Step One Educate Yourself Completely on What NFTs are The media hype around NFTs has got most of us excited – the thought of being able to bring in additional revenue following two years of economic uncertainty is music to our ears. But you shouldn’t let the attractiveness of NFTs cloud your vision. You need to commit time and energy to understand exactly what NFTs are or there’s little chance of success. What are NFTs? NFTs are basically digital collectables that have been transformed into verifiable assets so that they can be traded on the blockchain. They are tokens that people use to represent ownership of unique items and often involve intellectual property rights, though it’s important to note that this isn’t always the case. They are called non-fungible tokens because they represent things that have unique properties and therefore are not interchangeable for other items. For example, some of the most popular NFTs right now are: • Digital Artwork/Music • Items in online games shops • Domain names • Celebrity tweets • Essays • Domain names Whilst they can be used for almost anything with a unique property, they are most popular amongst those in the creative and entertainment sectors. Don’t worry if you’re not operating in those sectors though, it doesn’t mean NFT trading won’t work for you. Step Two Identify What Type of NFT Trading is for You NFTs have a huge gambit. The possibilities are endless and the NFT marketplace is adaptable to so many different mediums and contents of life – there really is no real limit. That being said, it’s not for everyone. Before you even begin ‘giving it a go’, you need to identify whether you can and want to commit to it, and in what way. There are three main types of NFT trading you can be involved with: 1. Buying and Selling NFTs This is realistically one of the simplest and easiest ways to get started with NFT trading. It requires little time from your end as you are trading already developed digital assets rather than developing your own. A point worth noting here is that you’ll need to be familiar with how cryptocurrency works. NFTs are purchased via specialised marketplaces online using funds from your digital wallet - there are a few marketplaces out there that allow flat purchases or credit cards, but they are few and far between. This means you’ll need to not only create a digital wallet that supports NFTs, but you’ll also need to be prepared to fill it with cryptocurrency ahead of your purchases. You can buy and sell NFTs online via specialist marketplaces or apps. There’s a new platform coming soon, PRISM, which is also a great marketplace for artists to trade and they accept cash - credit cards are on the horizon too. Remember, all transactions are recorded on the blockchain and only once the sale is verified will the NFT appear in your wallet. 2. Purchasing NFTs as an investment Though purchasing NFTs without the intention to sell isn’t necessarily a direct form of trading, it’s still an option for building up a digital asset portfolio - and one which might be more suitable for those who want to dip their toes into the market before going full steam ahead. Although no one knows what value an NFT will have over a period of time, there are a few research methods available to the investor which can help decide which NFT to buy. Community is a big factor for some. You may want to consider whether the community is organic and whether they care about the project. Another consideration is who created the NFT. Is it an anonymous individual or organisation? Is it a reputable brand or a famous artist? Do the developers have transparent and realistic plans for the project? Conducting due diligence is crucial to avoid scams and rugpulls. A few other things to consider when purchasing NFTs with no intention to immediately sell are: • Is it a 1/1 piece of art by a world famous artist? • Are you buying the rights and royalties to a famous musician’s song? • Are you buying virtual land which enables passive income streams? • Is it one edition out of a million NFTs distributed free by a globally recognised brand? • Does the NFT come with exclusive perks such as entry to private events or access to future NFT sales? 3. Creating and Selling NFTs Creating and selling NFTs isn’t one to approach lightly. Yes, it can be very profitable, but it doesn’t come without understanding the market and knowing exactly what to expect. You’ve heard the saying “if you fail to plan, you plan to fail” right? Well, it’s even more true in the world of NFT trading. The first place to start with planning is documenting Inve s tmen t 14 Finance Monthly.
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