Although they’ve been around since 2012, non-fungible tokens, better known as NFTs, only went mainstream last year after the last bull market.
For many, this asset class came out of nowhere, going from something completely unheard of to a major brand investment. The world has seen proof of this in the actions of celebrities like Justin Bieber posting their NFT purchases on social media and companies like JP Morgan and Facebook (now Meta) cementing their position in the metaverse. The market has since entered into full swing, with a valuation of billions of dollars as a standalone ecosystem.
With more funds flowing into this market, spurring continued buying behavior, many would-be investors have begun to ask themselves, “What’s the harm in participating in the meteoric rise?”
Just like other investments in this world, NFTs are more complex than they appear, which means that investing based solely on the trend “or the hype” can be a dangerous game to play. Consider the parallels drawn from the dotcom bubble, which caused several web-oriented companies to be overvalued. These “lucrative investments” alone ended up fueling widespread bankruptcy in the stock market crash of 2000, a cycle that repeated itself with the Initial Coin Offering (ICO) bubble. Time and again, bubbles are fueled by wealthy investors who invested early, took advantage of the hype, and sold profitably long before the late investor had even made their first purchase.
But the story is not meant to completely scare off NFT investors. Instead, it’s there to demonstrate an opportunity to improve the thought process behind investing. Consider that several web-oriented businesses have emerged from the dot com as profitable investments that continue to generate value. Therefore, the problem comes down to putting money into play based on emotion rather than reason. As historical data shows, when fear and greed take precedence over logic, most investors get burned.
Before investing in the seemingly lucrative market, investors are encouraged to research the subject thoroughly to understand the value of the underlying assets. At the current rate, NFTs are increasing; many believe the market is unlikely to maintain the same pace. For this reason, it becomes crucial that projects are purchased with some understanding of the value each presents beyond their current hype.
Provide increased search power
However, most potential investors are tired enough to know that they shouldn’t invest on a whim. Therefore, it would be unfair to attribute the action of “buying on the hype” to lack of knowledge. Rather, it is a lack of process.
Consider that the underlying value of NFTs is assessed differently than a traditional investment vehicle, looking at factors such as ownership, usefulness, scarcity, and social proof, all of which cannot be found by looking at a financial report. Additional complexities come down to NFTs existing as part of a collection or group of assets that have similarities while being different enough to make some rarer than others.
Collections like Bored Ape Yacht Club contain nearly 10,000 NFTs, with the most expensive being sold for over $3 million and the rest being a fraction of an Ethereum (ETH) token. While many investors will look to specific collections based on news, celebrity mentions, or Twitter because it is easier to assess similar assets, it can be difficult to identify a project itself because hundreds of thousands of assets may be at stake.
Therefore, gaining that same level of knowledge about an NFT or collection requires a significant amount of supporting research, starting with a council of Twitter, Discord, news platforms, and other marketplaces, followed by further research if the project is smaller. known. After a deeper dive, investors are encouraged to research the creator of the project, the technology and utility of the project, as evidenced in its white paper, and examine the scarcity tools to determine what sets a specific NFT apart in a collection.
Navigating the NFT Mass Market
With the already steep learning curve that comes with buying and storing these digital assets, the requirement to stay active on social media for new projects is often far too overwhelming for many to get started. For this reason, many analysts agree that an easy-to-use system that allows investors to discover promising new projects to their advantage and follow other NFT investors is essential to sustain the growth of the NFT market.
That’s why NFT trackers like the Delta app are becoming increasingly popular for new DeFi investors and veterans alike. The Delta app is said to be among the world’s first mobile NFT explorers, enabling users to make more robust investment decisions with global search functionality so users can find collections to their liking. Users can discover new collections based on volume or other criteria by accessing the NFT tab on the app’s markets page.
Through a secure connection to an ETH wallet that can be done automatically or manually, users get an overview of all their digital collectibles.
Disclaimer. Cointelegraph does not endorse any content or product on this page. Although we aim to provide you with all important information we may obtain, readers should do their own research before taking any action related to the company and take full responsibility for their decisions, and this article cannot no longer be considered as investment advice.