Whether it is for prestige or to gain access to benefits, there are many benefits to owning NFTs. But here are eight things you absolutely have to do before buying them. NFTs (non-fungible tokens) are digital assets representing ownership rights over something unique. They’re often used for crowdfunding projects, but there are other uses too. Here are eight things you should consider before purchasing an NFT.
Before buying a cryptocurrency, ensure that you understand what you’re entering. At present, no regulatory bodies control cryptocurrencies. So, you will have no recourse if anything goes wrong. Also, cryptocurrencies are volatile, meaning that their values change frequently. This means that when you purchase one, you might not actually own it at all.
Often NFTs come in the form of collections. For instance, we have Crypto Kitties, MekaVerse, and the Bored Ape Yacht Club. These collections consist of individual Avatar artworks. These all have different properties. Sometimes the properties mean a higher value, and sometimes they do. In some cases, the simpler avatar was the most valuable.
To determine if an NFT is worth buying, first, you should check the rarity of the properties. You would want an NFT with the lowest percentage of commonness in the collection. Also, checking the properties of an NFT helps you confirm that it is legitimate. You can verify with websites to reveal scam accounts, although it is difficult to replicate the properties.
Like Twitter or Instagram, official sellers on popular digital asset platforms such as OpenSea will have a blue verification tick next to their account name to prove that they can be trusted and are not impersonator accounts. So, if you’re looking to buy from a well-known seller, like World of Women or Cool Cats NFT, ensure the account has a verification tick.
However, this verification tick can’t always be used to check the seller’s legitimacy. Many legitimate NFT sellers don’t have a verification tick on certain platforms, just like certain influencers on social media that aren’t yet verified. So, check the NFT properties as a backup measure if you want to buy from an unverified account.
You can also check the seller’s social media accounts to see if they have a decent follower base and verification tick, which can indicate their legitimacy. You can also check their page’s sales stats to see if it’s a well-established account selling your desired NFT or an account that was recently opened.
An Initial Coin Offering (ICO) is where a company sells its tokens directly to investors. It’s similar to a crowdfunding campaign, except that instead of raising money from friends and family, the company raises funds through an initial coin offering.
An Initial Exchange Offering (IEO), on the other hand, is where a company offers its token to investors first, then allows those investors to sell their tokens on exchanges. Here, the company is selling its tokens to investors, rather than giving them away.
If you’re considering investing in an ICO, make sure to research the team behind the project. Look at their social media accounts, read their whitepapers, and see what community support they’ve received.
You need to establish a good understanding early on, of what future prospects and hopes the seller has for this particular collection. Do they expect to sell it to collectors who will further trade it? Or do they want to sell it to buyers to hold?
How will the utility (value proposition) be delivered over time? What are the long-term goals, and if there are any, are they reasonable? Note that if the future vision seems too good to be true, it probably is.
It’s also important to check out the team members’ social media profiles. This will give you an insight into how active they are on Twitter, Facebook, LinkedIn, etc.
Before you buy an NFT, ensure sure you know who made it. Check out their website and see what else they’ve done. Are they just starting out? Or have they established with years of experience?
Is the official launch going to be a big event? Is the company going to drop the entire collection all at once, or is the launch going to be a calculated one? What is the time span of the launch if it isn’t a one-time drop? The drop proves to be a massive contributor to creating an engaged customer base for the NFT, therefore, you need to get all details about it before you invest.
With the roadmap out of the way, does the website have a reliable team to act on those prospects? Does the seller allow you, as a customer, to have an insight into the progress of the team throughout your journey? If the seller is not transparent regarding the gears of the process, you might want to reconsider buying from them. Moreover, if the original founders still participate in the project, it is a massive plus point because it gives you the reassurance that they will try their best to execute their vision.
If all of the above boxes are ticked off by a company, they are reliable and you can invest in their NFTs free of worry.