NFTs are all the buzz of the investing world. Their meteoric rise from obscure blockchain to powerhouse is a fairytale, but it drives away some investors and draws those who know little about the market. So will the NFT market ever die out?
NFTs could, technically, die out. If people stop buying them, stop caring about them, and stop creating them, the market for them could hypothetically shrink. However, due to their recent rise in popularity, it is unlikely that NFTs will die out any time soon and possibilities of what can be done with NFTs seems endless.
There will always be the threat of losses when it comes to investing. Risk is part of the process and will teach you several things about investing and winning and losing with grace.
Strategies can be learned to lessen the blow of a loss, but nothing compares to real-world experience. So read on and learn all we know about NFTs and if they will die out.
Will NFTs Die Out?
There’s been some serious money invested into the NFT market. These monies, or should we say crypto, have spawned other companies looking to make millions off a small investment.
The flocking to the market has some wary investors petrified and has created a plateau in trading. Pauses are normal, but there could be some underlying problems that would force the market to implode.
A few ways that NFT could die out are:
- Lack of Investors – When the people with the money disappear, it is a good sign that the market could be failing. When the money stops flowing, people will lose interest and search for greener pastures with more cash swapping hands. If trading becomes stale, the investors will dry up.
- No Creators – One of the most unlikely scenarios is that people lose interest in making the non-fungibles. There is no shortage of creators, which could mean the market is flooded with worthless NFT art that will never be bought. Quality creators will always have traction in the fungible market, and bad amateur art can pop the bubble.
- High Gas Fees – One of the biggest humps to clear for NFTs are the outrageous fees to mint a token. These gas fees rise and fall each day, and some fees could cost more than the production value of the token. So many creators actually lose money by minting. These hefty fees affect both investors and creators. The good news is that in the future we expect to see mintng fees reduced or completely disapeared.
- Environmental Concerns – Non-fungible tokens and the processing power required to store and create them can be bad for the environment. In addition, server farms run off the same power grid as your home, and extra computing power means a more significant strain on the system. I talk more about the energy drain in this article: How Much Energy does it Take to Make an NFT?
NFTs dying is not something that seems to be happening, but the constant attention has slowed the market. Some even say that any investment made in NFT will be a bust because the trend has become mainstream, and more investors are a scary concept for those big shark trading companies.
How People Invest in NFTs Cautiously
Don’t get it twisted; the following is not financial advice. I’m definitely not a financial consultant, so be sure to complete your due diligence when looking at NFTs.
There will always be the chance that any investment you make will end up costing you money. A big part of investing is taking a bit of caution and studying the items you are going to invest in.
Doing your due diligence means protecting yourself and only losing what you have invested.
Some things to consider when studying up on your NFT investments are:
- Trend Setters – If you look for people who are the first in the industry, you can get in with a small investment. These are the folks who could be experimenting with their art or making things that people don’t presently enjoy. Their prices could be low and have a ceiling that sets records.
- Added Features – Another great place to find ways to invest in NFT cautiously is looking for those with added features. These added features could change the nature of the token or drive up the demand, which equals a rise in price. Although features will bring hefty investment, be warned that sometimes scammers use features as bait.
- Buy Cheap – One of the best things about NFT is that they can be very cheap to invest in. This is because the creators are starting and looking to build their portfolios. They often can be made for around $100, and if it ends up making millions, you have a success story. If not, you have only lost a small investment and not everything you own.
- Fractional Ownership – A feature to arise is fractional ownership of NFTs. This means that you too could have a piece of a million dollar Beeple NFT.
- Learn to Lose – Another great tip is to get comfortable with losing your money. This doesn’t mean you should learn to accept failure in your investments but be comfortable only investing as much as you are willing to lose. Losing should be seen as part of the game and fuel your subsequent investments.
Being cautious and learning about your investments is the best way to protect yourself against a failing NFT. Just because they are hot now doesn’t mean they will be forever.
Learning how to invest in the market smartly requires lots of research but will pay out if you have excellent timing and a bit of luck.
NFT Investments to Avoid
There are some ways to keep yourself protected against tokens that could not be on the up and up. Protection means that you will only lose your investments in the token and not on the rest of your NFT collection.
The NFT trends to avoid losing your investment are:
- Celebrity NFTs – Sometimes, celebrities attach their fame to a non-fungible token. They can tout the NFT on their social media or a podcast, driving up the price and making them some serious dough, only to back out when the price starts to tank—making their fans take the brunt of the loss.
- Oversaturation – Look out for NFTs that have high edition counts. Owning an NFT with 50,000 editions is not always a good idea so if you are making an after maket purchase be sure to know the edition count. Oversaturation can be a real problem.
- Unknown Artists – New or unknown artist is usually a tag given to minters who just got into the game. They could be a Picasso learning how to perfect the art or a hacker patiently waiting for you to buy a token so they can steal your collection. Avoid unknowns until their value is justified. And look out for copy cats that steal and replicate wel known artists work and sell their frauds. These article should help you confirm who the creator is: How to Check the Ownership of an NFT (7 Methods)
Investing is always going to be tricky and it’s a lot easier to buy an NFT than to sell one. However, knowing what scams can be hidden in NFT is a great way to ensure that the market doesn’t collapse. Keep cons at bay by watching the market and doing your homework before opening your wallet.
The NFT market shows no signs of failing. On the contrary, the number of non-fungible tokens being created increases every day, and more NFTs mean the market will always have a product. However, we all need to be careful as the demand side of the NFT market is starting to plateau, but that only means it will only hopefully stabilize, not falter.
Doing a bit of homework will help you conquer the fears of losing in the NFT market. Knowing how to invest and keeping control of your investing are excellent ways to ensure that you don’t lose the farm even if the non-fungible token market bites the dust.
Still not sold on the idea of NFTs? Well, be sure to read this popular article: 10 Reasons Why NFTs Will Change the World.
If you are a creator and want to start minting NFTs, you will want to read these two articles:
- How Much Should You Sell Your NFT Art For? Pricing Guide
- How To Sell NFTs Without Gas Fees (or less) | Complete Guide