ZoneBitcoin EditorialBecoming a good profitable NFT hunter cannot be improvised.
It took me quite a while to fully understand NFTs and, above all, start making money with them. This is because investing in NFTs is very different from investing in crypto and fungible tokens.
Other mechanics come into play and other criteria to take into account. In addition, you must keep in mind that the world of NFTs is constantly evolving. The projects are becoming more complex day by day and today, NFTs look more like neo-startups in terms of operation.
(Read the article : NFTs are not JPEGs, but companiess)
More and more, and this is the big current trend, there is an internal business created around the NFT. This results in more advanced and complete roadmaps. Consequently, the value appreciation of these NFTs also takes longer.
Finally, I analyzed hundreds and hundreds of NFTs. I observed those who had great success like CyberKongz or Bored Ape and those who experienced failures.
The very first thing I can say is that the quality of an NFT does not necessarily correlate with its value on the secondary market. Some projects have great ambitions and a coherent business model but due to lack of marketing, they do not have the visibility they deserve.
Conversely, some simple (too simple?) NFT projects are very successful because the marketing campaign was very well mastered. These projects are experiencing great hype, causing prices to inflate.
Now, we don't have the hindsight to know if this type of project will persist in the future...
Remember that the list of criteria set out below is placed over a long-term horizon. Without further ado, here they are.
1/ Check the economic viability of the project (and usefulness)
Know that there are two main types of NFTs. There are those that will earn you resale on the secondary market like Opensea for example. There, we can certainly make big moves if we choose the right NFT that ticks all the boxes.
However, many investors (including me) are looking more for NFTs that provide regular returns. These projects create utility tokens that holders can use to improve certain functions or elements. For example, we can have the possibility of storing NFTs to earn tokens. We can therefore use these tokens or sell them on DEXs. This is for example the case of management CyberKongz and banana tokens.
There are more and more NFT projects of this type with passive income, to summarize the idea. That said, the most important thing is to think about the viability of the ecosystem and the tokens in question. To do this, this is where the project must be analyzed. What will the tokens be used for? What is the use case of NFT in question? How will they be used? What are tokenomics like max supply?
All these classic questions must be asked to choose your NFT but it is not enough. This is just the starting point for your selection.
2/ The commitment and vision of the team
When I think about it, I feel like this is at the heart of a really good NFT project. This is also the same thing here, even with traditional companies. I think of Apple which is the blatant example of the importance of the team (or the entrepreneur behind it). Would Apple be Apple without Steve Jobs? Maybe not… Well, for an NFT project to last in the long term and increase in value, it necessarily needs its own and determined vision.
I look not at the background of the team but rather at its investment and the energy it has to develop its project. That's what interests me.
If a team is determined to develop its project, we can be sure that it will work. Conversely, a beautiful NFT project whose entrepreneurs behind it are "soft" has a strong chance of sinking after the hype.
So, to observe the team, I look at the partnerships made or in the making. I look at his involvement in the project, the completion of the stages of the roadmap etc.
In fact, the activity of the founders will impact and strongly influence the most important criterion when you want to invest in NFTs: the community.
Many founders rely on community. They think the community will survive on its own. However, this is the biggest mistake we can make.
We ABSOLUTELY need to awaken the community. How many projects die after the excitement of the mint? How many projects where the community is abandoned?
3/ The quality of the community
This type of project will not last in the long term. Without a community, an NFT becomes a JPEG that rots in your wallet.
We need announcements, new partnerships, new ideas. In fact, a community is only alive if the project itself is active and developing.
This is where we must learn to unite the community around a common vision. It is then necessary to set up events, physical meetings (yes) and/or create the feeling of belonging to a club. This is the most important element, even.
A bit like country clubs in the USA, people take their membership cards not only to play golf but above all to be part of the community. And, then benefit from a new network and new friendships.
It's the same with NFTs. Seriously.
4/ Take development time into account
This may not really be a criterion but I still wanted to talk about it because it can influence your investment.
Certain projects, as we have seen, take more and more time because they are real undertakings. Naturally, this type of project has a really long horizon. And, that's completely normal.
You even have to get used to this type of project now.
Sometimes, it’s also the founders behind it who open sales a little too early. There are too many projects today and investors are really scattered. I see it for myself. There is a limit of one sale per day and the projects are more and more interesting. And, we don't have unlimited capital to invest.
In fact, there are projects which are very interesting but which have not given themselves the time to build a strong community before opening sales. This is something that I see often and it's normal because the world of NFTs has just taken a new turn (big media coverage, new projects every day, etc.).
You must therefore be aware of the dimension of time before investing. Some projects will explode quickly and others will take time. I am thinking of the BlocBurger project which, given its ambition, will take time to develop.
It's up to you to choose projects according to the capital you have and especially the time you have before resale.
I have sometimes sold NFTs too early when a few months later, they have gained crazy value. My impatience made me lose money.
Don't make the same mistake and only invest where you can.
5/ Media coverage and visibility (increase the desire to belong)
We arrive at the last criterion which can have an incredible impact on the price of your NFT. There, when I talk about media coverage, I'm talking about visibility in general.
This may be the fact that a well-known collector is interested in the project. A crypto celebrity or influencer. This can be decisive if outside people with a certain credibility or influence or visibility are interested in the NFT project.
In general, the media are interested in very innovative projects or those that have recorded remarkable sales. A media outlet generally becomes interested after the success of an NFT is proven.
The visibility of a project also shows the marketing work of the project. The more a project knows how to talk about itself, the more chance it has of attracting traffic and light to the project.
For me, this is the criterion that consolidates my investment. When I see that a project is mentioned in several media, blogs, YouTube videos, etc., I always tell myself that the team knows how to work.
There you go, this is how I finish this selection.
Final Word on NFT Investing
Of course, this list is not exhaustive. In any case, these are the criteria that emerged from my analysis of successful projects. I add that since I followed this list, my NFT portfolio has increased enormously in value. I manage to resell my NFTs at more than reasonable prices within a period of 3 to 6 months after the mint and often even after only 1 month. I also keep NFTs that I feel invested in (other than financially) and that I enjoy being part of the club.
Some times, we will rely on our intuition, in fact, and that's normal. Other times, we will want to invest in a project because it interests us above all. I am thinking of a musician who will rather choose projects in music. The added value that he will be able to record is then secondary. Fortunately, we have this type of investment because otherwise, NFT projects would be empty and only speculative.
I personally invest in projects that check these boxes and where I also like the idea or theme.
Even more, I also like to look at the criterion of charity. Many NFT projects donate part of the profits to associations. I also remain sensitive to this criterion. I particularly appreciate projects that have this human dimension.
So it’s up to you to make the right choice. You notice that being 100% objective turns out to be very difficult with NFTs and I want to say that all the charm is there.
Don't you think so?
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Note: No financial advice is given in this or any other article on zonebitcoin. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.
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