigm Agency’s new platform, Royal, where you can invest in artists. Looking for a cleaner, curated artsy experience? Go to SuperRare.
Carefully Curate: Beware of high “gas fees” when purchasing Digital Artwork.
Set up Your Digital Wallet
You need to find a secure place to store your most precious artwork: NFTs and cryptocurrency. (To be clear, digital wallets are required to store your NFTs and cryptocurrency.)
Although there is a lot to consider when selecting a digital wallet, the easiest place to start is to consider whether or not it supports the type of blockchain you plan to use.
For example, since a MetaMask wallet is compatible with the Ethereum Blockchain, you should consider using when purchasing on OpenSea, Foundation, and other Ethereum-based protocols.
Whereas a Kukai wallet is compatible with the Tezos Blockchain and thus provides a fantastic solution when leveraging marketplaces like OneOf.
For Sound Security: Never, ever share your wallet’s password. Ever.
Look for More than Digital Artwork
The utilitarian nature of NFT and Blockchain technology can provide the owner with additional benefits such as awesome, exclusive access to limited edition merchandise, unique experiences, and one-of-a-kind services.
These mint & burn scenarios often create additional value on secondary markets, thus providing the holder with the potential for a short-term financial windfall. Get the goods, resell the goods, make money.
This past fall, luxury fashion powerhouse Balenciaga teamed with Fortnite to launch a digital fashion experience which transcended the gaming realm, bringing high-street style into the real world.
The Drop: Be on the watch for Limited Edition Merch from brands like Gucci, Jordan, and Dover Street Market.
Plan Your Exit Strategy
Here’s the thing about NFTs and digital artwork—peer-to-peer trading on the secondary market is real. It’s active. So, if you’re in it for short term gain and want to speculate, it’s there for you.
But, keep in mind, we are merely at the beginning of investing in digital artwork now. Think caveman artwork stage. This stuff can be valuable over the long-term. CryptoPunk 4156 was purchased in June of 2017 for less than $20. On December 9 of 2021 it was sold for more than $10 million.
Be an Early Bird: Be strategic and try to find early-stage trends.
Marc Beckman’s new book—The Comprehensive Guide: NFTs, Digital Artwork, and Blockchain Technology—is available now on Amazon.