The digital art market has reached over $24 billion in the last few years, with NFT marketplaces booming with the sale and exchange of NFTs and cryptocurrencies. Investing in the art market has never been easier with more and more opportunities to purchase NFT artworks. These digital assets can be crucial to your investment portfolio and may generate high returns over time. If you’re a collector or artist, here is everything you need to know about investing in NFTs.
What are NFTs?
A non-fungible token of NFT is a unique digital asset stored and exchanged on a blockchain network. NFTs are purchased using cryptocurrencies and are always encrypted with the original code of a digital file and information about the asset’s creator, owner, and history. Because NFTs are held on blockchains, they cannot be lost or tampered with, securing and protecting the asset online no matter how long you hold it.
How to Purchase NFTs
Purchasing NFTs is quickly done online through an NFT marketplace such as FTX. Before purchasing your first NFT, you need to open and fund a crypto wallet. There are many apps you can use to open a wallet. You can fund your wallet using whichever cryptocurrency you prefer; however, be sure the NFT marketplace you want to buy through is compatible with the currency you select. Once you’ve chosen a marketplace and funded your crypto wallet, you can begin to purchase NFTs.
Do your research beforehand to know which artists you want to buy from. Many artists will promote new NFT drops to build hype around their latest collections. You can look on the marketplace to see the rarity of certain NFTs and gauge how popular a collection might be.
It can be challenging to predict which NFTs will be popular in the future. Still, these art assets typically accrue value over time regardless of their initial sale value.
When to Sell Your NFTs
To get your money back on your investment, you need to pick a strategic moment to sell your NFT collections. Investing in art is a great way to protect your portfolio from inflation. However, this leads to other challenges when it comes to knowing when best to sell. Keeping an eye on trading volume can indicate when the NFT market is hot or cold for sellers. When trade volume is high, you have a better opportunity to sell.
Further, keep tabs on the career of the original artist of the NFT. The success and popularity of the artist can significantly impact the value of your NFT. If you’re unsure what to list your NFT at, you can put it up for auction to see how much it will go for on the market. Remember what you bought your NFT for and have a reasonable pricing strategy when purchasing so you have an idea of what to sell it for later on. There is always a risk when investing in any asset, but with digital art NFTs, there is a ton of opportunity for financial success as the market continues to grow. Staying informed about the state of the marketplace is key to successfully reselling your NFTs for a profit.
Diversify your investment portfolio this year by investing in the digital art market. NFTs are a wise long-term investment that can give you great returns and the opportunity to take advantage of a growing art market.
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