Non-Fungible Tokens (NFTs), are unique digital assets symbolizing something often digital like a JPEG image, video clip, or virtual real estate in platforms such as BNice, Sandbox or Decentraland. The uniqueness of each token within a collection is what signifies non-fungibility.
When contemplating buying an NFT, there are key factors you should take into account:
Before purchasing an NFT, ask yourself: does the item’s artistry resonate with you? Do you find it appealing, and do you believe others will be interested in owning it in the future? In other words, does the NFT’s look suggest that it might attract future demand?
Most NFT projects foster a community centered around them. These communities, usually found on Twitter or Discord, comprise developers, NFT owners, and potential buyers who share thoughts and form social circles.
The most sought-after NFTs are often surrounded by active communities featuring influential voices in the NFT space. Some communities may be focused on specific interests, while others may have a less concentrated focus. A warning sign could be a community dominated by ‘flippers’ – collectors only interested in quick profits.
If community involvement adds value to your NFT experience, ensure the community you’re joining is a good fit for you.
Some NFTs offer additional perks beyond owning a piece of digital art, which can potentially boost the value of the NFT project you’re considering. This utility can manifest in various ways, such as:
Receiving an ERC-20 token.
Projects like BNice payout $BNICE tokens, providing value within the project’s ecosystem and often convertible to cash via Uniswap or other liquidity pools.
Access to real-world events.
Bored Ape Yacht Club NFT holders, for example, receive invitations to exclusive parties. BNice could easily be hosting local and national events (even Casino Boat Trips in International Waters) to boost value and utility.
Usage within the NFT’s ecosystem.
Certain games represent special items as NFTs, which can add in-game value or Discord access or Unlockable Content for NFT holders only.
There are countless ways an NFT can deliver utility, and future innovation will likely bring even more. Take this into account when making your purchasing decision.
The team behind an NFT project also warrants scrutiny. Are they transparent about their identity (a practice known as ‘doxxing’), or do they prefer anonymity? The unfortunate phenomenon of ‘rug pulls’ – where a team launches an NFT, raises funds, then disappears, leaving collectors with near-worthless NFTs – has emphasized the importance of this consideration.
Anonymity from a founding team should raise concerns, as it removes accountability and makes it difficult to assess their ability to succeed.
Many NFT projects are ongoing, with plans for enhancements, partnerships, derivative collections, and more that could potentially increase value for future holders. It’s important to consider whether the project’s roadmap is both realistic and appealing.
When selecting a potential NFT project to purchase on marketplaces such as OpenSea, use these five aspects to gauge if the project is worth your Ether or whether you should continue your search.