Finding NFTs to buy is easy, however, choosing a good NFT can be a bit more challenging. But it doesn’t have to be. After purchasing many NFTs myself, I’ve discovered exactly what you need to look for when trying to choose a good NFT.
To find a good NFT, first look for a project you like and want to support. Once found, do a minimum of 50 hours’ worth of research on any project before going all-in. Researching an NFT project is as simple as looking into these five key signs of a good NFT.
Finding a good NFT to buy is not any different than purchasing something in real life. You find something you like, you research it, then you decide if it’s something worth spending your money on. Let me elaborate a little more.
How to Choose a Good NFT
1. Study the Creator’s Social Status
When looking to purchase a good NFT, it’s important to understand exactly who’s behind the creation of the token you’re interested in buying. Generally, someone who has a positive social status and good public history will have more leverage when it comes to creating and selling non-fungible tokens.
For example, you may have better luck buying an NFT from a known celebrity figure versus someone who is unknown and has little publicity. That’s not to say that someone who isn’t known publicly can’t create successful NFTs though.
Just look at Mike Winkelmann (Beeple). Previously, Mike was relatively unknown until he auctioned off multiple editions of his own artwork which ended up selling for millions of dollars.
When you research someone offering an NFT, you want to know you can trust them and their vision. You are supporting them after all.
2. Brand Name/Intellectual Property
A brand or company’s reputation is an important factor when you’re trying to purchase a good NFT. Many NFT projects may not have a reputable brand name, as they may be building up their IP through the launch of their NFTs. If this is the case with a project you’re looking into, make sure you find the project’s ‘Roadmap‘.
An NFT’s roadmap is a guide creators make to give a general idea of where a project is headed and what to expect in the future. Roadmaps may state any perks, collaborations, community involvement, and other branding ideas you may find useful when deciding whether or not you want to purchase. Generally, roadmaps can be found on the brand’s website.
If an NFT has a strong brand name backing it, it’s more likely that the project is being created to be built upon instead of for a quick flip.
In my opinion, a strong and active community is one of the most important things to look for when you are deciding whether or not to purchase an NFT.
An involved community creates more hype and can even help further develop a brand. Additionally, when a brand has a strong community backing it, everyone acts as a support group for each other. Questions, comments, and concerns can all be put to rest with the help of a positive and knowledgeable community.
Signs of a strong NFT community include but are not limited to:
- An active and consistent social media following.
- Present in a diverse group of communication platforms (Twitter, Clubhouse, Discord, YouTube, Websites, etc) are all good signs of a strong community being built. Especially if they are active on multiple platforms.
- Friendly and helpful creators, as well as community members, are a tell-tale sign of a solid community being built. Good people attract other good people, it’s that simple.
So, the next time you want to check for a strong community starts observing. Be active in the community, ask questions, help others, and learn as much as you can. If you get nothing other than knowledge out of a project, even that is a worthy investment of your time.
4. Smart Contract Terms
Any time you are on the hunt for a good non-fungible token project to invest in, it’s wise to look into the smart contract and the specific terms within. Smart contracts may offer access, physical goods, mentorship, investment opportunities, and much more. Along with all the perks, however, come terms.
Some good terms to look for would be things like expiration dates (length of access), redemption quantities and limitations, burning and forging (destroying and combining) of your NFTs, and any other data which may add more value.
Make yourself fully aware of any terms an NFT may have and make sure you understand them completely. If you don’t understand something, ask questions and seek the answer.
5. Past Projects, Failures, and Accomplishments
The last piece of the puzzle is to find out who’s behind the creation of the token you are looking to collect. Is the creator an established brand such as Taco Bell? Or is it a group of individuals who have multiple attempts, accomplishments, and likely even failures all under their belts?
Regardless of whether the creators have had previous success or failure in the past, the important thing to look for is that they have tried to build something previously. If there is a record of failure, what did these creators do in order to overcome any diversity and struggle? This can tell you a lot about the people behind a project.
Likewise, if the creators have accomplished something great in the past, it’s more likely they will be able to accomplish greatness in the future.
How to Know if An NFT is Valuable
There are many aspects when it comes to determining if a specific NFT or project is valuable.
The most simple way to know if an NFT is valuable is by auditing the market. If prices are on the rise and consistent over a period of time, this may be a sign of a valuable NFT. Moreover, if the resale value is always higher than the previous sale, this is a good sign. As well, looking into the smart contract will tell you about any additional perks offered as a token holder.
Just like sports cards and other collectibles, non-fungible tokens aren’t immune from fluctuating in pricing and popularity. That’s why it’s important to invest in a token that you genuinely like.
Which NFTs Not to Buy
As the popularity and commonality of non-fungible tokens gain traction, so does the amount of people releasing their own NFT projects. With so many new and intriguing non-fungible token projects on the market, which tokens should you avoid buying at all costs?
Avoid purchasing NFTs that contain no underlying value. The underlying value reflects the actual value of the brand and its assets at the present time. Moreover, NFTs lacking community engagement, perks, uniqueness, and other value boosters should not be considered good tokens to buy.
Really though, it’s up to you to decide which non-fungible token project you want to invest your hard-earned money in. What I suggest is to do your own research beforehand.
Risks of Buying NFTs
Non-fungible tokens are considered high-risk investments. With so many different NFTs on the market, there are plenty of risks that are included when purchasing any NFT.
The risks of buying NFTs are as follows:
- You may lose all the money you invest (do your research.)
- Your wallet could be compromised (if you are on untrustworthy sites.)
- It can become an addiction (buying NFTs can literally become an addiction.)
- You could get scammed into buying a fake (replica) NFT as opposed to the authentic one.
- People may think you’re crazy (don’t worry about other people’s judgment.)
- Your life could be changed forever (there’s so much opportunity with NFTs.)
Ultimately, buying a good NFT comes down to doing your own research. Study the market, study the community, ask a lot of questions, contribute your own thoughts and opinions, and follow your intuition. That is the best way I know how to buy what I consider a good NFT.