NFTs have become very popular in 2020 and 2021, and their value and desirability seem to be going up and up with no end. NFTs, on the other hand, have prices that vary a lot and can sell for thousands of dollars. Various scammers in the NFT industry try to take money from buyers who don’t know what’s happening. This is why it’s crucial to exercise caution and think about a few things before buying an NFT.
The NFT’s special qualities
Most NFTs are made up of collections. Bored Ape Yacht Club, MekaVerse, and Peaceful Groupies are only a few examples. These NFT collections are made up of different avatar NFT pieces with different properties. Of the time, having more properties means a higher value, but not always.
Sometimes the simplest avatars, like the basic Bored Ape NFT, are the most valuable. So, if you want to know if it’s worth it to buy an NFT, you should first look at how rare its properties are. You want an NFT with the lowest percentage of commonness in the collection.
As shown above, you can see these percentages in the Properties section of the NFT’s page. Checking the NFT’s properties is another great way to ensure it’s real. There are a lot of fake accounts that post copies of popular NFTs, but they can’t copy the properties. So, as a safety measure, keep an eye on this part.
Official sellers on popular online asset platforms like OpenSea will have a blue verification tick beside their account name, just like on Twitter or Instagram, to show that they can be trusted and are not fake accounts. So, if you want to buy from a well-known seller like World of Women or Cool Cats NFT, make sure their account has a verification tick.
But you can’t always use this verification tick to determine if the seller is real. Many legitimate NFT sellers do not have a verification tick on some platforms, just like some social media influencers aren’t yet verified. So, if you intend to buy from an unverified account, check the NFT characteristics as a backup.
You can also look at the seller’s social media profiles to see if they have a good number of followers and a “verified” checkmark, which can signify that they are real. You can watch how many sales their page has had to see if it’s a well-known account selling your desired NFT or a new account.
The Market Platform Transaction Fees
On a market platform, you often have to pay a transaction fee when you exchange crypto, buy an NFT, or do something similar. Traditional e-commerce locations like eBay and Depop work similarly, but the fees vary by platform. For example, OpenSea charges sellers a 2.5% transaction fee, which is 2.5% of the sale price.
But there are no transaction costs for buyers. Most NFT marketplaces work this way, including Recognized Origin and Axie. But some platforms, like Raible, charge fees on both ends of the transaction. For example, Raible adds a 2.5% fee to the NFT price per transaction for the buyer. So make sure you know about any fees on the platform you choose before you buy anything.
NFT Market Volume and Liquidity
It’s important to remember that NFTs don’t have the same liquidity as crypto coins. You can’t turn an NFT into regular money as easily as you can with cryptocurrency, which may be a problem for people who want to make money by investing in NFTs. Some experts say you should fractionalize your NFTs to make them more liquid. This means splitting your NFT into smaller pieces.
In addition to liquidity, it’s important to consider how big the NFT market is. When this was written, almost $40 billion worth of NFTs were on the market. This number varies depending on what kinds of NFTs people buy most often. The NFT market is still very new, as you know.
A few years ago, hardly anyone talked about non-fungible tokens (NFTs), and digital artworks didn’t sell for millions of dollars. And, like many companies or industries that seem to grow quickly, the peak may not last long. So it’s important to consider this if you want to buy an NFT as a long-term investment and not just as a piece of art or something to sell in a few months.
Price Performance of Other NFTs Sold by the Seller
It’s always an excellent idea to check the seller’s account to see if the NFT you want to buy is a good investment and will go up in price. Here, you can look at their past sales to see how much their pieces are selling for. Then, you can look at the table and scroll down to see how many identical NFTs sold a few months or weeks ago.
The lowest price at which NFTs trade is called the “floor price,” and it is the lowest price at which they can be bought or sold. This will provide an overview of how the NFT prices change and if they match up with what you’d want in your chosen NFT in the long term.
Other platforms give you these kinds of insights and more statistics that you might not be able to get on the marketplace. For more information, check out webpages like NFT Stats and CoinMarketCap. They have a lot of interesting data about NFT sales, value, growth, and more.