Maximize Returns: Practical NFT Art Investment Guide
Written by  Daisie Team
Published on 8 min read

Contents

  1. What are NFTs?
  2. How to research NFT artists
  3. How to choose which NFTs to invest in
  4. How to buy NFTs
  5. How to sell NFTs
  6. How to store NFTs
  7. How to manage NFT investment risks
  8. How to track NFT market trends

Imagine you're browsing through a digital art gallery, admiring pieces that exist solely in the virtual realm. These stunning pieces of art are not just images you can download; they're unique, tied to a blockchain, and ownable. Yes, we're talking about NFTs or Non-Fungible Tokens. As an investor looking to diversify, investing in NFT art collections could be an exciting new frontier for you. We're here to help you navigate this space.

What are NFTs?

Non-Fungible Tokens (NFTs) are unique digital assets that represent a wide range of tangible and intangible items, from digital art pieces to virtual real estate and even digital sneakers. Investing in NFT art collections means you're buying ownership rights to a unique piece of code stored on a blockchain. Here's why they're exciting:

  • Uniqueness: Each NFT has a digital signature that proves its authenticity and ownership. No two NFTs are alike — even the ones that look similar have different codes.
  • Ownership: When you buy an NFT, you gain the ownership rights to that unique piece of data. It's like owning an original painting, but in the digital world.
  • Monetization: NFTs have opened up new possibilities for digital artists to monetize their work. As an investor, you're not just buying art; you're supporting artists too.
  • Accessibility: NFT marketplaces operate 24/7, making investing in NFT art collections possible for anyone with an internet connection, at any time.

One thing to remember is that NFTs have been around for a while, but they've recently gained fame with high-profile sales, like the digital artist Beeple's work selling for $69 million. They've become the new kids on the blockchain, and everyone — including you — is invited to this digital art party.

How to research NFT artists

Just like you wouldn't buy a physical painting without knowing the artist, the same principle applies when investing in NFT art collections. Here are some steps to guide you:

  • Explore NFT Marketplaces: Platforms like OpenSea, Rarible, and Foundation are great starting points. Browse, explore different artists, and note the ones that grab your attention.
  • Understand the Artist's Vision: Many artists have their own websites or social media platforms. Take time to read their artist statements, explore their body of work, and understand their creative vision. This can give you a sense of whether you're investing in an artist with potential.
  • Check Their Track Record: How long have they been creating? Have they consistently produced new work? A track record of consistent creation can be a good sign.
  • Look at Past Sales: Have their pieces been sold before, and for how much? This can give you an idea of the artist's market value.
  • Consider Their Community Engagement: Do they engage with their followers? An artist who interacts with their audience can indicate a dedicated fanbase, which may lead to more demand for their work in the future.

Remember, researching artists is more than just looking at past sales and current popularity. You're investing in their future potential too. So, take your time and follow your intuition. After all, art is a matter of personal taste.

How to choose which NFTs to invest in

Choosing the right NFTs for your art collection can feel a bit like finding a needle in a haystack, but don't worry, we've got some tips to help you out:

  • Consider the Rarity: Some NFTs are more rare than others. For example, an artist might release a series of 1000 NFTs but only 10 of them have a unique attribute. These 'rare' NFTs could potentially be more valuable.
  • Think About Longevity: Will the NFT still be relevant or desirable in a few years? NFTs tied to timeless themes or established artists might be safer bets than those built around fleeting trends.
  • Evaluate the Quality: Just like in traditional art, quality matters. Look at the creativity, craftsmanship, and effort put into the NFT. High-quality art tends to hold its value better.
  • Understand the Rights: What exactly are you buying? Some NFTs come with rights to physical artwork, others give you access to experiences or perks. Make sure you understand what you're getting.
  • Factor in the Price: Investing in NFT art collections can be risky, so it's wise to consider the price. Ensure that the price aligns with your budget and the potential return on investment.

Choosing NFTs to invest in is both an art and a science. It requires a mix of research, intuition, and a bit of luck. But with these tips, you're well on your way to building a collection that not only reflects your taste but also has the potential for a great return on investment.

How to buy NFTs

Now that you have a solid idea of what kind of NFT art you want to invest in, the next step is to make that investment. Here's a simple step-by-step guide on how to buy NFTs:

  1. Get a Digital Wallet: To buy NFTs, you first need a digital wallet. This is where you'll store your digital currency and your NFTs. Some popular options include MetaMask and Trust Wallet.
  2. Buy Some Cryptocurrency: Most NFTs are bought with Ether (ETH), the cryptocurrency of the Ethereum network. You can buy Ether on a cryptocurrency exchange, such as Coinbase or Binance.
  3. Find a Marketplace: Next, you'll need to find a marketplace where you can buy NFTs. OpenSea, Rarible, and Foundation are popular platforms for buying and selling NFT art.
  4. Choose Your NFT: Browse the marketplace for the NFT art you want to invest in. Remember the tips from our previous section!
  5. Make the Purchase: Click on the NFT you want to buy and confirm the transaction. Be aware that you may have to pay a gas fee, which is the cost of processing the transaction on the Ethereum network.

There you have it! You're now the proud owner of an NFT. But remember, buying the NFT is just the first step—now you need to make sure you store it securely. But we'll get into that in a later section. Stay tuned!

