If you’re an investor or a digital artist, chances are you’ve heard of NFTs and the millions of dollars they are selling for online. Many celebrities are dropping massive amounts of cryptocurrency on these digital NFTs, generating a highly lucrative and opportunistic marketplace. If you’ve been considering entering the NFT market, there’s never been a better time with innovation across industries and NFT sales continuing to grow year over year.
What is an NFT?
Non-fungible tokens, or NFTs, are encrypted tokens on a blockchain that hold metadata representing a real-world or digital asset. Digital files can be encrypted within this metadata, but the NFT itself acts as an immutable record of ownership. NFTs allow digital creators more significant control over their intellectual property once it’s online. By minting a file into an NFT, you create digital scarcity and add inherent value to that specific file. The NFT is then stored on the blockchain and can be bought for cryptocurrency. Artists can even collect royalty payments each time their artwork is resold on the blockchain. Because NFTs can represent any asset and encrypt virtually any file type, the NFT market is a highly diverse and lucrative marketplace with ample opportunity for creators and investors alike. NFTs can potentially disrupt and alter various creative industries, giving more power to the creators and their audiences, and less to intermediaries.
The NFT Market
In 2020, NFT sales totaled $95 million, and in just one year, NFT sales topped $25 billion. This tremendous growth shows the incredible opportunity for investment and innovation in creative industries using NFTs. The NFT marketplace holds all types of digital assets, including NFT videogame items, music recordings, video clips, gifs, digital paintings, photographs, etc. In the last two years, famous artists and celebrities like Snoop Dogg and Steve Aoki have heavily endorsed the NFT market, even creating collections of their own and participating in collaborations with other major players in the crypto world. The most expensive NFT sale has reached nearly $100 million and was purchased by a group of investors rather than a single buyer. This NFT, titled The Merge by Pak, had a unique selling method that divided the asset into multiple tokens and created a scarcity mechanism within the painting each time you transferred the NFT. The subsequent ten most expensive NFT sales to date reach from $6 million to $69 million. With these high transactions and growing rates of NFT purchases, there is more and more faith in this marketplace and, therefore, more stability and opportunities for financial gain and market growth.
How to Invest
Artists or investors interested in entering the NFT marketplace can find plenty of resources and a broad crypto knowledge base at FTX to help them start their crypto investment. Conducting plenty of research is the first step to any successful investment. You will need to select the cryptocurrency, NFT marketplace, and crypto exchange that best suits you, then open a digital wallet. The cryptocurrency you choose to fund your wallet should also be compatible with the NFT marketplace and blockchain of the NFT you wish to purchase. Once you have selected your blockchain and crypto, you can open a digital wallet and fund it through an exchange. There are plenty of apps for crypto that may charge different fees and have various rules around transactions. After you’ve funded your wallet, you can join the NFT marketplace and begin purchasing NFTs.
Like any cryptocurrency, the value of an NFT does not fluctuate in response to the traditional fiat money economy. Instead, other factors such as the crypto community or even public opinion can influence these investments. Keeping this in mind, NFTs can help diversify your digital investment portfolio and hedge against traditional inflation, but all investments come with risk. The more the NFT market grows, the more stable your investment could become, but be sure to always keep up with the latest in crypto and NFT news to continue making smart investment options.