Non-fungible tokens are one of the next big things in the cryptocurrency community. You have probably read stories about NFTs selling for millions of dollars or the stories about people arning tens of thousands of dollars trading NFTs.
You have probably wondered if it’s possible for you to make money trading NFTs. It certainly is possible to make money trading NFTs. However, it’s also extremely easy to get rekt trading NFTs.
That is why this article will focus on how to avoid getting rekt trading NFTs. Honestly, it’s not difficult to avoid going broke trading NFTs, but you will have to shell out some money to avoid going broke.
Anyway, here are some of the top tips we have to help you earn some money trading NFTs.
Tips For Trading NFTs
The NFT world is complicated to say the least. This is because anyone can create an NFT, so a lot of junk NFTs exist. Junk NFTs are worthless NFTs that are valuable only because they’re an NFT.
It’s similar to how ICOs could lure investors with enough hype or companies increasing their valuation by adding .com during the Dot Com bubble.
With that in mind, here are some of the tips we have for trading NFTs.
High End NFTs Are Best
Our biggest tip is to focus on high end NFTs. We define these NFTs as the ones attached to a high-end brand. This could be a band, a professional sports league, a celebrity, or really anything else that would be considered high-end or collectible in real life.
The reasoning for this is pretty simple – if it’s worth a lot in meatspace, then it’s worth a lot as a digital asset.
This strategy does have one major downside, though.
It’s really expensive. A high end NFT will usually fetch six figures and seven figures is not unheard of for an NFT attached to something memorable such as some of the NBA Top Shot NFTs.
However, those high-end NFTs will likely always be worth something considering the brand equity built into the NFT. For instance, Lebron James’ first dunk in the NBA will always be worth something because, well, it’s Lebron James and his stardom likely isn’t going anywhere.
That same reasoning applies to popular bands, but it does not apply to videogames. Remember, videogames come and go all the time. If the video game becomes less popular, then the value of the NFT will drop in value.
With that in mind, we strongly recommend sticking to high-end NFTs if you can afford them. Don’t worry if you can’t afford them, though. There are still plenty of more affordable options available for NFTs that can still make money.
Rising Popularity NFTs
The other option for NFTs is to stick to NFTs that are based on projects that are rising in popularity. We do admit that this is a good way to get rekt trading NFTs, but a low amount of investment means that you must take on more risk to make money.
If you want to stick to the more speculative NFTs, then we recommend choosing ones that are based on video games that are rising in popularity.
The logic is simple on this – if the video game rises in popularity, then your NFT should rise in popularity. Band related NFTs are another option, but 99.9% of bands will never become anything. And that means your NFT will likely never be worth more than you paid for it.
Basically, avoid music or art NFTs unless it’s an already established band, musician, or artist.
For this, when we see value, we mean the NFT has some sort of purpose other than simply aesthetics. A good example is an NFT that adds some sort of feature or other unique ability to a video game.
This could really be anything, but it is usually video game specific. Of course, this also requires having some familiarity with blockchain games. And that brings us to our next point.
Only Invest in NFTs You Know About
Perhaps the most important point is to only invest in NFTs if you have some understanding about the purpose of the NFT. This is actually pretty basic investing advice – only invest in things that you understand.
If you can’t pinpoint the exact reason that the NFT is valuable, then don’t bother investing in it.
That one concept alone will save you from getting rekt trading NFTs.
That covers it for some quick tips on not getting rekt while trading NFTs. The easiest advice is to stick to high end (read: expensive) NFTs. The value of those will likely only increase over time as the digital space slowly eats meatspace. However, we know that isn’t possible for everyone, so in that case we recommend sticking to projects that have the potential to explode in popularity.
The final tip is, of course, to only trade NFTs if you understand what they’re about. Don’t bother with expensive NFTs that you don’t understand. That is a recipe for disaster.