Investing in non fungible tokens (NFTs) is a growing trend which cannot be ignored at this stage. Investors around the world are seeking assets that can preserve purchasing power in the long run, due to the current economic situation. Non-fungible tokens are especially attractive thanks to the scarcity effect, which means that they are “one-of-a-kind” instruments. In their essence, they are designed to provide ownership over unique assets such as art or music.
However, even though NFTs have been gaining popularity recently, we recommend you learn a bit about the industry if you’re interested in them. We talked to the experts from MetabaseNFT, a growing NFT platform which enables the buying and selling of these assets online, and they gave us the following tips.
Tip #1: Understand why the asset can grow in value
Not all NFTs are created equal and because of that, the growth potential of each one is different. Depending on the sector, there are several variables that can lead to valuations growing in the longer run. The NFT buyer should not make the purchase without studying the asset and its characteristics first.
“We at MetabaseNFT encourage all of our buyers and sellers to treat this activity with professionalism. The price of an NFT can go up or down, just like any other asset class, and that means there is also a risk of loss. Understanding why the price goes the way it does can help mitigate this risk.”
Tip #2: Use a reliable NFT platform
Just like with any other form of online commerce, buyers and sellers need to make sure they use a reputable platform with top-notch infrastructure and security. Variety, user experience and support are also important elements. On professional platforms such as MetabaseNFT and others, this can be guaranteed, promising an overall smooth sailing experience.
“Do not be tempted to use a platform which is not dedicated solely to NFTs. Working with a platform that specializes in this asset class means access to tailored services provided by a team of experts, which can also assist users better.” A trusted platform also offers secure payment solutions and grants privacy to all users. This is also important, since transactions are done digitally online.
Tip #3: Buy when the broad sentiment is bullish
What happens in the broad NFT market can also influence valuations. For the past couple of months, NFT prices have been cooling down, in tandem with the entire financial system.
Stocks, bonds, and traditional cryptocurrencies have been failing to present a bullish sentiment, and that fact has also capped the interest in NFTs.
Even if users find an NFT with high potential, they should adopt a broader point of view and see how the general market is doing. In case prices are falling, maybe it would be better to wait until valuations become more affordable.