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You have heard the buzz about Non-Fungible Tokens (NFTs) and you have seen people make millions off of CryptoKitties and similar collectibles, but you haven’t invested because you’re afraid of losing your money. You’re not alone! Although there are some fantastic opportunities in the space, investing in NFTs can be risky if you don’t do your research and know what you are getting into. If you are into cryptocurrency, you may also consider knowing about Cryptocurrency Seed Phrase.
Here are 7 safety points to consider before buying into any NFT project! Read on to know more in detail to have an overall better understanding!
1. Study, study, study
When it comes to investing in NFTs, it’s important not just to see where your assets are held but also how they’re held and what safeguards are in place. There’s no substitute for due diligence when it comes to investing in blockchain technology. Look at upcoming nft drops and research what makes them unique.
2. Go slow (Don’t rush)
The popularity of non-fungible tokens (NFTs) is quickly rising, with games like CryptoKitties leading the way. If you’re looking to invest, take your time and do it right. There is plenty of money to be made off these blockchain projects—but there is also plenty at stake if you don’t act thoughtfully.
3. Don’t invest your rent/mortgage payment
If you have a ten-year fixed mortgage at 4% interest, your monthly payment is $1,000. That’s what you should be investing with—not $200 or whatever other figure you might choose. When it comes to saving for retirement and your future, it’s easy to get ahead of yourself and think that investing a lower amount will make a big difference.
Don’t fall into that trap. If your rent/mortgage payment is eating up your budget every month, you don’t have much left over for financial investments anyway—so look at ways of reducing that expense before doing anything else.
4. Learn about exchange platforms
If you plan on trading non-fungible tokens, or hope that your project might one day be traded on an exchange, it’s worth familiarizing yourself with how these platforms work. Many of them—such as EtherDelta and CryptoBridge—are effectively decentralized exchanges; these services pair buyers with sellers and take a small fee for facilitating trades. For example, if you wanted to buy CryptoKitties, you might create an order using a smart contract written by CryptoKitties team members.
5. Manage the risk factors
It’s important to understand that investing in NFTs carries a risk, especially if you intend on selling your assets. The market is relatively new and not regulated, meaning that while it could be an exciting investment option, you should also keep tabs on how your assets perform in comparison with traditional assets such as stocks and bonds. Not sure what an NFT is or how they work? Don’t worry—we’ve got you covered with our beginner’s guide here .
6. Diversify your investments
Before buying non-fungible tokens (NFTs), it’s important to do your due diligence. Don’t rush into an investment without first educating yourself about an asset or ICO. There are plenty of trusted places where you can find and evaluate information. Regardless of what service or resource you use, make sure it comes from a reliable source before making any investment decisions for NFTs.
7. Do your research
The growth of new technology platforms means an influx of untested, unregulated investment vehicles that seem too good to be true. And they often are. We’re not saying blockchain and cryptocurrencies don’t have a promising future—just that you need to be aware of how little we actually know about them. Some will become massively profitable over time, while others will become nothing more than tools for fraudsters and thieves.
Do your research; look at white papers and business plans; check out an exchange or two before you decide where to put your money. A good way to gauge the project’s viability is by conducting token holder surveys. These surveys can provide valuable insights into the community’s sentiment and expectations, helping you make more informed decisions. If something feels too good to be true, it probably is. There’s no such thing as easy money—especially when it comes attached with a lengthy white paper.
Conclusion
Although non-fungible tokens have opened up a whole new world of investment opportunities, there is currently little regulatory oversight. There is also no standard way of valuing these tokens, which means it’s difficult for investors to make rational decisions. With that said, some companies will help you make an educated decision on your investments, while others will take advantage of your inexperience. As always, do your research before investing any funds into a new asset class at https://ethereumcode.app/.
