At this point, you’ve probably heard the term “NFT” enough to have a vague idea of what they are. Unsurprisingly, the NFT market is now worth over $54 billion, up from $100 million in 2020, and the combined value of the top 100 NFTs ever issued is nearly $17 billion
NFTs are now almost in every industry like Hollywood, music, gaming, sports personalities and big names like Coca-Cola and Nike. NFTs are rapidly entering mainstream investment circles and have the potential to disrupt entire industries.
In this article, we will be looking at how to invest in NFT without breaking the bank.
What are NFTs?
Non-fungible tokens (NFTs) are digital assets stored on a digital ledger (blockchain) that serve as a secure ownership document. They are essentially a digital stamp confirming that an online asset is original.
Non-fungible means that they are not equally interchangeable; being “non-fungible” means they are not interchangeable; for example, as a cryptocurrency, they have unique properties.
When you buy one, computers on the crypto network record the transaction on the blockchain, making it part of the permanent public record.
How to Invest in NFTs Without Breaking the Bank
Before you buy small amounts of NFTs, it is important to note that they are highly speculative assets. Most investors buy NFTs hoping they will appreciate in value, and in many cases, they are bought primarily to show off.
The assets it contains are easily duplicated since this is the internet, after all (although the stamped original always remains the original). For example, images, GIFs or songs can be downloaded from the Internet. If you are not careful with your NFT wallets, they can also be stolen. And they don’t offer the buyer the same steady cash flow that stock dividends and real estate investments offer, but the creators of the original NFTs can earn royalties from each resale.
However, they are a new asset class that represents a continuous evolution of blockchain usage, and they deserve a closer look, perhaps not for what they are currently doing but for what they can achieve in the future.
If you want to experience it for yourself by investing in it, there are several ways to do it, which be discussed below:
Buying or Making NFTs
Buying NFTs is pretty straightforward. All you need is a cryptocurrency wallet (preferably ether, as it contains most NFTs). Then you are familiar with NFT marketplaces like OpenSea (the largest), where you can buy and sell your own NFTs.
After purchasing an NFT, you will receive an access code, and that’s it. You now have your own NFT. You can keep it or sell it (hopefully for a profit) if you wish.
Another option is to create your own NFT and sell it. If you are an artist, you can try to make something that could be the next Nyan Cat.
You can sell your NFT and even choose to earn a 10% royalty every time someone resells it.
Buy NFT Adjacent Stocks
For those of you who don’t want to buy NFTs outright, a better, and perhaps less risky, approach is to invest in companies involved in this space.
Over the past year, many large companies have joined the NFT train hoping to capitalise on the momentum.
In May 2021, eBay (EBAY) began selling NFTs on its platform.
The original meme stock Gamestop recently mentioned entering the NFT space. This sent shares higher as investors expected the brick-and-mortar company to attempt to reshape in a new direction. However, it remains whether Gamestop’s NFT market can compete with markets like OpenSea, which are currently valued at over $13 billion.
Many video game developers and publishers already generate the majority of their revenue from the sale of in-game items and content, such as a revenue stream.
Take-Two Interactive (TTWO), which recently acquired mobile game developer Zynga, has made it clear that it is looking at ways to incorporate NFTs into its games in the future.
Ubisoft (UBI) announced the integration of NFTs into its Ghost Recon: Breakpoint game in December 2021. The NFTs, dubbed Digits, will come in the form of in-game accessories and upgrades available for purchase on their new platform, Ubisoft Quartz. Players can buy and resell numbers, and ownership is recorded on the blockchain. Although the stock took a hit following the announcement, it has recently bounced back.
Many smaller companies and microcaps offer unique NFT exposure, but most of these are fairly speculative, so be sure to do your due diligence.
Galaxy Digital (GLXY) is a small financial services company serving the entire crypto industry. It serves institutions, has investment banking and a mining segment that mines Bitcoin and funds other mining stocks.
It also has a business unit that offers NFTs and invests in NFTs itself, as well as several companies operating in this space. The stock has seen a sizeable decline of late, down nearly 50% from its 2021 peak.
NFTs have something for everyone, whether you’re a budding digital artist looking to monetise your passion or a trader looking to capitalise on your investments. Investing in NFTs is much easier than you might expect, and hopefully, this article has given you the confidence to participate and purchase your first NFT.
If you are looking for a guide to help you with ways to invest in NFTs, check out this one.