NFT can generate large amounts of money; unfortunately, many do not realize the reality is not as easy as imagined.
This article will explain five things you need to know before entering the world of NFT to avoid false hopes from the current phenomenon.
Different from Ordinary Crypto
Before diving into NFT trading, investors should know that NFT differs from crypto.
NFT is a token that is not commensurate or Non-Fungible, in contrast to crypto, which is fungible or commensurate.
A clear example is that one Bitcoin will have the same value as one because it is worth it.
But one NFT and another NFT, although in the same collection, can have different values or prices because they are not commensurate.
So when you see an NFT collection and want to buy it, the assumption that it is the same as crypto, in general, should be eliminated.
In general, when an investor buys a token at a low price, and there is a lot of positive sentiment around it, he will believe that the token will go up in price.
This assumption does not apply to NFTs because even though one NFT collection has a positive sentiment, there are NFTs in the collection that can reach high prices, while others have the potential to stagnate or not move.
This is due to the statement that one NFT is not always the same as another NFT.
Even though they are in the same NFT collection, some NFTs have rarer features or elements and are considered more expensive than other NFTs. So this needs to be considered so as not to be exposed to false hopes from the NFT.
Types of Exchanges and Fees
Apart from understanding the true nature of NFTs, investors also need to know that NFTs are sold on various exchanges.
Currently, the most famous exchange is the OpenSea exchange.
OpenSea is the largest NFT exchange or trading place in the crypto world today, with a transaction volume of over $14 Billion.
This exchange is on the Ethereum Blockchain, but it is not the only one on the Ethereum Blockchain because there are currently more than dozens of different types of NFTs.
One thing to remember is that Ethereum Blockchain transaction fees are currently relatively high.
Even though there is help from the Polygon Blockchain, if you want to use the Ethereum Blockchain, the NFT transaction fee can reach $130K and even more.
But the good news is that Ethereum is not the only blockchain with its NFT exchange.
Solana, Binance Smart Chain, Harmony, Tezos, and other blockchains have lower fees and diverse NFT exchanges.
In addition, the exchanges in the blockchain are also very diverse, ranging from those that only sell one type of NFT to general and random types of NFT.
These factors need to be considered before buying or selling NFT. Because, with the choice of the stock exchange, investors can adjust market share and sentiment.
In addition, these various costs can also be taken into consideration to calculate the potential profit before entering the world of NFT.
Promotion
Remember that NFT trading is trading a product like dealing with any product.
Thus, in NFT trading, the marketing or promotion process is also mandatory, especially for early publishers and sellers.
In general, NFT collection project owners do digital marketing through the creation of social media, official websites, and even whitepapers for the collection project itself.
The goal is to make the NFT collection project more credible and trustworthy to buyers. In addition, this creation aims to increase awareness of the project’s existence by providing updates and explanations about the NFT.
Another relatively quick way to do this promotion is through influencers, a common practice for NFT project owners.
Generally, a project will have one “face” representing the NFT, promoting the NFT.
These “faces” are generally influencers; sometimes, the collaboration is made public and done secretly.
This promotion does require not only external factors such as influencers but also needs internal factors from the NFT itself.
The point is that the NFT must have a uniqueness or follow and support a widely discussed phenomenon.
The purpose of this promotion is crucial because it will increase transaction volume and interest faster.
So when you want to sell NFT, creators need to consider the time and cost process required for promotion.
From the buyer’s point of view, investors must understand whether the NFT has a good purpose and plan or if it is just a way for the creator to make a quick profit and make the NFT owner lose because there is no other use.
Not All NFTs Sold
One thing that is also most important to understand before entering the world of NFT is that not all NFTs will be sold.
Whether an NFT project as a whole or an NFT in pieces, there is no guarantee that buyers will always be interested.
This statement also emphasizes that NFT is not a project or scheme to make significant and quick profits.
NFT will have value when someone is interested in bidding on it at a price and will sell for a profit if the bid exceeds the buyer’s posted price.
There are also factors of interest regarding taste and scarcity that need to be considered.
Scarcity itself is not only seen in the number of NFTs but also in terms of the elements it has.
The price is generally higher when an NFT has elements other NFTs don’t have in a collection.
On the other hand, when the elements owned by the NFT are relatively common, the price will be relatively stagnant or increase no more than those rare or unique.
In addition, NFT that supports a phenomenon will generally be relatively faster to sell.
An example is NFT World of Women, which is selling fast due to its support for women’s independence. On the other hand, when the NFT is relatively common and has no value or phenomenon behind it, the chances of selling it will be smaller.
It Takes Dedication of Time and Luck
Finally, realizing that creating, selling, and profiting from NFTs takes time is essential.
Like crypto investing, when you want to buy an NFT, it’s a good idea to take the time to explore the NFT.
In addition, when you want to buy, it’s also a good idea for investors to understand which exchange is the most profitable in terms of transaction volume.
The goal is to ease liquidity or resell after buying. As long as the transaction volume is high, it is generally more accessible for the exchange to become a platform for NFT transactions.
When selling NFT, whether reselling or trading a project from scratch, be aware that the NFT collection won’t sell out all at once.
Some NFTs lag behind in price compared to other NFTs, even in their collection. Then it should also be realized that when you want to sell NFT, there will be potential losses.
When you want to sell and create your project, there is a potential loss from the marketing side of spending money and time but not getting a purchase.
In terms of reselling, there is a possibility that the NFT has been priced lower by the market.
So even if the price does not go down when it is not sold, the NFT cannot be cashed out, thus creating a loss.
In addition to time, it should be understood that to benefit from NFT requires a little luck.
An NFT collection project can experience an impromptu price increase if found by the right people.
The right person in this context is a famous person, such as an artist or influencer who can influence other people to buy.
With the influence of this famous person, it is possible to create FOMO, which can increase the price of NFT.
But not all NFTs have the same luck, so there is still the potential for these NFTs not to sell quickly.
In conclusion, NFT is an excellent way to make a profit. But the reality is not as easy as ordinary people say.
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