How to Invest in NFTs (and Profit Off Your Meme Obsession)
The future of art investing is...buying a $1 Taco Bell GIF and reselling it for $3,000?
Jul 28, 2021
Okay, but what exactly is an NFT?
The jargon-y version: A non-fungible token (NFT) is a unique virtual token that represents ownership of a digital asset. They’re called “non-fungible” because they aren’t interchangeable–while you can swap one bitcoin for another bitcoin and still have the same thing, every NFT is a one-of-a-kind (like a special snowflake). These NFTs are certified by and stored on a blockchain, which is like a digital ledger.
Even more confused? Us too.
The ‘Explain it to me like I’m 5’ version:
- Today’s creators are more likely to use TikTok or Adobe Creative Suite as their canvas than, well, canvas.
- But digital content is easily downloaded, shared, and replicated, so no one can own a YouTube video the way you can own a Monet...until now.
- Using the same technology as crypto to certify and track digital content, (much like you’d verify and track a painting), NFTs have finally made it possible to put a price tag on the JPEGs and GIFs we all thought were free.
How much did it sell for?
Each of these digital artifacts, representing significant moments in online and popular culture, were sold as NFTs. How much would you pay to own a piece of internet history?
Twitter founder Jack Dorsey’s first tweet
‘Charlie Bit My Finger,’ once YouTube’s most watched video
Nyan Cat,’ a popular early 2010s meme
Why are NFTs even worth anything? And are they a good investment?
Before you learn how to invest in NFTs, you need to understand why they’re worth something in the first place. After all, anyone can get on twitter, search for @jack, scroll down to his first tweet and view, retweet, or even screenshot and print it. So why are NFTs valuable?
We’re not gonna lie: a large part NFTs' value is the bragging rights. The ability to flex on your friends has always demanded top dollar.
A print of Van Gogh’s Starry Night costs $15 while the painting itself sold at auction for $111 million—anyone can own a print, but only one person can say they own the original. And while digital assets don't contain the texture and brush strokes that make an original painting so special, they have a quality that’s arguably even more brag-worthy: up until recently, they were deemed unownable.
The question for people who want to try investing in NFTs is this: are they a passing fad, or the future of fine art investing?
Don’t take our word for it. This June, iconic hustler Jay-Z commissioned a piece of digital art to celebrate the 25th anniversary of his first album, Reasonable Doubt, and turned it into an NFT. The NFT will be sold at auction by none other than Sotheby's, the largest broker of fine art (we’re talking Picasso, Pollock, Monet) in the world.
Pick Your Flex
Wake up in a new Bugatti, or lay claim to the first tweet ever? A 2020 Bugatti Chiron sells for about the same price as Jack Dorsey’s first tweet did.
Where to buy NFTs
Learning how to invest in NFTs is simpler than you’d think. It looks a lot like investing in anything else: you buy low, you hold, you sell high. Luckily, most NFTs don’t cost anywhere near six figures, and online marketplaces make it easy to buy, sell, and trade NFTs.
You can browse NFT marketplaces much like you’d browse Etsy. Filter through them based on categories, price range, and keywords. When you’re ready, add money to your account and buy NFTs you think will go up in value. Eventually, you can resell or trade them on the same marketplace. Once you’ve got the hang of how to invest in NFTs, you can even create and sell your own NFTs on these platforms.
Picking an NFT marketplace
The granddaddy of places to buy, sell, and trade NFTs is OpenSea, the internet’s largest NFT marketplace. You can filter through their catalogue of over four million items or browse exclusive OpenSea drops from both well-known and up-and-coming artists. These NFTs can go for a couple dollars or hundreds of thousands of dollars—your goal is to buy the NFTs that go for $2 and then flip them for $200,000.
On Rarible, which integrates with OpenSea, you can buy, sell, and create NFTs. Browse by top sellers, hot bids, and hot collections to get a sense of what’s trending, or keep your eye on live auctions to get in on the bidding action. When Taco Bell made their own series of taco-themed NFTs, they put them up on Rarible for $1 each. The ‘NFTacoBells’ sold out within 30 minutes, and smart NFT investors went on to resell them for over $3,000.
Art investments have a history of outperforming the stock market, and finding art to invest in doesn’t require millions anymore. Plus, adding new types of assets into your investment mix can help you keep your funds intact when the market dips. Get started investing in art today.