What To Know Before Investing In NFTs
Ever heard of Crypto Kitties? Well, these are fully-owned non-fungible tokens (NFTs) that allow players to buy and sell unique digital kittens via the Ethereum blockchain. Due to this simple yet widely popular game, NFTs have become more mainstream in recent months. As a newbie, there are critical things you should know before investing in NFTs. Please read on!
What are NFTs And What are You Buying?
NFTs are unique, non-fungible assets that have their pre-assigned attributes. These assets are created on the Ethereum blockchain and often reside in your digital wallet.
Both ERC-721 and ERC-1155 are used to create NFTs. However, you should know that there are different types of NFTs in the market.
How To Choose A Safe NFTs Marketplace?
The Cryptocurrency market is unregulated and traders often get lured into false promises. Don’t let this be you! Here are 2 important factors to consider when choosing a safe marketplace for your NFTs:
(1) Community Feedback on Reddit/Twitter/Facebook
Check out the online community feedback on social media or search their comments on Reddit. Be wary of online scammers and avoid investing in a marketplace with a high number of bad reviews.
(2) Customer Support
You might have to contact the community manager or customer service department for assistance. Some marketplaces don’t allow users to delete their accounts as an additional security measure. In such cases, always check if your funds are safe!
How To Decide Which NFT To Buy?
There are several types of NFTs in the market – Cryptokitties, Crypto Celebrities, Gods Unchained Cards, Decentraland, etc. We advise you to research the top NFT projects and coins and make your choice based on objective reviews and expert predictions. With so many choices available it can be hard to decide what’s best for you. Nonetheless, here are some general rules that you should follow:
(1) What Are You Actually Buying?
These non-fungible tokens often represent various forms of virtual assets (such as drawings, videos, images, etc). Make sure you understand exactly what you’re purchasing before investing your money.
(2) Research The Team Behind the Product
Always check if the product has an experienced team and plenty of positive reviews from users and influencers. You can also find information on the company’s website, social media pages, and on any other relevant platform.
(3) How Many Tokens are Issued?
Some projects have a limited stock of tokens available. Make sure you understand how many tokens are issued before finalizing your purchase!
How To Avoid NFT Scams
As previously mentioned, NFTs are easier to fake than traditional physical assets, but also many major companies such as YouTube are betting on NFTs. You should therefore be extra cautious when making your purchase, and stick with established brands. Here are 2 simple rules you should follow:
(1) Always Use Escrow Services
This will ensure that the transaction is secure and the marketplace doesn’t have access to your funds. Make sure you pick a trusted escrow service from a safe marketplace to avoid getting scammed!
(2) Verify The Crypto Address With A Public Blockchain Explorer
Every blockchain has its own official explorers that can verify the address of an individual wallet. Make sure you input the correct address before investing your money to prevent losing it all in case of a scam.
Are NFTs Actually A Good Investment?
The NFT industry is still in its early stages and there are several companies that are looking to make their mark. Some of the leading projects will go on to become very successful while others may fail completely. Over and above, all indications that the NFTs marketplace will grow exponentially in the near future, which makes it an investment worth considering.
Final Thoughts
NFTs are the future of the cryptocurrency market. This new asset class has many advantages over traditional cryptocurrencies and is well worth your time. Never forget the golden rule – always do your own research before making an investment!
