Don’t let the terminology confuse you
NFTs as a means of investing are rapidly becoming mainstream, but most people don’t understand how they’re traded. Floor price and rarity mechanics seem confusing and foreign. Whitelist grinding sounds like complete nonsense. If you look closer, however, you’ll notice NFT’s behave similar to many traditional assets. This post contains two examples to help you bridge your perception of NFT investing back to the off-chain world.
NFT Trading is like Digital House Flipping
The media characterizes NFTs as “digital trading cards” but this ignores their many use cases. A better way to describe NFTs is “Digital Property.” A successful short term NFT trader has a mindset similar to a person flipping houses. Like NFTs, houses are Illiquid assets. They require large up-front costs, and have non-monetary characteristics (school districts, interior design, appliances), and there is no guarantee you’ll find a seller for your specific house. The market is volatile, but if you have the risk tolerance, there is the possibility of outsized return.
Long Term NFT investing is similar to buying Season Tickets
NFTs, like property, can be specialized investments which grant certain privileges or royalties. Football season tickets are a perfect example. It’s not uncommon for a family to invest in decades-worth of season tickets, and pass them down to their children. These can be enjoyed, but also be sold to provide a source of income to the owners. Many long-term NFT investors buy certain items with the expectation their demand will grow in the future, or yield certain benefits. ApeCoin is a perfect example of how an NFT project created additional value for its holders.
NFT’s protect rights and ownership on the blockchain.
There’s an NFT investment strategy for everyone. For some people its flipping JPEGs. Others may race digital horses, purchase music rights, or perhaps just support their favorite artists. People have done all these things for decades, but NFTs bring these old concepts to the Blockchain. Don’t let the tech scare you from participating in this growing ecosystem.
Check out our DeFi investing article if you found this one informative.