NFTs are sprouting up everywhere in the vast forest of the Web. Like mushrooms, there are good ones and bad ones. To avoid falling on a deadly specimen for your wallet, it is important to study them with a magnifying glass. In the following, you’ll find out the steps you need to take when choosing your NFT project.
What is an NFT?
An NFT is a digital property title attached to a work. NFT is the acronym for “Non Fungible Tokens”. “Non-fungible” means that they are not interchangeable, unlike a $1000 or 1 BTC note, for example, which are fungible.
The rarity, popularity, and usefulness that can be associated with an NFT make its value. For example, an NFT available at only 100 copies giving access to a private party with a well-known personality would probably see its value increase rapidly.
Steps to choosing a profitable NFT project?
Now that you know what an NFT is, let’s see how to choose a profitable NFT project. Here are the steps to guide you:
Step 1: Study the different projects to find one that you love
To start your investment, you can easily find new and old NFT projects on common NFT tools and social media platforms. An NFT project you’ll invest in should inspire confidence in you. Why buy something you don’t like? This first step may seem obvious, but too many people invest in NFT projects for the wrong reasons.
The lure of profit and the syndrome of the shiny object too often lead to a lack of lucidity on the part of certain investors. Not everyone has the same interests and will not be able to make informed decisions in specific areas.
Let’s imagine that you are a football fan and know the teams, players, and coaches well. In this case, investing in an NFT project related to the world of football makes sense as your knowledge will allow you to make better decisions. Choosing an area that you appreciate or in which you have a minimum of knowledge remains the best way to not go wrong. You can check a well-known exchange and NFT marketplace like Binance.
Step 2: Find out who the creator(s) of the NFT project are
Behind every NFT project, there are one or more people. To learn about the team is to look at their experience, their successes, and their failures in their previous projects. To use a sports analogy, you will not bet on a team made up of just any player and a coach that no one has ever heard of.
When several people are behind the project, it is always interesting to look at their complementarity. One of them was an illustrator for a recognized brand? Has another team member ever successfully started and resold a business? Does a third have a lot of experience in marketing?
If you find a project with an experienced team with people who are recognized in their field of expertise, this brings certain credibility and reassures about the potential of the project. Do the creators of the project give you the impression of simply being there to “make a splash” or, on the contrary, to settle for the long term and become references in the field? etc.
Step 3: Read the roadmap or the white paper of the NFT project
A roadmap is a document on which are written the objectives, strategies, marketing plan, and milestones of an NFT project. The goal is to communicate the long-term vision of the company. It is also an essential step to reassure investors, as any company looking for funds would do.
This white paper can take the form of a web page or a downloadable PDF document. By reading it, you should clearly see the vision of the company and the mission they have given themselves. If this resonates with you and you share the same values as the brand, chances are you will like their products. This is one more indicator in favor of the project.
When you join the project is also important. If it is still in the launch phase, you necessarily take more risks. But it’s also where your investment has the best chance of gaining value, hence the need to check the team behind an unproven project.
You can also check if the first key steps of the project have been put in place. If so, did the team meet the deadlines it set for its launch? If not, how can this be explained? Is the project too ambitious for this team? It is by asking the right questions that you find the right answers, so be curious.
Step 4: Look at the social presence and community
Before buying a company’s product, we often look at its social presence, particularly on the web. How many people follow the project on social networks? Read comments from other members of Discord, Telegram, or Twitter. What do they say about this brand? Team communication on roadmap progress and responses to the community is also important.
This brings us to another key element: community. A good NFT project necessarily has a strong community behind it. It is only with a committed community that the project can be successful. It is the members of the project who talk about it with enthusiasm and passion around them. It’s a great indicator of the brand’s potential for success.
Step 5: Consider the utility associated with the NFT
The NFTs you buy shouldn’t be just collectibles. Owning one of these works should ideally give you access to a platform, a private club, or an associated service. This is called utility. An NFT can for example give you access to a private event, a reduction for a product, or even an associated return if you keep it for a certain period.
There are more and more promising projects in the world of NFT. Note that not all NFT projects will stand the test of time, but many should have a great career. With the steps above, we trust that you’ll be able to find one or more profitable NFT projects you can invest in.
Note: Investment in NFTs are risky. You can lose your investments.