Investing in NFTs 

For now, though, where does one start with NFTs? And what are the essential things to look for when investing? 

Non-fungible tokens can be purchased on many NFT marketplaces, including Rarible, OpenSea, Enjin Marketplace with many more opening up all the time.

You’ll need to have a crypto wallet set up to access these sites; they support popular browser based wallets such as Metamask or Fortmatic. 

You can browse these marketplaces for any NFT you are looking to purchase. Their interfaces are intuitive. As you browse NFTs you can click on them to find more details on their owner and bid history as well as their price. 

If you find an item you would like to own; you can buy it on-site using your wallet. There will be an option to purchase and then confirm the transaction. Once you do this, and the transaction is confirmed the NFT will be deposited directly to your ETH address and will be yours.

The NFT you have purchased will be stored in your wallet meaning that only you have access to it and you aren’t reliant on a third party platform for this access. The usual caveat around wallet security applies here.

The most common assets that appreciate are those used in blockchain games growing in popularity, with CryptoKitties being the most famous example. These NFTs are used to represent ownership of in-game assets. Decentraland is a crypto hybrid of Minecraft and Second Life, where you can own and trade real estate., with an NFT ecosystem worth more than $24 million.

If the game grows and becomes more popular, demand will increase for these assets and drive the price up. If you believe that a particular game will become more popular in the future, investing in the NFTs of that specific game may just pay off. 

Investors need to pay attention to the provenance, reputation, and transaction activity of the NFTs that are of interest. If a token has lots of transaction history and has been attached to reputed creators or traders, you can be more confident about a sound investment. 

Deciding what NFT to invest in – like with anything – isn’t easy. Whilst the market is undoubtedly growing with many NFTs appreciating, there are always risks involved, not least is a bubble around values. Not every NFT will appreciate in value, and buyers can be hard to find. 

Some NFTs have sold for huge amounts. Take for example, CryptoPunks, an NFT collection of limited supply art images depicting punks. Their supply has been limited to just 10,000 with the rarest ones selling for hundreds of thousands of dollars.

The biggest CryptoPunk sale has recently been recorded for over $750,000 dollars. These are crazy amounts of money for ownership of pixelated images but their value is in their scarcity. 

$69 million

The value of an NFT based piece of art entitled 
'The first 5,000 days' by Beeple, sold at Christie's 
Auction house in London on March 11, 2021

As with any type of investing, it pays to stick to what you know. If you are a sports fans, look at how NFTs are being used. NBATopshot for basketball and Sorare within soccer are two good examples where analogue methods for creating collectibles – cards and stickers – are quickly being replaced.

It doesn’t take much imagination to see how this could extend to other niches, from Harry Potter to Pokemon.

Another approach to entering the world of NFTs, which will provide more practical experience, is creating one for yourself.