There’s the old saying, go hard or go home, and it’s difficult not to have the same approach when it comes to diving into the world of non-fungible tokens or NFTs. The news is swimming with success stories, we see celebrities the world over jumping on the NFT train, and it looks as though investing in NFTs is the easiest way to make bank.
But of course, with the excitement comes the risk. And that risk is multiplied a thousand times over when someone decides to invest without doing their homework.
The biggest rule of investing in NFTs is also the number one rule that people seem to overlook:
Only put into NFTs what you’re prepared to lose, and learn the difference between a risk and a calculated risk.
Many people forget that when you buy non-fungible tokens, it’s not an instant cash grab or a sure-fire win. Sure, it’s tempting to see other people making their fortune off NFTs, or even when we see things in the news like Grimes selling $6M worth of digital art, many are tempted to think it’s a no-brainer.
This is where 95% of investors fail and lose money. They forget that NFTs should be a calculated risk, not a risk. And, as Gary Vee puts it, “anyone who isn’t playing in the long-term is seriously vulnerable to taking a loss.”
How To Take A Calculated Risk With NFTs
When it comes to making decisions about NFTs, Benjamin Tan knows all about the crucial steps.
Also known as the TheNFTer, Benjamin is the top holder of the 0N1 Force NFT project and is now bumping shoulders with people like Gary Vee, Logan Paul, Faze Banks, and a bunch of other big names.
Already within the top 10 NFT projects by daily volume and with one of the strongest communities in the game, Benjamin knows better than anyone that the only way to turn a risk into a calculated risk is to spend more time researching a project than buying it.
Where many investors make a mistake is that they see crypto-Twitter influencers talking about it, or they saw hype on Discord and got excited, and then without thinking, they buy in.
To set yourself up for success with NFTs, Benjamin has provided the ultimate pre-launch and post-launch checklist that will help bump the odds in your favour:
1. Engagement, Community, and Social Channels
Pre-launch, one of the most important steps is to examine engagement. You can assess how engaged a community is by examining things like social media presence. This means looking at social channels like Twitter, the Discord Server, and any other communities you can find. You’re trying to get a sense of the community and to get a feel for the people in it.
Because after all, when it comes to NFTs, looks do matter.
Most NFT enthusiasts forget that when investing in NTFs the big secret is that it must be something unique, something that stands out, something special. The best strategy is to choose something with a strong popular appeal if possible to ensure longevity and to avoid disappointment.
Make sure you understand and can easily follow the dev team’s plans. It’s important to understand the entire road map; this means where they are going in the next few weeks, Amonths, and even years. This is important because some projects have either non-existent roadmaps or roadmaps that won’t be fulfilled.
This is a problem because, at the end of the day, people are buying into the future. NFTs are not about buying a “nice-looking profile picture,” you’re buying into something much bigger. That’s why it all comes down to the team and their ability to execute on the roadmap.
Analyse and inspect the team including the people behind a project. A critical mistake that many investors make early on is that they forget to check if the team is reputable. A reputable character can look several ways, but the best way to determine if they’re legitimate is if they’re in it for the long haul and not a quick cash grab.
5. Price Action
Post-launch, it’s important to carefully monitor supply and demand. Is the price going up, or coming down? Are people dumping, or are people buying?
6. Unique Distribution Of Wallets.
A rule of thumb: it should always be going up. This is how you can identify if the people who are supporting the project are rapidly selling which is never a good sign.
7. Mainstream Adoption Of A Project
Mainstream adoption of a project is probably the most important thing that will determine the longevity of any single project. The turning point of any single project comes down to this: who else is buying into the project?
Other than the community and people who might’ve bought it at random, check to see which influential figures have bought in. The moment something goes mainstream and enters into the public eye, there’s no turning back. Once it’s in pop culture, it’s already mainstream.
Unfortunately in 2021, unless you have a crystal ball, it’s almost impossible to accurately predict the direction of any project, but using this pre-launch and post-launch checklist, you can easily assess whether or not something will have you in the winning 5%, or the unlucky 95%. All it takes is a little elbow grease and some good research.