First, a quick word before diving into how to invest in NFTs. The popularity of these assets has skyrocketed in 2021 as well as their price. If you research this topic a little, you probably heard about NFTs selling for millions of dollars. Of course, only a handful of NFTs have reached such astronomical prices. This would be the case for a digital called ‘the first 5000 days by the artist beeple or the first-ever tweet by Jack Dorsey. For collectors of digital arts and other unique content, buying NFTs seems to make sense. However, investing in NFTs would be highly speculative at this point.
How to invest in NFTs: Key factors to value NFTs
In this article, we will be focusing on the key factors that influence the price of NFTs. Knowing these key factors is crucial to know how to invest in NFTs. If you want to know how to buy an NFT, please read our article on how to buy NFTs.
The key relevant factors that affect the value of an NFT are scarcity, utility, reputation, and liquidity. Also, depending on the nature of the NFT, some factors will affect value more than others. Let’s go over each of these so we can make informed decisions when investing in NFTs.
The utility refers to how the NFT can be used. Some NFTs are more than just collectives or digital arts and can be used in different ways. It makes sense for these NFTs to have an added utility value. The most popular example of utility is gaming NFTs which can be imported and used in actual game scenarios. For example, a rare object to enhance a character´s skills or new clothing for their character. The fact is that being able to make use of NFT in different ways adds value.
The scarcity factor refers to how rare the NFT is. This is similar to traditional art which draws value depending on how unique it is, the artist who made it, and the techniques applied. One such example in the NFT space would be Jack Dorsey’s first tweet ever as we mentioned before or Elon Musk NFT song which got an offer for 1 million dollars. As we can see, the reputation of the artist also plays a big role since people are drawn to assets owned by influential people or brands. With reputation you have two options, find an NFT that was previously owned by a famous artist and resell it for a profit or reach out to individuals or companies with a strong brand to cooperate with them by making NFTs.
The liquidity factor refers to how quickly you can sell the item. Investors should invest in NFT categories that trade at high volumes; this is also true for most financial assets. Having a large number of potential buyers reduces the risk of holding the NFT for too long.
Our Forecast of the NFT investing market
At Stadioplus we believe the NFT space shows a lot of promise, and recent popularity spikes are just the beginning. NFTs will continue to revolutionize how we think about digital works as the booming market continues to grow.
If you still have any questions on how to create NFTs, don´t hesitate to visit us at StadioPlus. We´ll be glad to answer your questions and welcome you into our community.