There is no straightforward answer to this question, and there is no guarantee that by following the ideas listed here – or ideas listed by anyone, anywhere – that your purchase will be worthwhile to you.
Here’s a few ideas to keep in mind when choosing what NFT to buy:
- Do I like the NFT?
- What is the reputation of the creator of the NFT?
- Does the NFT have a community?
- Am I buying the NFT as an investment?
- Does the NFT have a roadmap?
- Can I afford the NFT?
Do I like the NFT?
This is what comes to mind first. Do you like what the NFT looks like? What it represents? The art style? Having an interest in the NFT itself helps you to form a stronger connection to it.
As an example, if you’re a sports fan, look into officially-licensed sports NFTs. If you’re a fan of art, find an NFT collection with an art style that speaks to you.
What is the reputation of the creator of the NFT?
It’s important to do your own research on the creator of the NFT. Look for trusted information from an original source. This will help you to avoid rug pulls and other types of scam.
Quality NFT collections will be transparent with the team behind the collections, and will also be doxxed – sharing their real information, rather than a pseudonym.
Be warned: many celebrities have launched NFT projects, only to abandon them before delivering anything of note. Just because a known figure is attached to an NFT project doesn’t mean it has your best interests at heart.
Do your research, ask questions, and find out the information you want to know. If red flags appear, it’s best to steer clear.
Does the NFT have a community?
How many people are excited about the project, and how involved are they?
Most NFT collections will have a Discord, where you can see the activity, interest and discussion first hand. Be wary of huge numbers for a brand-new project – social media numbers and chat activity can easily be botted, so keep an eye out for authentic followers, and ask them questions about the NFT collection if you can.
Am I buying the NFT as an investment?
Generally, there’s two main reasons you will buy an NFT: for fun (to support the artist), or as an investment.
If you’re buying an NFT for fun, it is generally because you like the artist’s work and would like to support them. We suggest that you research the artist to verify that the art they are selling is indeed their own – but otherwise, there’s no hard or fast rules to follow.
If you’re buying an NFT as an investment, you must consider if you are buying as a short-term or long-term investment:
- Short-term investment: look for NFTs that have high activity, or are teasing upcoming news. This is a risky strategy, and profits are never guaranteed. We would only suggest this strategy to experienced NFT collectors.
- Long-term investment: look for NFTs with trusted teams, and that have a clear roadmap and track-record of delivery. This strategy is more beginner-friendly, though we strongly suggest to conduct ample research before purchasing an NFT for these purposes.
There are many NFT marketplaces, tools and services that can provide you with data on collection analytics, community sentiment and general trends to assist with both strategies. Always do your own research before purchasing any NFT.
Does the NFT have a roadmap?
A roadmap, produced by the NFT creators, gives you an idea of their future plans, and what you can expect as a holder.
Typically, it is less of a risk to purchase an NFT with a solid community and a proven track-record of achieving the items on its roadmap.
If a project is pre-mint, play close attention to their roadmap and future promises – but bear in mind that an NFT mint is typically where an NFT project hits the peak of its hype, and that prices can swing wildly in both directions post-mint.
Can I afford the NFT?
NFTs can be exciting, desirable and fun – but they’re also high-risk, and there’s no protection for holders if something goes wrong.
By and large, NFT prices are dictated by community hype and market sentiment – both of which can change in an instant. Be responsible, and do not buy an NFT unless you’re prepared to lose all the money you spend.