With the popularity of cryptocurrencies and blockchain technology, NFT (non-homogenized token) artwork has become an emerging form of investment. Before purchasing NFT artwork, it is especially important to understand how to choose, buy and how to evaluate its investment value. This article will provide Chinese users with a concise and clear guide to buying and investing in NFT artwork, helping readers quickly understand the NFT market and make more informed investment decisions.
What is NFT Artwork?
NFT (Non-Fungible Token) is a form of digital asset based on blockchain technology, which proves the uniqueness of a digital asset through a unique cryptographic algorithm.NFT artwork, on the other hand, refers to those digital artworks that are released through the form of NFT, which can be various types of creations such as images, audio, video, and so on, and have a unique certification and ownership.
NFT artworks are more than just digital files, they represent the scarcity and authenticity of the work. Therefore, more and more art lovers and investors are paying attention to this emerging market. In China, the potential of the NFT market is huge, especially the younger generation's growing interest in digital art.
How do I buy NFT artwork?
Buying NFT artwork does not involve going directly to a gallery and picking it up like traditional artwork, but requires the use of a number of blockchain platforms. Here are the basic steps to buy NFT artwork:
1. Creating digital wallets
To purchase NFT artwork, you first need to create a digital wallet that supports cryptocurrencies. Common digital wallets include MetaMask, Trust Wallet, etc. They can securely store your cryptocurrencies (e.g. ETH) as well as NFT's. The digital wallet acts as your "bank account" and is used to store and manage all of your assets in the NFT market.
2. Selection of trading platforms
Trading of NFT artwork usually takes place on specialized marketplaces. Here are some common NFT trading platforms:
- OpenSea: The world's largest NFT trading platform with support for multiple blockchains such as Ether and Solana.
- Rarible: A decentralized NFT marketplace where users can easily create and sell their own NFTs.
- SuperRare: An NFT platform focused on high-end artwork, designed for artists and collectors.
When choosing a platform, you can make a decision based on the type of work, the cost of the transaction, and the reputation of the platform.
3. Purchase of cryptocurrency
NFT art trading usually requires the use of cryptocurrencies such as Ether (ETH). Therefore, you need to purchase a certain amount of ETH and deposit it into your digital wallet. ETH can be purchased through major exchanges such as Binance and OKX.
4. Browse and buy NFT artwork
On the platform, you can browse thousands of NFT artworks and choose your favorite. When purchasing, make sure to verify the authenticity and copyright information of the artwork to avoid purchasing pirated works. When making a payment, there is usually a fee (the "gas fee"), which depends on the load of the exchange on the blockchain.
5. Transaction confirmation and collection of NFT
Once the payment is complete, the NFT artwork will be transferred to your digital wallet. At this point, you can view and manage your NFT assets through your wallet.
How do you assess the investment value of NFT artwork?
Like traditional art, the investment value of NFT art depends on a number of factors. Below are some of the key valuation criteria:
1. Visibility of the artist
The influence of the artist and the uniqueness of the work are important factors in determining the value of NFT artwork. Works by well-known artists usually attract more collectors and investors, thus driving up prices. For example, well-known NFT artists such as Beeple and Pak have always had high market prices for their works.
2. Scarcity and uniqueness
One of the core strengths of NFT art is its scarcity. Most NFT artworks are limited editions, which means they have a high collector's value. When purchasing, pay attention to the number of copies and whether the artwork is a first edition (i.e., a "Genesis" edition).
3. Community support and market demand
The NFT market is essentially a decentralized market, and the value of works is often influenced by community and market demand as well. Active communities and strong market demand mean higher trading liquidity and potential appreciation for works. Therefore, when choosing NFT artwork, investors can focus on the community or fan base that supports the work behind it.
4. Creativity and quality of artistic works
Although the value of NFT artwork is highly influenced by the market, the creativity and quality of the work is still a factor that cannot be ignored. Some highly innovative and unique styles of artwork often achieve higher market recognition.
Investment Risks of NFT Artwork
While NFT art investments offer some potential for returns, they also come with certain risks:
1. Market volatility
The NFT market is highly volatile and prices can change significantly in a short period of time. This volatility may be influenced by art market trends, advances in blockchain technology, and other factors.
2. Counterfeiting and copyright issues
There are some pirated works or copyright issues in the NFT art market, and investors should be cautious about purchasing to ensure that the copyright of the work has been clearly acknowledged.
3. Insufficient mobility
Although NFT artworks are gradually gaining more and more attention, their market liquidity is still low compared to traditional forms of investment. If you want to sell NFT works in a short period of time, you may face greater difficulties.
How to Profit from NFT Artwork?
There are two main ways to profit from investing in NFT artwork: value-added sales and copyright proceeds.
Value-added sales
If the NFT artwork you purchase is able to gain market recognition, its value may rise over time. By selling in the secondary market, investors can realize capital appreciation.
Proceeds from copyright
Some authors of NFT artwork will allow the buyer of the work to share in certain copyright revenues. For example, the buyer may earn income from secondary or licensed uses of the work. This profit model is especially beneficial for investors who hold NFT artwork for the long term.
summarize
As an emerging investment category, NFT art is attracting more and more investors to participate in it. By understanding the buying process, evaluation criteria and risk control of NFT artwork, investors can better capitalize on the opportunities in this market. With this, it is also important to remain cautious and ensure that every investment is well thought out in order to reap substantial returns from this wave of digital art.
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