NFT has emerged as a phenomenon recently and has brought investors many opportunities to get rich. However, NFT trading is still quite new and many people do not know much about it. So, what is NFT trading? How to trade NFTs for newbies? Let’s find out with CoinMinutes through the article below.
What is NFT Trading?
NFTs are simply digital assets and you can trade them just like you trade cryptocurrencies, stocks, or commodities. So, NFT trading means buying and selling NFTs with cryptocurrency on platforms, like OpenSea and Rarible. NFT trading allows people to profit from the fluctuations in the value of digital collectibles over time. NFT trading will be successful when we know which NFTs are likely to be valuable in the future based on factors such as the NFT quality, its popularity trend, or the potential it possesses.
Why is NFT Trading So Popular?
NFTs have been popular during the pandemic as people spend more time online. Add to that the successes of NFT projects like BAYC skyrocketing in value. NFT Trading has attracted community interest because of the possibility of making large profits by identifying potential NFT projects early.
NFTs are digital collectibles so their value can increase significantly over time. For example, one person bought CryptoPunk for just $1 and now owns assets worth tens of thousands of dollars through trading. These numbers have attracted many speculators to speculate in the market.
In addition to the lucrative returns it brings, owning an NFT also represents social status and access to exclusive communities. Owning Bored Ape or CryptoPunk allows users to connect with other reputable collectors. Creative works tokenized as NFTs also attract art and culture fans who want to invest in up-and-coming digital artists.
How Do People Make Money Trading NFTs?
Making a profit with NFTs requires people to have some strategy and patience. Through trading people will buy low and sell high, meaning you can buy undervalued NFTs and hold them until their value increases. This requires careful research and an understanding of market trends and what collectors are looking for.
Although no one can accurately predict the future, you can still evaluate them through a few important factors such as characteristics, history, rarity of NFTs, etc. to make a decision. Invest wisely.
Evaluate the quality of a work of art through its uniqueness and appeal. By considering the values and privileges that the project brings to users. You should prioritize choosing projects that build a strong community by following Discord and Twitter channels. For example, the Bored Ape Club allows members to participate in exclusive events and receive future gifts.
How to Start NFT Trading?
Step 1: Register on a cryptocurrency exchange or wallet that supports NFTs
First, you need to choose a reputable cryptocurrency exchange or wallet that supports NFT trading. Some popular platforms for trading NFTs you can refer to are OpenSea, Rarible, and NBA Top Shot.
Register an account and complete any required verification processes.
Step 2: Get set to acquire NFTs
To trade NFTs, you need to obtain them through a number of ways such as:
Buy NFTs from the marketplace: after finding the NFT you want to buy on the platform, follow the instructions to complete the purchase using a supported cryptocurrency.
Participate in NFT auctions or drops to earn bargain NFTs, by following announcements from artists or projects you are interested in participating in these events.
Step 3: Trade NFTs on the market
Once you own NFTs, you can choose to keep them, sell them, or exchange them for other NFTs. Visit the marketplace in the platform, offer the NFT you want to sell or trade, set the desired price or conditions, and complete the transaction when the buyer or trader matches your list.
Where Can You Start Trading NFTs?
Below are some reputable platforms you can refer to when you want to trade NFTs:
Risks of NFT Trading
Besides the benefits that NFT Trading brings, it also has some potential risks as follows, please refer to them to avoid encountering them.
- Market volatility and price fluctuation: Because the NFT market is still emerging and speculative, prices can fluctuate up and down. Traders need to be prepared for volatility.
- Fraud and scams: NFT Trading, like any new industry, has the potential for bad actors trying to take advantage through fake projects and market manipulation. It can be difficult for those new to the market to identify fraud. Therefore, you need to ensure transactions are carried out through reputable markets to minimize fraud.
- Liquidity: The NFT market typically has low volume and liquidity compared to other major cryptocurrencies. So it will not be easy when you want to find a buyer to sell NFTs. Traders risk getting stuck holding an asset that they cannot get out of easily.
How to get into NFT trading?
The simplest way to get into NFT trading is to visit platforms like OpenSea, Rarible, and Blur, which are popular options for buying, selling, and trading NFTs.
Is NFT trading profitable?
Yes, trading NFTs can be profitable, but there are also high risks due to the price volatility of the market. So you need to do extensive research before buying.
Why you should be careful when trading NFTs
As we mentioned above about the risks of trading NFTs, high price volatility poses risks of loss. There are always potential threats of fraud, hacking, and gas wars rendering invalid transactions.
NFTs can absolutely become a highly profitable investment in your investment portfolio. Above is an overview article about Trading NFT that CoinMinutes compiled. Hopefully, this article will help you easily choose and perform NFT transactions more easily.