How to Invest in NFTs – Exclusive NFT Investing Tips for 2023

Unless you have been living under a rock, you will not fail to have seen the surge in demand, and popularity, of investing in NFTs.

The industry mostly thrown in the media spotlight over investment in cartoon punks and apes for a couple of hundred dollars going on to sell for 7-figures, but underneath the journalistic spotlight there is a seriously powerful NFT engine that has only just started revving.

The NFT industry is here to stay.

For those who want to start investing but don’t know where to start, it can not only be daunting but could be very costly. It is very easy to spend $2,000 on the minting of just 5 NFTs, before you even know whether the projects will take off or not.

To help avoid throwing dollars away, this article can help provide some information on some of the better ways to check NFT projects.

Disclaimer: this is information provided to help, but it is not investment advice and dollars should not be invested in to NFTs or any other investment without your own due diligence. You are responsible for your own investments, so spend wisely!

Why NFT Investment is Challenging

One of the biggest challenges facing new investors in to the NFT space is finding projects before they mint and start selling on the reseller marketplace like OpenSea or Solanart.

Once a list of up-and -coming NFT projects and mints has been found, due diligence needs to be performed to rule out any projects that do not offer potential return on investment.

There isn’t one easy rule to follow of course. If there were then everyone would become millionaires through NFTs.

For every newly made NFT millionaire there are thousands of people who lose money in the NFT space.

On the other hand, those that usually lose money often do so because they do not understand what they are buying, do not do enough due diligence or research and listen to the hype.

Listening to the hype is the fastest way to lose money.

Join any Discord channel of a pending sale NFT project and you’ll hear cries of ‘we’re going to the moon’ meaning we are all going to see huge return of investment.

The project releases and it sells 10% of it’s NFT listing. It flopped and those who bought in will probably lose their investment.

Now that NFTs have been around for a couple of years, we can now analyze the data patterns and draw conclusions using that data on future NFT releases.

Let’s look at how this analysis and data can help find and critique new NFT projects with the hope of finding the ever-increasing smaller number of diamonds in the ever increasing rough.

How to Find Up and Coming NFT Projects

The very first step when investing in NFTs is to find a project.

Projects are a collection of NFTs from the same founder(s) under the same project name.

For example, Crypto Punks and Bored Ape Yacht Club NFTs are examples of projects which are home to 10,000 NFTs each.

Here are the three main ways of finding up and coming NFT projects.

Twitter

Although Twitter is one the least used social media platforms out of the big four, it has become the first place to turn to for NFT news, updates, and projects.

Everything in the NFT world happens on Twitter.

You’ll need to start following NFT investors and popular influencers. These people keep their ear to the ground and their finger on the pulse in the NFT world, and can often share some gems.

Gary Vaynerchuk is one some entrepreneur NFT investor who has a huge following on Twitter, and a multi-millionaire.

Almost every NFT project has a Twitter account, which provides official links to their website where you can mint, as well as their Discord channel.

The Twitter page for an NFT project is a first clue as to the popularity of the NFT project.

A low following, less than 2,000 to 3,000, especially just before a public mint ‘may’ indicate a lack of interest and without interest and demand it is difficult to make a return on investment in the short to mid-term.

On the other hand, a large Twitter following of 30,000 followers or more may not necessarily mean it is a popular NFT project as the follower numbers can be artificially inflated.

A NFT project may purchase a old Twitter account with a large following and change the name, logo, hero image etc… or alternatively they could purchase fake account likes through online services, again to artificially inflate their followers to give potential investors a false impression to want in.

Engagement is a very good indicator. A high following with little engagement, or Twitter post likes is a red flag. Engagement is more important than popularity at times.

Look out for how many people retweet NFT project tweets, and comment on their updates. The higher the number the better.

Discord

Discord is another social media platform that has significantly grown in recent years, particularly with the gaming community.

Almost all NFT projects have a Discord channel, of which the link can be found on official Twitter accounts or official websites.

Once you click on the welcome link to join the NFT projects Discord channel, you will see the number of other people who have also joined the Discord channel.

Discord NFT Members

In this example above you will see this NFT project already has over 17,000 members who have joined their Discord channel.

17,000 is a good healthy number in the NFT space.

Just like with Twitter, followers can be artificially increased or purchased, so it is important to hang around the community and while and look at the engagement.

Are there lots of different engaged conversations from lots of different users in the General channel or, is does it resemble a ghost town.

A good sign is a high number of followers, greater than 10,000, and with lots of engaged activity, posts, excitement, and messages in the community.

NFT Tools

There are some NFT tools and websites on the market that will give you a list of NFTs that are due to launch over the next 7 days.

This allows you to find NFT projects and start your own due diligence on the roadmap, long term goal, founders, followers, and engagement.

One of the most popular tools is the Rarity Tools Upcoming NFTs list which is 100% free and a good place to start.

