The popularity of blockchain, its solutions, and its products keep soaring. Among the most popular products are non-fungible tokens (NFTs). Their popularity has been partly because blockchain technology is slowly taking shape as a disruptive technology. Also, NFTs on their own have had some significant successes and a high growth rate that have attracted the attention of brands and individuals alike.
However, everything is not all in black or white in the NFT world. First, there are many people now trying their hand at NFT projects. Secondly, the value of an NFT is unpredictable and can be nothing or an interestingly high amount. This makes choosing an NFT project to invest in can be a huge challenge.
Spotting a good NFT project
NFTs are all different in their value. They’re not the same as buying a dress in a fashion store where each item has a specific price. Neither is it like exchanging currency, where the exchange rate determines the end amount. So identifying an NFT with a high potential of growing in value is difficult.
And the truth is, no magic formula or solid rule will enable you to identify which NFT will make better profits or go down. Fortunately, developers have created NFT fraud detection methods to determine which projects are designed to scam people.
But looking at some of the NFTs that have made their owners millionaires, you can tell that it’s quite hard to simply point out an NFT and categorize it as a high or low-value project. However, don’t fret. This article will guide you on what to look out for and make an informed investment.
Know where to find projects
Knowing exactly whom to trust can be highly challenging with so many projects, sources, and supporters of NFTs projects. Not all projects have been created to win. While there might be nothing wrong with a project, some NFTs can quickly fizzle down and go under the radar real quick.
But the source can tell that a project has growth potential. In the same way, you trust some brands over others due to their reputation or identified qualities. The same can apply to NFT sources. It’s advisable to get your information and NFT projects from trusted sources.
While it’s not obvious to tell which NFT projects are the real gems, the source of your information plays a significant role in the outcome. Here are some ways to filter the sources and identify the best places to gather information:
- NFT influencers
Like any industry, the NFT world has its experts. They’re primarily individuals who are investors in the industry themselves. They include successful entrepreneurs with their hands right in the middle of the NFT industry with various investments, artists, and anonymous personalities with a great following for their helpful insights in the industry.
They have an in-depth knowledge of NFTs and share fast hand information on the industry trends and forecasts. By following these personalities on social media and websites where they share their knowledge, you can easily find attractive and potentially excellent projects to invest in.
- Tracking trending projects
Another excellent source is following the trending projects. For example, which projects have a consistent rising graph for the past week, month, or several months? Which ones have traded the highest volumes in the past day or so? You can get this information from the leading NFT marketplaces. An intelligent NFT analysis platform can help you evaluate the projects’ performance. You can identify trends that can help you forecast your performance in the future.
Know what to look for
It’s one thing to know where to get the correct information, but it’s another to understand what you need to look for in these sources. This is the criteria you use to evaluate the potential of an NFT project:
- Rarity: The nature of an NFT is it should be unique and can’t be exchanged for another. It can be one object or a limited collection. That means its uniqueness and scarcity is its selling point. Any NFT with a limited supply has higher demand which drives its price up.
- Utility:Is there any real-world benefit besides the hype behind an NFT? This can be access to an exclusive event or rights to an asset.
- Floor price:What is the lowest price the NFT project sells? A floor price that is rising is a good indicator that there is potential in the project. A stagnant and falling floor price should be a warning sign that the NFT is not gaining and may never gain value.
- Community:One critical thing about NFTs is that they thrive on the community behind them. If there’s no community or endorsements, watch that project from afar without getting involved as well. The lack of a following means no demand for the project at all. Without people, the project is as good as dead.
- Team: Who are the creators of the project? Research the people behind the project to evaluate their knowledge in the industry. In any case, NFT developmentis more than creating a digital asset. It needs to be viable in the market too. If the creators are known in the industry and maybe have developed other projects, that’s a good sign.
- Trading volume: This indicator can tell you if there’s demand for a project or not. Compare a project with its main competitors and see if the trend is rising or declining. The trading volume will tell you if there is demand for the NFT or not. Look for a consistently growing project. One that fluctuates too much may indicate a poor community backup and might not be an ideal investment.
As you can see above, finding a viable NFT project that makes the best investment can be a considerable challenge. However, when you know the crucial things to look for, you’ll have an easier time identifying potential projects. Now that you know where and how to find good NFT projects go ahead and find yourself a good project to invest in. However, if you still need more information, consulting an NFT development expert can help provide a clear direction in your investment goals.