NFT is the latest rage in investment, especially amongst the young. You are not cool, if you have not created a NFT, or invested in it.
For the uninitiated, NFT means non-fungible tokens.
Sounds so simple.
We know what is cryptocurrency. It is digital money not backed by any sovereign authority, but which can be bought or sold on cryptocurrency exchanges like shares in the stock market, to make money. Cryptocurrency is fungible. One bitcoin can be exchanged for another.
NFTs are virtual digital assets from the same metaverse, but being non-fungible implies that each piece is unique with intellectual property rights and cannot be replicated.
HOW ARE NFTS SIMILAR TO OTHER CRYPTO ASSETS?
- NFTs can be bought and sold on cryptocurrency exchanges.
- You can own a fraction of NFT. Yes, it is possible to own a small part of a digital Picasso painting, and earn profits whenever it is traded.
- You can receive NFT drops similar to crypto airdrops in your account. Airdrops means free crypto assets given as part of a promotional scheme or when you open a new account on an exchange.
WHAT EXACTLY ARE NFTs?
In India, superstar Amitabh Bachchan created a non-fungible token with a recital of his father’s poem. And the masses got curious about the concept of NFTs.
Have you heard of memorabilia from celebrities being auctioned for high prices? It could be Madhuri Dixit’s outfit donned for the picturisation of Dhak-dhak song, a monogrammed suit owned by the Prime Minister or a cricket bat used by a top player for the first match played by him.
Why do people shell out astronomical amounts of money to pay for things which they’ll never use?
Exclusivity attracts a premium. One takes pride in owning and displaying something no one else has. One can also make a profit by selling the item at a higher price.
NFTs are digital versions of exclusive assets.
Jack Dorsey made a NFT out of his first tweet. Do you remember yours? And would any one care to pay for it?
However, if your parents or grandparents perform a ritual which looks exotic and is known only to your family, consider recording it on video. Maybe, some day it sells as a part of culture. If you see a Himalayan yogi ingesting sunlight at dawn from his lower eyelid, make a video of it. There is a story that yogis can survive without food, on the strength of solar energy taken in at dawn and dusk. Do you think this can sell as exotica from a country with a rich cultural heritage?
These are just examples of how seemingly inconsequential stuff can acquire value over a period of time. Trends can become money churners for you.
SUCCESSFUL NFT PROJECTS
One of the earliest successful NFT projects is Cool Cats. It is a series of cat images, each distinctly different from the other, scanned over half-a-million possible combinations.
Christie’s arthouse sold a digital collage by artist Mike Winkelmann (popularly known as Beeple) for $69.3 million. It is the most expensive piece of digital art ever sold.
Here is an image of the same.
HOW DOES ONE START INVESTING IN NFTs?
Have a crypto-wallet with some cryptocurrency in it. Most of the NFTs trade on Ethereum blockchain.
In short, you need to be a crypto-investor first with an account on a cryptocurrency exchange.
Buy and sell in NFT marketplaces such as Openspace, Rarible or Mintable, based on NFT market place recommendations. However, do your own research on the subject.
Needless to say this is important, as all crypto-assets carry the same amount of risk. High volatility can lead to a loss. One needs to perform credibility checks in the same way, as one would do for any other crypto-asset. Perform due diligence based on their white paper, founding team members, credibility of the website going by their digital artwork, language, grammar etc.
Related post: Cryptocurrency-How is it launched in Money Markets
FIND CREDIBLE NFT PROJECTS
Be a part of the NFT metaverse.
The successful projects are not always affordable.
Look for upcoming projects on rarity.tools and Upcoming NFT. These are spaces to conduct your research and network with online communities. A high volume of interactions will show that the followers are not all bots, and you are connected to a genuine community.
Follow their Twitter accounts and be on their Discord channels.
HOW TO BUY NFT?
Find step-by-step instructions on how to open an account and buy NFT here.
Can NFT lose value?
Yes. It is subject to the same market risk as any other investment.
WHY SHOULD YOU INVEST IN NFT?
- To diversify your investments
- You may want to support artists and creators
- To be a part of the future by investing in emerging digital markets.
- For the ‘coolness’ factor, to be ‘with it’.
HOW CAN YOU CREATE A NFT?
Anybody can create and own NFTs, if the piece is rare, unique and you have the intellectual property rights for it.
Music, videos, collectibles, moments in cinema or sports, domain names, memes, virtual fashion items, game items nor digital art can all become NFTs.
NFT minting is the process of uploading your digital file in a market place. Most of the market places do not charge a fee for minting, but will charge a service fee when you list it for sale.
Set up the NFT selling process as per instructions given on the site.
MoneyGoalz does not recommend any site, NFT project or sales process. Investors need to do their own research and make NFT investments at their own risk.