NFTs have been all over the news this year, and if you are curious about them, you should try to dig into them a little deeper. There are lots of myths and mistruths circulating about them, and they could easily lead you astray, so take the time to learn what NFTs are from a reputable source first before you form an opinion on them. You also need to know what makes for a good NFT and which ones should be disregarded. Let’s take a look at the pros and cons of investing in NFTs, how to start trading them, and how to identify good NFT projects.
The Pros and Cons of Trading NFTs
One of the biggest benefits of trading NFTs is that you can make a lot of money with them in a short period. Some NFTs have skyrocketed in value very shortly after being bought, and if you know how to find good projects, you could sell low and buy high on a very small investment in some cases. So, if your goal is to act as a speculator and you like fast-paced trading, NFTs could be a good option for you.
But, if you want to get into NFTs as a pure investment for the long term, you should think twice since we don’t know yet if the ones being released right now will have any lasting power.
How to Start Trading NFTs
There are plenty of ways that you can start buying and selling NFTs, but it all starts with getting a solid NFT wallet and getting some crypto. You will need a wallet to identify transactions on the blockchain and denote ownership and most NFT transactions have to be made in cryptocurrency, which is why you need both to get started.
The next step will be to find a reliable exchange. You can decide to go on individual exchanges, or you could find one NFT marketplace that allows you to buy and trade NFTs on different platforms at once. Some of the most popular and respected NFT platforms out there include OpenSea, SuperRare, and Rarible, just to name a few.
How to Pick Good NFTs to Buy
Many things will allow you to identify good NFT collections and choose the right NFTs to buy. The two most important factors are rarity and interest. You need to look at the interest in an NFT collection, know which NFTs in that collection are the most prized, and know what a reasonable price for them would be.
The challenge is picking NFTs before they’ve become overvalued, and you will need to look at things like average price and floor price along with trends within the collection to tell if an NFT is overvalued or not. Other things to consider when looking at NFTs include the cultural significance of the coin, any utility it might have, and some of the perks and rewards attached to it.
You should also know, however, that you are not buying the underlying asset when buying an NFT, but only the piece of code on the blockchain proving that you performed a transaction related to it. So, make sure to look at the terms of the purchase and know exactly what you’re getting as part of the deal.
This is all you need to know as a beginner if you’d like to start trading NFTs for profit. First, take the time to know exactly what you’re getting into and look at the risk and benefits of trading in the NFT markets before getting started.
