NFTs investing adventure continues
Meanwhile, continuing my NFT studies and testing my understanding in practice. I managed to find some more information, which might be helpful in my investing/collecting NFTs adventure.
It appears that I have a long way to go before becoming a true NFT connoisseur.
-------------------------------------------------------------------------------------------- Disclaimer!
Under no circumstances it is investment advice. Believe me, I’d be the worst financial advisor you’ve ever met. Nor am I an art specialist, advisor, or kind like that. I'm just a guy who likes nice-looking things (in the deepest part of my soul, I'm a romantic one). This post is published for entertainment purposes.
--------------------------------------------------------------------------------------------
NFTs are a unique combination of technology and imagination that enable programmable artwork and images. Artists may create visuals using smart contracts on blockchain networks. Directly selling digital works to worldwide audiences allows artists to keep a larger portion of their sales proceeds than traditional auction houses or galleries. The artist may also charge license fees for his collections. This allows the creator to make money by selling their work on the secondary market.
When a consumer purchases an NFT, they immediately "register" their ownership. They can learn about the history of an artwork or photograph, including previous owners and sales prices.
One of the most important components for every investor is to set clear rules for the game in which they are playing. The fundamental goal is to understand the distinction between investment and speculation.
Understanding the distinction between investing and speculating is critical for prudent money allocation, and this is where mistakes are most prone to happen. Many feel that flipping NFTs can result in quick wealth gain.
While a few individuals may succeed, the vast majority do not. Success in short-term speculating frequently depends on promotion and chance. If the proper influencers support a project, the price might rise. However, if you lack such influence, success with flipping becomes unlikely.
- Future Distribution
- Utility
- Cultural Significance
These categories represent a wide range of investing techniques, from strictly financial investments to those motivated by social currency.
The most successful NFT initiatives are those that effectively combine all three elements, with the value of future distribution enhanced by cultural importance and/or job usefulness.
Future Distribution: An Investment Value Model for NFTs
NFTs that entail the distribution of other assets are the most similar to stocks in terms of the flow of "dividends." Similar to typical equity investments, such ventures require analyzing the team and forecasting future cash flows.
The dividend can be distributed through different ways:
Income from tokens
Certain projects provide tokens to NFT holders, either as general-purpose cryptocurrencies or tokens tailored to a specific setting, such as a project's DAO.
For example:
Yuga Labs, the makers of Bored Ape Yacht Club (BAYC), has issued 1 billion tokens, with 8% reserved for gratis distribution to NFT holders from the BAYC and MAYC collections. BAYC holders earned 10,094 ApeCoins , while MAYC owners received 2042 ApeCoins .
These coins are now paying out significant dividends to their holders, with no additional investment required.
Royalty
NFTs, based on smart contracts, might provide assured royalty percentages for the original owner upon resale. Investing in such NFTs follows a standard stock investing approach, which values the NFT based on discounted cash flow.
Airdrops of Other NFTs
Some programs release fresh NFTs to existing holders or provide discounted access to new assets. Evaluating the prospective worth of these future NFTs becomes critical for investors, as it is frequently determined by the cultural relevance of the initiatives being launched.
Investing in the Decentralized NFT Community
Decentralized team structures rely on the community for development, resembling a social rather than corporate approach. Strong communities gain from creative returns, which increase cultural value and help NFT holders.
Investors should be cautious when investing in initiatives with decentralized teams, taking into account the community's strength and potential.
Investing in a Centralized NFT Team
Beyond the value of dispersed assets, assessing the accompanying project team is critical for investors who use an allocation approach. The team is critical in building value through cryptocurrency asset distribution, earning streams, and increasing the cultural relevance of NFTs.
- In-depth research.
Before investing, make sure you understand the item, its creator, and the market. Profitable selections are frequently the result of educated choices. That is why we highlight everything from market history and cycles to the intricacies of choosing a project for investment. Your personal research serves as the basis and fuels your investment decisions.
- Set a Budget.
Prior to investing, determine your maximum budget. Hazard and hype-driven purchases frequently surpass your own financial limits, leading you down a road of poor investing.
- Consistency
Effective trading does not follow a one-size-fits-all approach. Consider that this market is still developing, and if you experience losses in one direction, don't write off the entire market. Investigate different projects, finances, personal methods, and concepts when carrying out this work.
- Information
Keeping an eye on trends: the NFT space and adjust your strategy appropriately. Knowledge is power, and being one step ahead is critical.
Will investing in NFTs be profitable?
NFTs, like other investments, carry financial risk. While there is a potential of winning a lot of money, there's also a danger of losing everything. Your investing decisions are entirely personal, and if you believe in the potential of NFTs, which are comparable to cryptocurrencies such as Bitcoin, you can pursue this option. However, the golden rule in any financial effort is to always invest funds that you can afford to lose.
There is no perfect NFT trading method that ensures enormous gains. However, each individual should research and implement a trading strategy that is appropriate for their time horizon, budget, and level of interest in the subject matter and market.
Understanding the NFT market as an investor is a journey of both art and technology. Armed with the right information, skills, and methods, you may identify possibilities that others may ignore. The trick is to be educated and flexible.
RESOURCES:
https://nftmetria.com/
https://nftcalendar.io/blog/nft-trading-strategies/
https://blog.daisie.com/beginners-guide-10-strategies-for-nft-investing/#research-the-market
https://www.kubera.com/blog/investing-in-nfts
https://www.youtube.com/watch?v=zANq9Dusk6Y
https://www.thenftmag.io/
https://icreate.io/custom-nft-gallery/
