DataDrivenInvestor
Feb 22
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Investing in NFT is no joke, well, except you have so much money that you can afford to buy a couple of them without your pocket ‘screaming’ for help. This is because there are so many NFT collections popping up in the market daily. In fact, almost every day, you have new NFTs.
So how do you know the ones that will make it?
How do you know the ones that will give you a run for your money?
Do you buy them all?
Well, I don’t know about you, but I do not have that type of money!
Except you’re living under a rock, you would know that NFTs and Metaverse are the ‘buzzing’ words right now. Everyone is talking about it, and as you must have guessed, the two are somewhat related. Let’s do a brief introduction to what NFTs are. If you are already getting bored, jump to the next section of the article.
NFTs are non-fungible tokens. It means they are unique and can’t be replaced. Just like fungible objects in the tangible world: there may be many copies of the Mona Lisa, but only one has the certificate of authenticity.
NFTs can be anything but most times, we are talking about digital items. You can buy and sell NFTs on specialized platforms known as the NFT marketplaces. For example, Opensea is one of the most popular marketplaces. If you are very familiar with cryptocurrency, then investing in NFTs should not be a problem, as they are somehow similar.
By now, you should know what NFTs are, even if it’s just a tiny little bit but if you don’t or you need further explanations, please catch up on some of my articles.
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Okay, with the NFT intro out of the way, let’s talk about identifying NFT collections with potential. Not to worry, your questions will be answered, so don’t go anywhere, okay?
Let’s now focus on how to decide whether to buy an NFT:
I’m sure we can both agree that the NFT market is one of the fastest-growing sectors in the crypto space. Just as you’re interested in this fast-rising sector, millions of other people are as well. And these ‘other people’ could include scammers and rug-pullers that may want to just take your money without giving you your money’s value.
Whether you’re an artist or a collector or just generally interested in NFTs, here is a guide to help you identify NFT collections with potential.
First off, there’s something I call an ‘NFT decision-making process.’ This has to do with the basics of selecting an NFT. This is what I mean;
These are the basic things you look at before choosing an NFT. For example, if you see any art and it’s appealing to you, that means you like it, right? And if you like that art, there’s a probability that thousands, if not millions of people will also like that same art. Make sure also to consider the potential market size. We want a collection with a large market size. So what if you have a nice-looking artwork and there is a potential market for it, do you think it’s enough reason to invest? So what do we do next?
The next thing to do is to check out the community on social media. I’m going to dwell more on here because the community is where you get the juice and whatnot. I usually check their social media to know if they have an excellent online presence. It could be on Twitter or any other channel. They should also have a lot of social media engagement. Check the comments, check the likes! Check the engagement. Note that a large ‘following’ doesn’t necessarily mean they have a good online presence, so watch out for accounts with bot followers (you can usually detect this if an account has, for example, 50 000 followers but the posts have only 5 likes and 3 comments).
You also need to understand whether the community is real and active. Any NFT project with potential will definitely have a channel for educating its followers and also to communicating its updates or progress. For instance, you could join a project’s Discord channel to get a better insight into the project’s activities, which could help you decide whether it’s worth your coin. Or not!
But like I said earlier, these are just the basics. In addition to this, there are several other variables to also consider. These variables will give you a more objective and informed decision when choosing your NFT. So let’s look at them, shall we?
How committed is the artist? What about the team? Is it a small team? These are questions you need to answer to enable you to identify those NFTs with potential. To answer these questions, you need to do your homework. Check blogs watch YouTube videos. Many of these questions have been answered by people already, so just find them! The more “invested” the team is, the higher the probability of success.
Ok, we have looked at the art the market, the community, and the artist/ team. Is that all? Well…. no.
This is to know whether they reveal their true identity or they work under a pseudonym. The team behind a project actually determines the success of that project. It is important to understand that when you invest in an NFT, you are indirectly investing in the team behind the project. So it’s better if you know the real identity of the project's founders. Not all pseudonym teams are scams. The Humanoids, for example, is a super legit project (and yes, I have some). On the other hand, other good projects like Meta Angels gave a fully doxed team.
In the same way, if a well-known artist is about to drop an NFT collection — like Damien Hirst's “Currency”, you know that it will have a lot of demand.
A roadmap shows the goals and future milestones of an NFT project. Think of it as a business plan. A business plan highlights short and long-term goals. That’s exactly what an NFT roadmap does. Are these goals attainable? If this is attractive to you, you can decide to go with them and if you can’t make sense of it, then it probably won’t make sense eventually.
You need to have in mind that in most cases, super ambitious roadmaps are a bad sign. For example: does the project promise to launch a hyper-realistic metaverse game within six months? How are they going to do it? Even big AAA game developers with hundreds of employees sometimes take more than 2 years to develop a game!
This answers the question: “How relevant is this NFT in the Metaverse?” As said earlier, NFTs and the Metaverse work hand in hand. For example, you can use your NFTs in the Metaverse to buy virtual land. An NFT that has one or more usefulness in the Metaverse is a potential NFT that should be invested in.
Utility is another indicator of the potential success of an NFT collection. This means that you should have access to some exclusive benefits rather than just being a collector. For example, Bored Ape owners have first access to new NFTs, NFT upgrades, and a couple of other perks. Bored Ape Yacht Club has organized meetups in New York and California. In fact, in November, there was an actual Yacht party and concert for Bored Ape owners. How cool is that?
Some NFT collections also have additional utility. This can take the form of NFT Staking, DAO voting, and more.
With this, you want to know if the different NFTs in the project look different from each other. Here, we are testing for their ‘alikeness’. For instance, Mekaverse is an NFT project that people initially invested in, but then the price dropped because once the NFTs were revealed, people noticed that they looked so much alike. i.e., each one was not that unique compared to the other.
If there’s not much difference between the NFT collections, then the NFTs have very low/ no potential at all. Hence, it would be best if you reconsidered investing.
Here, we want to see if the project is paying Key Opinion Leaders such as YouTubers or social media influencers to talk about them or publicize them. An NFT collection with potential wouldn’t employ such methods. You need real opinions from people who actually took their time to study the market, who didn’t get paid for their views, and who would definitely not be biased in their judgment.
Also, if a celebrity endorses an NFT, that NFT might have very good potential. Celebrities are crowd-pullers. For example, Stephen Curry, DJ Khalid, Post Malone, Jimmy Fallon, Snoop Dogg, Eminem, Jay-Z, and even Future are all Bored Ape owners. Do you know how many people would be influenced to buy the NFT just because their favorite celebrity endorsed it? But please be careful here because some celebrities could be gifted NFTs, so it would seem as though the project is doing really well.
NFTs are here to stay, no doubt about that! A lot of organizations are pulling their weight into the NFT space. It’s only a matter of time before everyone realizes that it’s definitely something to ape in. NFTs are the true democratization of digital art.
The crypto space is volatile and isn’t certain so always make sure to do your research before investing. It is only wise to put an amount of money you’re willing to forgo if things go south. I’m sure by now, you should be able to know those collections that will yield you profit later in the future.
If this article has helped you in any way, please leave a comment. Also, don’t forget to share with your friends.
Do you want to learn more about crypto, NFTs, and the Metaverse?
🚀 Follow me if you like this content and also check my blockchain and NFT courses:
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📖 The Complete NFTs CourseLearn everything about NFTs
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