Official NFT Website

The official NFT website aside from providing some great graphics and usual vertically scrolling interface explaining about the NFTs and why you should by one, hold some clues.

You should look at the hidden information but there is a checklist you should review to look for common traits of those NFT projects that have really taken off over the past 24 months.

Founders

The first due diligence I make on any website is to the founders.

A long term NFT project, after the NFT sale has happened, is like running a business. It will require good leadership, drive, determination and ideally experience.

With $3million in the bank, the founders could be tempted to rug pull (disappear with the funds) or for those who wish to fulfil their long-term goal may lack the necessary experience in delivering.

Any business startup with a kickstart of funds worth $3m needs to be steered in the right direction by the right type of founder at the helm.

If you have ever watched a Dragon’s Den episode you will see that Dragon’s invest in the entrepreneur as much as – and in some cases more – than the startup business idea they present.

The NFT projects who will go on and fulfill the potential they set out to achieve, and provide investors with a return on investment, will be led by amazing founders.

The type of founders the Dragon’s would be investing in to.

Many founders remain hidden under pseudo-names and creative handles, without any photo or link to social media account.

If I can’t see the founders and can’t assess their expertise to drive such a large business in the right direction, I will often steer clear.

Whitelist Presale Minting Volume

There is a pattern emerging amongst NFT projects where the release a small number of spaces for investors to mint an NFT from the project before anyone else can.

This is called a Whitelist.

Think of it as a pre-sale for concert tickets, where you can purchase before public sale and the rush starts.

Whitelists have proven to be a great marketing technique for NFT projects as it increases demand, adds scarcity, and raises awareness for the project.

The NFT project will offer whitelist spaces as competition prizes – and the reward is almost guaranteed possibility to mint an NFT from the collection, and often at a reduced price.

The reduction in price between Whitelist price and public price can often be as much as the gas fees, which is incredibly important to investors.

Some investors will only mint from an NFT project if they manage to secure a Whitelist spot.

Whitelist spots are often given away on the projects Twitter or Discord channels by either retweeting posts, liking comments, or being one of the highest contributors on Discord channels.

Each of these enables further reach in to the NFT community by the NFT project, so it really is win-win.

How to Mint and Buy NFTs

If you have managed to find a great popular NFT project, with a great founder and inspiring long-term vision for the brand, and maybe even managed to win a Whitelist spot, you are ready to mint or buy.

We have put together a full guide on how to mint an NFT here (/how-do-you-mint-an-nft/), so it isn’t something I’ll repeat here but this guide will give you everything you need to know to create and connect your digital wallet and mint an NFT.

Minting is essentially being the very first person to buy the NFT, and your mint (or purchase) creates the NFT in the blockchain, which is why NFT minting gas fees as usually over $100.

Minting an NFT can be risky because it’s a gamble.

A gamble that you’ll be randomly awarded one of the top 5% to 10% rare NFTs in the collection that may see an instant return on investment (meaning 90% to 95% of buyers will not get given these) – and a gamble the NFT project will take off.

Some NFT investors take the guess work out by letting the NFT establish a mature a little.

It means when you make a purchase through a reseller market such as OpenSea you will likely pay more than at time of minting, but some of the guesswork and assumptions have already been realized – hence the project less risky.

As this will require usually larger investments, you really need to know what you’re doing and looking for.

How to Know Whether an NFT Project will be Successful

Successful NFT Projects

This is probably the very hardest thing to do in the NFT space right now.

Trying to see which projects will take off and which will fizzle and disappear.

Some of the tactics in this guide will help guide you on key metrics to look at and research further.

If we all knew which businesses were going to really take off, we’d all invest all our hard-earned savings into their stocks and shares and ride the train to financial success.

The Dragons have a similar problem. With their insight and experience they still invest heavily in startups that go nowhere, and then say, ‘I’m Out!’ to startups that go on to be worth millions and millions of dollars.

The best way to analyze an NFT startup is to assess it as a business.

Each NFT project has a roadmap as to how they will build the investment they receive from NFT minting and sales, into a business of some description.

This could be a game, metaverse estate etc…

The only way the NFT held grows in value is by demand. Unless there is a demand higher than supply, the NFT value will stagnate or fall.

Once demand is higher than supply the value of the NFTs will increase, and so will the return on investment for any holder.

Assessing the worth of the long-term vision of the business, and whether once built there could be a huge market willing to invest in to, is the key to calculating the benefits of investing at the start.

For example, investment houses saw potential in Facebook and PayPal before they launched, whilst they were still in the stages of just a long-term vision.

Those initial speculative investors have seen a return on investment many times more than the original amount they put in.

NFT projects should be viewed in the same way.

The NFT space looks to be on the verge of exploding in many different capacities. Those who can spot the potentials – just like early investors in the start of the internet – will reap the huge rewards that will be on offer.

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