How to sell NFTs

So, you've invested in an NFT art collection, and now you're ready to sell. But how do you do that? Well, selling NFTs isn't that much different from buying them. Here's a step-by-step guide:

  1. List Your NFT: Go to the marketplace where you bought your NFT, and look for the option to sell or list a new item. You'll need to provide details about your NFT, including any background information that might boost its value.
  2. Set Your Price: This is a key step. You'll need to set a price for your NFT. You can choose to set a fixed price, or you can put it up for auction and let buyers bid on it. Take into account factors like the popularity of the artist, the rarity of the piece, and current market trends when setting your price.
  3. Confirm Your Listing: Once you're happy with your listing, confirm it. Your NFT is now officially up for sale!
  4. Wait for a Buyer: Now, all you need to do is wait. If you've priced your NFT right and there's demand for it, you should see offers rolling in soon. Remember, patience is key when investing in NFT art collections.
  5. Finalize the Sale: When you've accepted an offer, it's time to finalize the sale. The buyer will pay the agreed amount, and the NFT will automatically be transferred to their wallet. Congrats! You've just sold your first NFT.

And there you go! Now you know how to sell NFTs. Just remember, the key to making a profit when investing in NFT art collections is buying low and selling high. So keep an eye on those market trends!

How to Store NFTs

So, you've bought an NFT and are probably wondering, "Where do I keep this digital art piece?" The answer lies in a digital wallet — a place where you can store your NFTs securely. But how does that work? Let's break it down:

  1. Choose Your Wallet: There are many digital wallets out there that support NFTs. Metamask, Trust Wallet, and Coinbase Wallet are some popular ones. It's important to choose a wallet that you find easy to use and one that keeps your NFTs safe.
  2. Set Up Your Wallet: Once you've chosen your wallet, you'll need to set it up. This usually involves creating a password and backing up your wallet by writing down a series of words (known as a seed phrase). Keep this information safe — if you lose it, you might lose access to your NFTs!
  3. Transfer Your NFTs: After setting up your wallet, you can transfer your NFTs to it. This is usually done through the platform where you bought your NFT. The process might vary, but generally, you'll need to enter your wallet's address and confirm the transfer.
  4. Manage Your NFTs: Now that your NFTs are in your wallet, you can manage them. You can view your NFTs, see their details, and even transfer them to other wallets. Remember, your wallet is like your personal art gallery — it's where you store and showcase your NFT art collections.

And that's it! You now know how to store NFTs. Remember, keeping your digital wallet secure is vital when investing in NFT art collections. So, always keep your password and seed phrase safe!

How to Manage NFT Investment Risks

Investing in NFT art collections can be an exciting venture. However, like all investments, it's not without its risks. So, how can you mitigate these risks and ensure a safer investment journey? Here's a step-by-step guide:

  1. Do Your Homework: Knowledge is power. The more you know about the NFT market, the better equipped you are to make informed decisions. Stay updated on market trends, understand the value of different NFTs, and get to know the artists behind them.
  2. Diversify: Don’t put all your eggs in one basket. It's wise to invest in a variety of NFTs from different artists and genres. This way, if one doesn't perform well, others might balance it out.
  3. Think Long-Term: Investing in NFT art collections is not a get-rich-quick scheme. It requires patience and a long-term perspective. Remember, art often appreciates over time.
  4. Secure Your Investment: As we discussed earlier, storing your NFTs securely is key, and so is protecting your investment. Consider insuring your NFTs against theft or loss. Yes, digital assets can be insured too!
  5. Stay Vigilant: Keep an eye out for scams and fraud. Only buy NFTs from reputable platforms and never share your wallet's private keys or seed phrase with anyone.

By following these steps, you can manage the risks associated with investing in NFT art collections. Remember, the goal is not to eliminate risk entirely, but to balance it against potential rewards. Happy investing!

Tracking NFT market trends can be likened to a game of hide and seek. You're always on the lookout for the next big thing. Here's how to stay ahead of the game when investing in NFT art collections:

  1. Stay Active on Social Media: Platforms like Twitter and Instagram are where many NFT artists and collectors hang out. Following them can give you a sense of what's hot and what's not.
  2. Join Community Forums: Websites like Reddit and Clubhouse have a vast array of NFT communities discussing the latest trends. Being part of these discussions can offer you valuable insights.
  3. Keep an Eye on Auction Houses: Seeing which NFTs are doing well at auction can give you a good idea of what's currently in demand.
  4. Use NFT Analytics Tools: There are several online tools available that track the performance of NFTs across various platforms. These can provide you with a wealth of data at your fingertips.
  5. Monitor Traditional Art Trends: Although NFTs are a digital phenomenon, they often mirror trends in the traditional art world. Understanding these trends can help you predict what might happen next in the NFT market.

By keeping your finger on the pulse, you'll be well positioned to make smart decisions when investing in NFT art collections. Remember, the more informed you are, the better your chances of success. So, are you ready to start tracking?

If you're interested in learning more about investing in NFT art, don't miss the workshop 'How to Invest in Art' by Ciarra K. Walters. This workshop will provide you with practical insights and strategies on how to make the most of your NFT art investments and maximize your returns.