3 Steps to Safely Buying Your First NFT
KEY POINTS
- NFTs are joining the ranks of status purchases such as Rolexes, Lamborghinis, and yachts among cryptocurrency millionaires.
- NFT scams and fraud are increasing, but there are some steps you can take to ensure you make a safer prestige purchase of your favorite NFT project.
Non-fungible tokens (NFTs) can be profitable if you know what you're doing, and risky if you don't -- here's how to protect yourself.
NFTs continue to be one of the most popular trends within the entire cryptocurrency sector. According to NonFungible.com, NFT sales have increased every year since 2017, peaking in 2021 with total NFT revenue of more than $15.3 billion.
In January 2022, the largest NFT marketplace in the world -- OpenSea -- had a record-setting sales month logging more than $5 billion in NFT sales. A key driver of this trend is that NFTs are the newest intangible status symbols for the wealthy, joining physical prestige flexes that include Rolexes, Lamborghinis, yachts and all the other material trappings of the rich and famous.
While NFTs can be profitable if you know what you're doing, there's a level of risk if you don't. If you want to join the ranks of NFT owners, here are some cautionary steps to consider.
Use the right tools to find and screen for the best NFT projects
There are dozens of online resources for finding and assessing potential NFT projects. Three of the most popular -- and free -- websites to help educate and inform NFT decisions are provided here.
- Compass.Art: A web resource that provides a lot of in-depth and useful information regarding dozens of collections including those having a first-time mint at this very moment, showcasing the number available, average price, mints per hour and much more.
- Rarity.Tools: A useful way to evaluate and assess the rarity of every NFT in every collection that's currently available for sale. The data are updated regularly and in near-real time. It also has a tab for upcoming NFT projects with names, links, and mint dates for further research.
- NFTSignal.io: This website is a good sanity check. It allows you to see the projects that large investors are putting their funds into. You're able to see the exact NFT projects that the "smart money" is buying and how much was paid for each project. This could help you identify similar items within the same collection or validate a similar asset.
Do your own research on any NFT project
After you've identified a possible NFT project that you're interested in, the next thing to do is find the website for the project. That's where you'll discover its overarching mission, the vision and utility of the project -- if any -- as well as the name of the founders, financial backers, and designers.
Once you know the team members, Google their names so you can find out their backgrounds, expertise, as well as crypto and technical track records. You can also enter their respective names with Boolean search terms such as "scam, fraud, lawsuit, theft, crime, etc." to see if any negative media coverage surfaces. If so, read those and factor those into your decision.
Back on the project's website, be sure to check if it has a roadmap or whitepaper to get additional information regarding where it is on the development path and what the future plans might be. It's also a good idea to visit Twitter and enter in the project name as well as the name of the founder and developers. That can help provide a bit of social sentiment regarding the NFT. You can do the same thing on Reddit to get a different perspective as well.
Use a solid NFT trading platform
There are dozens of NFT platforms where users can buy, sell, and trade digital collectibles. The largest in the world is OpenSea, however, the larger NFT marketplaces tend to attract the most scams and thefts anecdotally. The best and easiest platform for a beginner -- or anyone for that matter -- to explore or buy an NFT is the VeVe Collectibles app from the iPhone app store.
VeVe has a host of proven NFTs from major brands that include Disney, Star Wars, Marvel, Star Trek, DC, Universal, James Bond, and more. Additionally, you don't need a cryptocurrency wallet to use VeVe as it connects to PayPal or a credit or debit card, and it's very easy to use. I've personally used VeVe for eight NFT purchases without a single issue -- it's a great first step into the world of NFTs.
Investing in NFTs can be risky and this is not financial advice, however, this may provide some useful information to begin exploring and get grounded in the popular trend.
Our Research Expert
Tor Constantino is a corporate communications executive and business writer with an MBA. Since 2017, he has written about cryptocurrencies, blockchain, and crypto's potential to revolutionize finance. His writing has appeared in outlets including Entrepreneur, Forbes, Fortune, CEOWorld, and Yahoo!.
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