An NFT (Non-fungible token) is a unique digital asset recorded in a blockchain. NFTs can be sold and traded but cannot be copied or substituted. This is what makes them non-fungible, whereas other assets, such as cryptocurrencies, are fungible. NFTs have exploded in popularity since 2020, when they first caught the mainstream media’s eye. Since then, they have been viewed as speculative investments but are still stirring up the market due to their range of distinctive advantages. If you want to join in on a growing community and diversify your trading portfolio, then follow this beginner-friendly guide to what to do before buying an NFT!
5 Things to Do Before Buying an NFT
Want to buy your first NFT but need help figuring out what exactly to do and how to begin? If you carefully follow this guide, you’ll discover how to safely buy NFTs and set off on your trading journey!
1. Do Plenty of Research
Before you buy your first NFT, you need to do your research. This is the absolute first step you should take, as it can help prevent you from making avoidable mistakes or falling into scammers’ traps. Luckily, there is an endless stream of helpful resources you can find online to help you learn more about the NFT market.
For instance, if you want to find out key terms related to NFTs and trading, then we suggest heading to Investopedia. Alternatively, check out reliable news outlets to discover hot news that touches on the NFT and crypto market. By doing your research, you’ll have a greater understanding of the characteristics of the trading community, which will help you to make profitable investment decisions. You’ll also have a chance to learn about common NFT-related scams, helping you to avoid falling into a scammer’s trap and risking losing your assets. You can never do too much research, so take your time, check out plenty of different sources, and be as thorough as you can!
2. Create a Trading Strategy
After you’ve done plenty of research, it’s time for you to create a trading strategy. Creating a strategy is important because it can help you manage FOMO when trading. FOMO (short for fear of missing out) is a feeling that all traders experience at some point in their journey. This feeling usually happens when a trader notices other traders making large profits from a particular investment of a certain asset suddenly spiking in price. This can cause you to want to make risky trading decisions in the hope of making a profit but it often leads to disappointment and losses. However, if you have a strategy in place and plan to stick to it, then you’re less likely to give in to FOMO.
To create an optimal trading strategy, you first need to establish your personal trading goals. Ask yourself questions such as – “What are my short-term/long-term goals?” and “What does ‘success’ mean to me?”. You’ll also need to decide if you want to prioritise high-risk or low-risk investments. If you’re a beginner, it’s best to stick to low-risk investments since the market is volatile and unpredictable.
3. Sign Up for a Trading Platform
Signing up for a trading platform is crucial for beginner NFT traders. Through these platforms, users will be connected with a broker based on their location and trading preferences. Your assigned broker will guide you as you trade NFTs and provide a range of tools that you can utilise to improve and tune your trading strategy.
There are plenty of different trading platforms around, and choosing one that best suits you is vital. For starters, your chosen trading platform needs to support NFTs. You’ll also want to use a platform that is secure, user-friendly, and packed with features. If you’re unsure which trading platform to use, we recommend BitiCodes. This platform offers everything you need to set off on your investment journey and start trading NFTs. After creating an account, you’ll be assigned a top-tier broker and have a chance to discuss your goals before you start trading.
4. Choose an NFT to Buy
Now, it’s time to choose an NFT that you want to buy. Again, you should be researching all NFTs you’re planning to buy to ensure you understand exactly what you’re getting. At this point the process, you should also have a general idea of why you want to buy an NFT. Generally, if you’re looking to profit from NFTs, you need to look out for newly released projects.
Ensure that the NFT has an up-to-date website and an active social media account, as these are key indicators that the team is dedicated to their project. You can also research the founders of the NFT project to check that they’re legitimate. If you don’t rush this step and thoroughly research your chosen NFT before buying it, then you’re less likely to fall victim to a scam.
5. Evaluate the NFT’s Community
If a certain NFT has caught your eye, before you jump in and buy it, you should first examine the community behind the NFT. This means heading to its social media accounts and taking a look at its follower count and tweets. If an NFT account has an excessive number of followers, they are likely fake, which indicates a scam.
You can also check out the NFT’s Discord server to see how they communicate with their community. It’s a very good sign when a team regularly answers questions and gives updates about their project. Overall, if the community seems positive and the team has good communication, it may be a worthwhile investment opportunity.
Now you know what to do before buying an NFT! NFT trading can be highly rewarding, and following this guide will give you a better chance of safely buying an NFT. The key points to remember are – Do your research, think about your goals, and be aware of possible scams! Good luck and happy trading!