The market for non-fungible tokens, is on fire. According to DappRadar, the total value locked in NFTs has risen from $250 million to $2.6 billion in the last year. Not only are NFT costs rising, but the number of NFT projects is also increasing. Brands like Nike and Gucci are flocking to the NFT boom—and so are lawsuits.
That may have been the peak of the early NFT boom: a hint that the enthusiasm had outrun the market’s genuine hunger. Top Shot sales continued to dwindle, and a growing number of high-profile celebrity drops failed to provide substantial profits. Many people wondered if the NFT boom was just a passing trend.
The NFT boom, which some estimate generated over billions of dollars in sales last year, has also aroused concerns about an eventual NFT crash when the value of Bitcoin and other cryptocurrencies falls.
So, what is causing this NFT boom?
There are a few significant factors.
The first is the rise of blockchain games and digital goods. NFTs are excellent for showcasing in-game items, digital art, and other digital valuables. NFTs have grown in popularity as blockchain games, and digital collectibles have. During the early 2021 NFT boom, NFTs have seen some success.
Second, major NFT platforms were established, including Ethereum’s NFT marketplace, OpenSea. These sites facilitate makers’ and collectors’ purchase, sale, and trading of NFTs.
Third, there has been a surge in mainstream interest and investment. Celebrities such as Jack Dorsey, Mark Cuban, and Paris Hilton have all acquired NFTs. In addition, big venture capitalists are investing millions of dollars in NFT firms.
All of this is driving the NFT market to new heights. But as with any NFT, there is a risk of a bust. So what should investors know before entering into the NFT boom?
Alongside the NFT boom was its counterpart, the Metaverse, which many believed (read: prayed) would be the digital playground to use these NFTs, whether through avatar skins, items, or interacting in exclusive online communities.
1. The NFT’s Distinctive Properties
NFTs are often in the form of collections. Take a look at MekaVerse, Bored Ape Yacht Club, or PEACEFUL GROUPIES. These NFT collections include one-of-a-kind avatar NFT artworks, each with its characteristics. More attributes may sometimes yield a more excellent value, but not always. Sometimes the simplest avatars, such as the basic Bored Ape NFT, are the most useful.
Check the rarity of the qualities your selected NFT possesses if you want to boost your chances of purchasing an NFT with a promising value trajectory. You’ll want an NFT with the lowest proportion of commonness in the collection, which you can see in the properties part of the NFT’s page, as seen above.
Examining an NFT’s attributes is also an excellent technique to ensure legitimacy. Many scam accounts upload copies of famous NFTs but cannot duplicate the characteristics. As a precaution, keep an eye on this part as well.
2. Seller Authentication
Official merchants on sites such as OpenSea, like Twitter and Instagram, will have a blue verification tick next to their account name to ensure that they can be trusted and are not impostor accounts. As a result, if you want to purchase from a well-known seller, such as World of Women or Cool Cats NFT, make sure the account has a verification tick.
However, this verification tick cannot always be used to confirm the seller’s authenticity. Many reputable NFT sellers do not yet have their verification tick on specific sites, much as many social media stars are not yet confirmed. So, if you wish to purchase from an unverified account, verify the NFT attributes as a precaution.
You may also look at the seller’s social media profiles to see whether they have many followers and a verification tick since this might indicate their validity. You may also look at their page’s sales figures to discover whether it’s a long-established account selling your desired NFT or a new account.
3. Transaction Fees on the Market Platform
A transaction fee is paid to trade bitcoin, acquire an NFT, or do anything similar on a market platform. Traditional e-commerce platforms, such as eBay and Depop, charge similar fees, although the amount varies based on the platform.
For example, OpenSea charges sellers a 2.5 percent transaction fee, which equates to 2.5 percent of the selling price. However, the buyer is not responsible for any transaction costs. This is true for most NFT exchanges, including Known Origin and Axie.
However, some platforms, such as Rarible, charge a fee on both ends of the transaction, such as charging the buyer a 2.5 percent fee on top of the NFT price per transaction. So, before making any purchases, make sure you’re aware of any current costs on your preferred platform.
4. Market Volume and NFT Liquidity
It’s vital to remember that NFTs don’t have the same liquidity as cryptocurrency. Because you cannot convert an NFT into regular cash as readily as you can with cryptocurrencies, this may provide a dilemma for individuals looking to benefit from an NFT. Some experts recommend fractionalizing your NFTs to boost their liquidity rates, effectively separating your NFT into smaller sections.
Aside from liquidity, NFT company must take the market volume into their account. At the time of writing, the NFT market volume is about $10 billion, and the sort of NFTs highly influences the growth or fall of this figure acquired daily.
As you are aware, the NFT market is still in its infancy. A few years ago, no one talked about NFTs, and these digital artworks were not selling for millions of dollars. And, like with many other organizations or sectors that seem to boom quickly, the peak may be fleeting. So, keep this in mind if you want to acquire an NFT as a long-term investment rather than something to hold as an art piece or sell in a few months.
5. Price performance of NFTs from various buyers.
It’s usually a good idea to examine the seller’s account if you want to confirm whether or not your selected NFT is a suitable investment. You may check through their prior sales to see how much their things are selling for. Then, scroll down the table to see how many identical NFTs sold a few weeks or months ago. The floor price is the minimum price for which NFTs are traded at the bottom of the value range.
This will give you a fair understanding of how NFT prices are shifting and whether they connect with what you want to see in your selected NFT in the future.
Other platforms provide similar information and extra statistics that you may not be able to get on the market. NFT Stats and CoinMarketCap provide some fascinating statistics on NFT sales, value, growth, and more, so check them out if you want some more in-depth information.
NFTs are excellent investment opportunities, but It’s always best to play it safe.
While buying and selling NFTs may likely result in significant gains, several blunders can be made while making purchase selections. Cybercriminals are presently taking advantage of the NFT sector substantially, and certain NFTs are just not worth purchasing. So, before you finish your deal, make sure you consider all the criteria listed above.
Visit our blog area if you want to learn more about NFTs. You may also learn how to create your own NFT Marketplace.
NFTICALLY, a Global B2B SaaS, allows you to set up your own white-label NFT business or NFT Marketplace without any technical knowledge.