Investing in NFT Art: Where to Start and How to Maximize the Results
Since 2014, when NFTs, also known as non-fungible tokens, first emerged on the digital landscape, these unique digital assets have gradually established themselves as a valuable investment opportunity. By providing a blockchain-based transaction ledger, a unique item linked to the token, and immutable proof of ownership on it, they have revolutionized the way organizations engage their audience in various areas, including art collecting.
However, compared to other long-established digital assets, NFTs are still in their infancy. Many art collectors wonder whether investing in NFT art is a good option or if they should stick to traditional assets with more developed regulations. Therefore, let’s delve deeper into the topic to uncover why our team is so confident that art NFTs are the future of art collecting, how to get into Art NFT collecting, and how to maximize your returns.
Is NFT Art a Good Investment?
As we previously mentioned, art NFTs are relatively modern digital assets, which means that aspects like taxation may not yet be established or enforced properly in your country. Nonetheless, after years in the market, art NFTs’ properties aren’t inferior to any other digital assets, even well-established ones. Moreover, they provide various features and benefits that make investing more advantageous for both buyers and sellers.
For example, transaction ledgers based on blockchain provide investors with a means to verify deals and analyze the trading history of each asset. Meanwhile, proof of ownership in each token ensures that intellectual property rights on artworks can be protected and enforced in the digital realm, which previously was a source of concern for digital art creators and owners. However, the benefits of NFT art investing do not end there, as non-fungible tokens provide immense opportunities for those seeking a new experience of investing in digital artworks.
The Benefits of Investing in Art NFTs
Exclusive Ownership: NFTs are often created in limited quantities, granting collectors exclusive ownership of exceptional works unavailable to the general public. Consequently, these tokens can serve as valuable collectibles to be admired and displayed or as high-value assets for sale.
Global Accessibility: Compared to traditional collecting in the art industry, individuals can invest in art NFTs or participate in art NFT collecting regardless of place, financial capabilities, or status. On the one hand, some may be concerned about growing competition. However, on the other hand, this approach provides a broader range of galleries and access to artworks previously hidden behind the barriers of traditional art collecting.
Diversity: Art NFTs offer a diverse range of prices as well as collectible assets. By searching through various art styles, themes, and even art forms, collectors will be able to find an item that perfectly fits their taste, mood, and budget.
In-depth Engagement: Certain NFTs have interactive characteristics, providing collectors with distinctive and immersive experiences. For instance, individuals who possess NFT artworks may be admitted to virtual events, gain access to behind-the-scenes material, or acquire exclusive merchandise, which amplifies the overall collector experience.
Support for Galleries & Affiliated Artists: Collecting art in the form of NFTs protects the rights and supports the creators. So, despite being primarily beneficial from a financial perspective, NFTs also enable some socially responsible investments and foster equitable relationships with galleries and their artists.
High Liquidity: As NFTs are traded digitally and don’t require any permits from governmental entities, collectors can buy or sell their exclusive assets on their smartphones or laptops anywhere, anytime. This way, they can stay up-to-date with the market and seize investment opportunities without missing out.
How to Invest in NFT Art: Intro to Modern Art Collecting
Today, investing in art NFTs is as simple as buying a stock picture or ordering an item from Amazon or eBay. First and foremost, a collector needs the means to participate in trading, store their assets, and manage their property. They need a crypto wallet and cryptocurrency.
Crypto wallets are similar to regular wallets that allow users to store and manage their dollars, euros, or other forms of fiat money. The difference is that users can do the same with their crypto-based assets, like cryptocurrencies or NFTs. There is a diverse range of platforms that enable users to create crypto wallets, including OKX, Metamask, or Coinbase Wallet, known as the most popular crypto wallets on the market.
Crypto is a type of currency similar to fiat money, like dollars. There are various types of cryptocurrencies on the market, although traders tend to choose the one based on the Ethereum blockchain. Depending on the marketplace, there may be different options in which art NFTs can be bought or sold. So, before buying crypto, we suggest carefully reviewing the list of tokens you may be interested in.
Now, when the collector has their wallet and crypto, they may choose one of the two primary ways to approach art NFT collecting.
Invest on Their Own Through NFT Marketplaces
Nowadays, there are several popular NFT marketplaces like OpenSea or Rarible. They provide platforms for collectors to browse, select, and trade NFTs in the digital realm. For some, it may be a simple entry point into NFT art collecting, as all collectors need is to create an account and connect their crypto wallets to access full functionality. From that point, they can purchase and sell whatever they want.
However, these platforms may also confuse some beginner collectors, as they don’t facilitate direct deals with artists or other users. As a result, individuals may buy assets that won’t bring them any profit or become victims of fraudulent activity. It shouldn’t be considered a dealbreaker, as we don’t stop buying from the internet after one or two frauds. All we mean is that individuals should be aware of a learning curve at the start of NFT art investing.
Invest With the Assistance of Specialized Organizations
Companies like Digital Basel provide a broader range of services than regular NFT marketplaces. In addition to showcasing, promoting, and curating digitalized artworks created in collaboration with galleries and their affiliated artists, such specialized organizations also assist collectors and creators through their deals.
Although this takes more time, collectors will be guided through the process of purchasing NFT artworks, receive proper due diligence, and can be sure of their artworks’ artistic and monetary value. In addition, they will gain valuable experience and knowledge about the ins and outs of NFT collecting, making future trading on public NFT marketplaces more accessible.
How to Maximize Your Returns From NFT Art Investment
As with any other asset, NFT art investment requires collectors to be thoughtful and approach the topic with appropriate strategies or tactics. However, many more factors influence the amount of benefits individuals may get in return. Thus, we gathered, analyzed, and highlighted several steps that can help you make the most out of your NFT art collection.
Analyze the Market
When entering a new market, it is essential for collectors to thoroughly analyze insights, study their desired assets, identify future trends, and stay up-to-date with market changes. Consequently, you will be able to minimize risks and avoid fraudulent activities while keeping your returns on investment as high as possible.
Purchase NFTs with Artistic Value
Acquiring NFTs from famous galleries through specialized organizations provides high-value assets not only in artistic but also in monetary value. In addition, compared to generated artworks, these timeless masterpieces are usually much rarer, driving their desirability even further.
Approach with Long-Term Perspective
Having a long-term perspective is crucial when collecting NFT art. While some collectibles may experience rapid demand, others may require a longer wait for potential growth. It's essential to maintain patience and be willing to hold onto your collection for the possibility of long-term value.
Engage the NFT Community
Being a part of the NFT community is an excellent source of insights on art collecting. It's especially valuable for beginners as they can ask for assistance, get a piece of advice, or even find new friends. In addition, we highly advise you to visit NFT events that take place throughout the year. There, collectors can meet other NFT enthusiasts, gain valuable knowledge from prominent experts, or even participate in exclusive NFT drops.
Ultimately, although it's possible to achieve some assurance by sticking to options with proven value, like galleries and artworks at Digital Basel, the NFT art market can still be unpredictable and unstable. As a collector, it's best to prioritize your love for art, take calculated risks, and invest in pieces that personally connect with you.
Seek expert advice, and remember to adjust your strategy based on a critical analysis of the market. As a result, even market volatility won't stop you from maximizing investment returns.