In times when all the major investment opportunities like stocks are falling, many people look for alternative investment opportunities like contemporary art, or to take it up a notch, in digital art (NFTs).
Even though most people think that non-fungible tokens or NFTs were born overnight and will disappear the same way, it is important to mention that the first NFT came out in 2012, but this technology didn’t really catch on until the late 20-tees.
Last year was the perfect time for NFT lovers since some managed to get early in the market and invest a couple of hundred dollars to later sell their NFTs for hundreds of thousands of dollars and get a return, unlike any other investment opportunity.
However, this year the situation quieted down, and there is much less movement in the NFT space. Does this mean that NFTs are already thing of the past and are they still profitable?
What Gives an NFT Value?
In order to understand whether or not NFT trading is a profitable strategy, we first need to take a look at how NFTs get their value.
For newcomers in the NFT industry, this process can be odd just because they might encounter a beautiful art piece that has a value of $100 and a simple multiple-line painting that has a value of $1 million.
Well, the biggest factor that defines the value of an NFT is demand. Just like anything else in this world, if there are a lot of people looking to invest in the same NFT, the price of that image or video will go up. The same goes the other way, if nobody is interested in a particular NFT, no matter how good it is, it will be worthless.
The second thing that brings value to an NFT is the artist or the person that created it. If a well-known artist creates an NFT, its value will rise.
The third thing that brings value to an NFT is utility. NFTs are not just digital collectibles in form of images and videos. They come in a form of in-game items with an actual utility behind them. In other words, game developers might create NFTs that can be used in a game to bring benefit to the player.
The price goes higher for an NFT if its use brings an advantage to a player in a game, as you can see in wizardia.io.
Lastly, the thing that brings value to an NFT is a rarity. If an NFT is a one-of-a-kind it will have a bigger value compared to a common NFT with multiple versions of it.
How to Make Money out of NFTs?
When it comes to making money from NFTs the process isn’t that simple. It requires a lot of research, spotting trends, and market timing.
Unfortunately, we cannot generalize whether or not NFT is profitable since it depends on the user’s action. There are some people that made tons of money trading NFTs and some that lost a lot of money.
In order to increase your chances of making a profit, there are certain things you need to pay attention to.
. Do your Homework
The best way to profit from NFTs is to get in early or spot upcoming NFTs trends that will blow up in the future. Additionally, spotting NFTs before they were released gives you the chance to mint them at a lower price than the actual sell value of the image or video.
. Be Patient
NFT trading doesn’t guarantee an overnight success and sometimes getting to that desired profit requires time. This is why you need to be patient and not overreact to market changes.
. Invest in what you Believe in
Sometimes the hype of the project will not guarantee its success. In most cases, NFT projects that provide real value to users are the best ones to invest in. So, take a look at their road map, try to understand their idea and if you like the art and the entire project, you should make an investment.
. Track Your Gas Fees
One of the biggest expenses that can significantly lower your profits is gas fees. Picking a time when the network isn’t cluttered with many transactions will lower your gas fees allowing you to increase your profits.
