Dear Happy Investor, In this article we cover a basic explanation regarding NFT. Think of it as NFT for dummies. We explain what an NFT is and why and how to invest in these non-fungible tokens. We also give tips and explanations on how to get started. And, very important, we name the major risks of this interesting development within the crypto world.
All about NFT for dummies!
What is a NFT?
NFT is an acronym that stands for non-fungible token. NFTs are unique digital assets and cannot be replaced by other identical support. Unlike fiat currency or cryptocurrency, NFTs are not interchangeable. Each NFT has its value and can be traded or sold like any collectable. Thanks to their unique properties, NFTs have the potential to revolutionize the way we interact with digital experiences.
Lets look at an example to explain NFT for dummies. Currently, a non-fungible token has several uses. For example, an NFT can be used for a digital art piece. Suppose you have a valuable baseball card. Instead of keeping it physically in its original packaging, such a baseball card can also be converted into an NFT. In this case, the baseball card is given a kind of unique digital encryption in the form of an NFT. This makes this card "branded", so to speak, so that everyone can recognize that this is the original edition.
The application of the non-fungible token is still in its infancy. It does, however, fit in seamlessly with the ever-increasing digitization.
NFT for dummies: why (not) to invest?
NFTs are a new and exciting technology with a lot of potential. However, there are also huge risks, as the development of non-fungible tokens is still early. Make sure you do a lot of research and understand the risks before you invest. In fact, this means that NFTs are not for dummies 😉 .
NFT for dummies is not that easy to explain. Yes, the potential is great because each digital asset can be given a unique encryption. With an NFT, a digital asset can become unique. One practical application for investors are NFTs of collector items. But this is also a very difficult market, making NFTs not suitable for dummies.
Currently, NFTs are being sold for high prices. These are quite "useless" assets. For example, there are CryptoPunk NFTs. This is nothing more than an image of a "cryptopunk". You can't do anything with it at all. However, the demand is sky high. Why are people buying this? Because they are speculating. They expect the price to rise due to increasing demand. And if they are wrong, they are left with a digital ticket worth thousands of dollars. Yes, really.
NFTs are not for dummies. Moreover, they are very volatile. The prices of NFTs can go up and down very quickly. This means that you can lose a lot of money if you make bad purchases. If you only buy "hype" items, there is a good chance you will lose a lot of money. Instead, try to look for really valuable non-fungible tokens. And that's not exactly easy at the moment.
All in all, dummies are better off not investing in NFTs. Why take unnecessary risks? You can build long-term wealth purely thanks to risk diversification in valuable assets. For example, check our best stocks for potentially high returns of >15% annually.
NFT for dummies: how to buy and sell
This article is about NFT for dummies. We assume that this phenomenon is entirely new to you. To get you started, we'll go through an overview of the process to buying and selling.
How to buy NFT
To buy an NFT, you'll need to find a marketplace that sells the type of NFT you're interested in. For example, if you want to purchase digital artwork, you can search for "NFT art marketplace" to find several options.
Once you've found a marketplace, you'll need to create an account and deposit funds into your account. Once you have funds available, you can browse the marketplace and purchase the NFTs you're interested in.
Tips for buying NFTs:
- Check out the creator's profile before you buy. It will give you an idea of their reputation and the quality of their work.
- Read the item description carefully to ensure you know what you're buying.
- Pay attention to the price. Don't overpay for an NFT just because it's trendy.
Big warning regarding NFT for dummies: as indicated, this is not for beginners. Yes, the technology, like blockchain, offers a lot of potential. The thing is, however, that at the moment it is speculation at its finest. You can buy NFTs that really can't do anything. It's basically like baseball cards. Only in this case, it's much harder to determine which NFTs have a lot of future value.
How to sell NFT
To sell an NFT, you'll need to list it for sale on a marketplace. You'll need to set a price and provide information about the NFT, such as a description and image. Once your NFT is listed for sale, buyers can purchase it from you using the funds in their accounts.
Tips for selling NFTs:
- Make sure your item is high-quality and worth the price you're asking for
- Promote your item on social media and other channels to get more exposure
- Be patient! It may take some time to find a buyer, but eventually, someone who's willing to pay your asking price will come along
Marketplaces to Buy and Sell NFTs
Marketplaces are an important factor at NFT for dummies. There are several different marketplaces that you can use to sell and buy NFTs. Below, we've listed some of the best options currently available.
Open Sea is one of the largest and most popular NFT marketplaces. It supports a wide range of NFTs, including those from Ethereum games such as CryptoKitties and Decentraland. The NFTs of Decentraland are focused on the real estate metaverse.
The Enjin Marketplace is another major option for buying and selling NFTs. It offers a wide selection of NFTs, including those from popular games such as Minecraft and World of Warcraft.
Nifty Gateway is an up-and-coming marketplace that specializes in NFTs from the world of gaming. It currently supports NFTs from Fortnite, CryptoKitties, and Gods Unchained games. In the future, these kinds of digital images could be quite valuable. Fanatical gamers have a lot of money to spare for rare collector items.
Important tips to keep in mind While selling and Buying NFT:
If you're interested in buying or selling NFTs, there are several things to keep in mind:
- Make sure you understand the risks involved before buying or selling an NFT. For example, there's always the possibility that the value of an NFT could go down over time.
- Be aware of the fees charged by the marketplace you're using. Some marketplaces charge buyers a fee, while others charge sellers a fee.
- Read reviews of the marketplace you're using to make sure it's reputable.
- Make sure you understand the terms and conditions of the marketplace before buying or selling an NFT
- Buy NFT only with money you can afford to lose in the long run. Assume that you will lose money. Therefore, hold for the long term as well
- Ideally, buy "undiscovered" NFTs with lots of future value. Which ones these are exactly is of course the crux
NFT Risks and how to get started well
When venturing, as a dummy, into the world of NFTs, it's essential to be aware of the risks involved. Here are some of the key risks to keep in mind:
- Lack of regulation: the world of NFTs is still largely unregulated, which could lead to scams or other unethical practices.
- Volatility: the prices of NFTs can be highly volatile, meaning that you could end up losing money if you're not careful.
- Limited liquidity: it can be challenging to sell an NFT once you've bought it, as there's often limited liquidity in the market.
- Storage and security: storing and securing your NFTs can be tricky, as they're often stored on third-party platforms that may not be entirely reliable.
- Technical complexity: the technology behind NFTs can be complex, making it difficult to use them or understand how they work.
If you're thinking of getting involved in NFTs, it's essential to do your research and understand the risks involved. However, there are also some tips you can follow to help you get started safely and responsibly:
- Start small: don't invest more than you can afford to lose, and don't buy more NFTs than you can keep track of.
- Do your research: make sure you understand what you're buying and take the time to research the seller.
- Use a reputable platform: when buying or selling NFTs, make sure you use a reputable platform that offers security and protection.
- Store your NFTs safely: keep your NFTs stored securely, preferably offline, to reduce the risk of loss or theft.
- Seek professional help: if you're unsure about something, seek professional advice before making any decisions
Questions or comments about NFT for dummies? Let us know in the comments below!