Top Things to Check Before Buying an NFT
Non-food and non-factual goods became hugely popular commodities during 2020 and 2021, and there seems to be no end to their continued growth in value and desirability for now. However, NFT prices are currently highly variable and can be sold for tens of millions of dollars. So, if you are looking to invest a good chunk of money on NFT, it is very important to consider certain factors. So, what exactly should you check before making the purchase? Check out ways to avoid cryptocurrency scams: Beware of Bitcoin Scams.
What is an NFT?
NFT is an acronym for Non-Fungible Tokens, as it represents a collectible digital asset and it is a type of cryptocurrency very similar to Bitcoin and Ethereum, and it is seen as an investment that carries value, in more clear terms, but unlike Bitcoin, NFT cannot be exchanged where One currency can be exchanged for another with the same value, but for NFTs they are digital assets, each of which has a different value that cannot be exchanged for other assets.
While the NFT gives someone proof of ownership of their digital asset (a photo, video clip, drawing, tweet, or music clip, so that they can generate income from ownership or the right to own), however, due to the ease of obtaining the photo or video clip, for example, and the difficulty of preserving The content after it is published online, but your purchase of a non-fungible NFT does not mean that you will become the main owner of that thing, because there will be free copies of the same product that you purchased, but all you will get as an advantage is that you own the original copy of that thing.
When you buy NFTs you don’t get the copyright, the copyright remains with the artist who designed that work and who in turn gets a commission when you sell the NFT back.
1. The unique characteristics of NFT
NFTs often come in the form of groups. Think MekaVerse, Bored Ape Yacht Club, or PEACEFUL GROUPIES. These groups are made up of individual NFT token businesses, all with different characteristics. Sometimes more properties equals a higher value, but sometimes it isn’t. Sometimes the simplest individual tokens are the most valuable, like the Bored Ape Ape NFT.
If you want to increase your chance of buying an NFT with a promising value path, check out the rarity of properties of your chosen NFT. You will need the NFT with the lowest spread among the lot, and you can view these percentages in the Properties section of the NFT page, as shown above.
Verifying the NFT’s properties is also a great way to make sure it’s legitimate. Lots of scam accounts upload copies of popular NFTs, but they can’t copy properties. So be sure to check this section as a safety measure as well.
2. Verify the seller
Like Twitter or Instagram, an official seller on platforms like OpenSea will have a blue checkmark next to their account name to prove they can be trusted and not an impersonating account. So, if you are looking to buy from a reputable seller, like World of Women or Cool Cats NFT, make sure the account has a verification mark.
However, this verification mark cannot always be relied upon to verify the legitimacy of the seller. Not many legitimate NFT sellers have their verification mark on certain platforms, just as some social media influencers are yet to be verified. So check NFT properties as a precaution if you want to buy from an unverified account.
You can also check the seller’s social media accounts to see if they have a decent follower base and check mark, as this can indicate their legitimacy. You can also check his page’s sales stats to see if it’s a well-established account selling the NFT you want, or a recently opened one.
3. Market platform transaction fees
When you exchange cryptocurrency, buy NFT, or perform a similar function on a marketplace platform, you will often be charged a transaction fee. The same applies to traditional e-commerce sites like eBay and Depop, but these fees vary by platform.
For example, OpenSea charges sellers a 2.5% transaction fee, with 2.5% of the sale value going to OpenSea. However, the buyer does not need to pay any transaction fees. This is the case for the majority of NFT markets, including Known Origin and Axie.
However, some platforms charge both ends of the transaction, such as Rarible, which charges the buyer 2.5% on top of the NFT price for each transaction. So make sure you are aware of any current fees on your chosen platform before making any purchases.
4. NFT liquidity and market size
NFTs do not have the same liquidity as cryptocurrencies, which is an important thing to keep in mind. You can’t liquidate an NFT into fiat currency as easily as you can with cryptocurrency, so this could be a problem for everyone who invests in NFT for a profit. Some experts suggest hashing NFTs to increase private liquidity rates, which basically involves splitting the NFT into smaller chunks.
On top of liquidity, it is important to consider the size of the NFT market. At the time of writing, the NFT market size is around $10 billion, and whether this number goes up or down depends largely on the type of NFTs that are purchased regularly.
As you know, the NFT market is still very young. Just a few years ago, hardly anyone was talking about NFTs, and we certainly weren’t seeing these digital works of art sold by the millions. And, as with many businesses or industries that seem to explode overnight, peaks can be short-lived. So it is important to take this into consideration if you want to buy NFT as a long-term investment, rather than owning it as a piece of art or in order to sell it in a few months.
5. Seller price performance of other NFTs
If you want to make sure whether or not your chosen NFT asset is a good investment, it is always a good idea to check the seller account. Here, you can look at his past sales and see what price he sells his pieces for. You can then scroll down the table and see how much of the same NFTs were sold a few weeks or months ago. The lower end of the value range is known as the lower price, which is the minimum price at which NFTs trade.
This will allow you to get a good idea of how NFT prices will fluctuate and if it is related to what you would like to see in your chosen NFT asset in the future.
Other platforms offer these types of insights, as well as additional stats that you may not have access to in the marketplace. Sites like NFT Stats and CoinMarketCap offer some interesting data on NFT sales, value, growth, and more, so be sure to check them out if you’re looking for more in-depth information.
NFTs are great investment opportunities, but it’s better to be safe
While you can certainly make huge profits buying and selling NFT, there are countless mistakes you can make while making buying decisions. Cybercriminals are currently profiting from the NFT field in major ways, and some assets of NFTs are simply not worth buying. So make sure you consider each of the above factors before completing this transaction. You can now check out the best cryptocurrency wallets to store your assets from.