NFT Investment Complete Guide: From Beginner to Expert

Want to Invest in NFTs? Understand These Basic Concepts First

Many people are still unfamiliar with the concept of NFTs. In simple terms, NFT stands for “Non-Fungible Token,” referring to unique digital assets that cannot be exchanged on a one-to-one basis, such as digital art, game characters, virtual real estate, and more.

In contrast to NFTs are “Fungible Tokens” (FT), like Bitcoin (BTC) and Ethereum (ETH), which are completely interchangeable. For example: one BTC is indistinguishable from another BTC, but an NFT (such as a specific piece of art) is entirely different from another NFT.

NFTs and FTs are both crypto assets issued based on blockchain technology. NFTs typically follow standards like ERC-721, ERC-1155, while FTs use standards like ERC-20, BEP-20. This technical foundation ensures the uniqueness of each NFT and the immutability of ownership.

How NFTs Transition from Niche to Market Explosion

The story of NFTs began in 2017. At that time, a project called “CryptoKitties” became popular, with users frantically buying, trading, and breeding these virtual cats, even causing congestion on the Ethereum network. The most expensive cat, called “Dragon,” sold for $110,000, shocking the entire market.

In the following years, NFT enthusiasm cooled, but project teams did not give up. Instead, they explored more fields like art, entertainment, and sports. In 2018, a digital artwork titled “Everydays: The First 5000 Days” sold for $6.9 million, setting a market record and proving that NFTs’ true value lies not in speculation but in their nature as digital assets.

A real turning point came in 2021. The emergence of high-quality projects like CryptoPunks, Bored Apes (BAYC), World of Women, Art Blocks, and others attracted many renowned artists, celebrities, and big brands, leading to a market boom with diverse formats and rich content ecosystems.

It’s worth noting that the bull market for NFTs generally runs in sync with the FT market (represented by BTC), but usually with a lag. This correlation provides important reference signals for investors.

How to Identify Promising NFT Projects

Many favor projects like CryptoPunks, Bored Apes, Art Blocks, Azuki, mainly because they “look great,” have “artistic value,” are backed by “strong teams,” or have “celebrities endorsing.” But are these factors truly enough?

The answer is: not necessarily.

Take Jay Chou’s endorsement of the Fantom Bears (PhantaBear), which once was hugely popular but ultimately ended in disappointment, with investors losing their money. Why didn’t Bored Apes meet the same fate? The key lies in the business model support — Bored Apes continuously creates value using its IP, generating real income, which gives investors hope and encourages continued holding.

When investing in NFTs, distinguish between two situations:

First: Projects with a solid business model — suitable for long-term holding (2-3 years or more), as they need time to build reputation and attract users. However, such projects are rare.

Second: Pure hype projects — most NFT projects fall into this category, with short lifespans, suitable only for short-term trading (within half a year). The developers’ goal is just to quickly harvest profits, then disappear or develop the next project. Never hold these long-term.

How to assess project quality? Check the official website, forums, or community discussions (Telegram, Discord, etc.). Pay special attention: if the contract shows signs of minting more tokens or scams, skip it — the farther away, the better.

Current NFT Market Status and Future Trends

According to NFTGO data, NFTs now cover nine fields: art, gaming, domain names, virtual worlds, and more, with over 1,000 projects. Among them, top projects like CryptoPunks, BAYC, MAYC, Art Blocks, and DeGods account for nearly 50% of the market cap.

However, data shows that the overall market cap of NFTs is declining, and trading volume is shrinking. Many blue-chip NFTs (like Bored Apes) are hitting new lows in floor prices.

But this doesn’t mean NFTs have no future. In fact, the biggest difference in this bull run compared to the last is that: NFTs are beginning to integrate with the real economy, with “physical asset on-chain” likely becoming a key trend.

The logic is simple: physical assets can be traded quickly, conveniently, and efficiently via NFTs, giving NFTs real application value. Currently, fields like paintings, luxury goods, and real estate are exploring this model. The combination of physical and digital assets is seen by many market participants as the most promising development for the next bull market.

Guide to Choosing NFT Trading Platforms

Based on NFTGO statistics, there are about 40 NFT trading platforms, with the top three being Blur, Opensea, and X2Y2. Each has its advantages and disadvantages, so investors should choose according to their needs.

Blur — a new platform with strict quality review for artworks, currently no transaction fees, but smaller user base and liquidity, limited project options. Suitable for users who prioritize quality.

Opensea — an established industry leader with the largest user base and trading volume, offering a wide selection of NFTs and high liquidity. The downside is higher centralization and relatively high fees. Suitable for those wanting to buy new projects without caring about costs.

X2Y2 — a decentralized trading platform emphasizing user privacy and data security, with lower fees. As a newer platform, it still faces issues with user base and liquidity. Suitable for privacy-conscious and cost-sensitive users.

Recommendation:

• Prioritize security → choose X2Y2
• Want to save on fees → choose Blur or X2Y2
• Only interested in buying various new projects → choose Opensea

Three Major Risks to Avoid in NFT Investment

Before entering NFT investment, investors must understand the following key points:

First: Liquidity risk — NFTs are far less liquid than FTs. After purchase, quick resale can be difficult. Non-blue-chip NFTs may be ignored. If engaging in secondary market short-term trading, be mentally prepared: you might not sell or may have to sell below the floor price.

Second: Counterfeit risk — NFTs are often launched as blind boxes, so investors cannot preview actual images beforehand. Fake projects are rampant. For example: Cool Cat was plagued by counterfeits, causing many investors to burn ETH and end up with fake NFTs that couldn’t be sold. Always verify the contract address on official channels before buying.

Third: Wallet security risk — Never sign permissions to third-party sites casually, and avoid using NFTFi (NFT + DeFi) products recklessly. Improper signing can lead to assets being transferred or destroyed. The irreversible nature of blockchain means assets are forever lost if compromised.

Summary

NFT investment is full of opportunities but also hidden risks. Successful investors need to: deeply understand project business logic, choose suitable trading platforms, and stay alert to scams and risks. With new applications like physical asset on-chain being explored, the future of the NFT market remains promising, but always enter with thorough preparation and risk management.