How to Invest in NFTs: A Quick Guide

Did you know that in 2021, over $41 billion was spent on NFT marketplaces? With the world adopting digital assets, investors are beginning to get involved.

However, NFTs aren’t exclusive to the wealthy. Anyone that owns cryptocurrency can purchase NFTs. for those interested in how to invest in NFTs, continue reading.

What is an NFT?

Non-fungible tokens (NFTs) are digital assets that are stored on a blockchain – The same technology that cryptocurrency is built on. What makes them different from cryptocurrencies is their non-fungible nature. Where there are multiple of the same cryptocurrency, NFTs are unique in their code.

Due to the token’s uniqueness, they inherently hold value. While others can view the token, only one person can claim ownership. The opportunity to own something that can not be replicated makes NFTs highly valuable in several cases.

Often created as artwork, music, or video clips, people are paying hefty prices to own NFTs. Crypto Punk, a series of pixel art, has pieces selling upwards of $20 million. With numbers this high, investors see the potential to make a lot of money.

How to Invest in NFTs

Unlike traditional artwork, NFTs are exclusively digital. When learning how to invest in NFTs, you’ll need to own cryptocurrency. You can do this using a crypto exchange platform such as Coinbase.

When you purchase crypto, it goes into a digital wallet (AKA crypto wallet). You can leave it in this default wallet or move it to another form for additional security. Wherever you decide to store your crypto, you’ll want to keep track of the transfer key associated with your wallet.

To invest in NFTs, you’ll take your digital money to an NFT marketplace. This is similar to any other online market, only it deals in NFTs exclusively. Many NFTs sell in an auction format, although some give you the option to purchase outright.

Benefits of Investing

Although these digital assets are relatively new in the art scene, there are benefits to investing in NFTs. Companies like nested.fi suggest that the uniqueness of NFTs bolsters investment opportunities. Those that navigate the volatility of the tokens may find great success.

Unlike traditional art, your NFT purchase is protected from damage or theft with blockchain technology. Using encryption and decentralization, it is nearly impossible for someone to alter the digital ledger. This ensures that your asset stays in its original condition and in your possession.

Investing in NFTs also allows you to learn more about the technology. With blockchains quickly integrating into every industry of our society, you can begin to familiarize yourself with several aspects while also diversifying your investment portfolio.

NFTs for Beginners

As with any investment, it is wise to familiarize yourself with the assets you are purchasing. While the above information helps you learn how to invest in NFTs, there is always more to know. For further information on NFTs, as well as other blockchain topics, check out our Technology section.