How to Trade NFTs
If you have already entered the world of cryptocurrencies, trading NFTs will be a piece of cake for you. But if you are a newcomer, it might be a bit challenging at the beginning and you should be careful about your early steps.
How to start trading NFTs?
The first and the most important step would be to educate yourself about the basics of NFTs: Non-fungible-tokens. The more you understand the underlying technology, the use cases and the vulnerabilities; the less you are vulnerable for scamming attempts.
Choose the type of trading that is better for you. You can interact with the NFT world in three different ways. You can either buy or sell NFTs with short term goals or buy and hold NFTs to build up your digital asset portfolio with long term goals. It’s just like day-trading and long-term investing in the stock market. The easiest way to start with NFT trading would be to trade an already developed digital asset.
Moreover, you can create and sell your own NFT. It is more profitable than the other two ways, but it takes a lot of work. You should document your ideas, set goals, research your audience, and find out which NFTs are selling well and then you can start your own NFT project.
NFT industry has not matured enough, and we are at the initial stages. That is why there are some confusion and uncertainties when it comes to regulations and tax. NFT Marketplaces are taking steps to help with tax filings. But until the process gets normalized it is essential for all NFT creators to have a detailed record of all the income, costs, and information of the NFT mintings and listings.
After you minted your NFT project, you should research the tax regulations based on the country you are living in. It is somehow reliant on the individuals to keep record of all the trades they do with digital assets. Cryptocurrencies are used for trading NFTs, and they are considered reportable transactions which should be declared.
How to find an NFT which is good for long term investment
The first thing to pay attention to is the community. If an NFT project has an organic community growth, it is probably a legit project. The more the community cares about the project, the higher the chances that it will be successful in the future.
Due diligence is one of the most important steps in any kind of investment. When the team behind a project is transparent and easy to follow on social media, it is a good sign. On the other hand, anonymous teams are a bit worrying. Every promising NFT project should have a roadmap; if they do not have one, then it means there is no extra future value for the investors. Scam NFT projects might have a roadmap with extraordinary goals which are impossible to be achieved. Having realistic goals on the roadmap is a good sign.
As mentioned before, there are diverse types of NFTs. Some are 1/1 piece of art and some are multi-editions. The scarcer an NFT project is, the higher the value will be.
If the project generates thousands of random NFTs which are easy to be owned by everyone; the supply and demand ratio will make it impossible to turn it into a long term profitable NFT. For example, buying virtual lands might be a good long term investment due to passive income streams. Paying attention to the utilities of an NFT is vital. Some NFTs come with access to VIP private events or future exclusive NFT sales.
Buying NFTs
The first thing to do when you want to buy an NFT is to open an account in a cryptocurrency exchange platform. Each platform has different rules and offers different services. It is important to be fully informed about the process before starting it.
The next stage would be opening a crypto wallet. The different types of crypto wallets have been explained in the former sections.
After taking care of this step, you need to buy some Ethereum. Most of the NFTs are built on top of Ethereum blockchain. That is why you should make sure that your crypto wallet is compatible with Ethereum. ETH can be bought on cryptocurrency exchanges and then be transferred to your crypto wallet. After that, the wallet should be connected to the NFT Marketplace and you are ready to buy your first NFT.
Tips for trading NFTs
Well-known NFTs will be sold extremely fast. If you have an eye on a specific NFT, make sure that your wallet is connected and funded with Ethereum before the NFT drop. The security measures are vital for the newcomers. It is better to use two-factor authentication and strong passwords. As mentioned before, cold wallets have higher security than the hot ones. It is helpful to do a sample transaction with a small amount of money before the NFT drop to make sure everything works properly.
Buying an NFT does not mean that you bought the copyright unless it is stated in the agreement.
Due to the hype in the NFT market, this industry is full of scams. Some of the most common scams are phishing, catfishing, pump and dump schemes and counterfeit NFTs. There are many fake links and advertising pop-ups on websites which promote new fake NFT projects. You should avoid clicking on every link which is offered to you. There are many fake marketplace websites or social media accounts who try to impersonate famous NFT influencers. Sometimes a group of people play with the price of an NFT, just like the stock market and the cryptocurrency market. They pump the price and once it reaches the peak, the top-tier investors cash out, while the bottom-tier investors are left with invaluable assets.
Minting NFTs
The process of converting an artwork into a unique crypto asset on the blockchain is called minting. If you want to create your own NFT project, choosing the right software based on your goal would be the most important first step. You can use Photoshop and graphic design software for classic art. If you are looking forward to creating an innovative 3D design for Metaverse or games you can use 3D modelling applications such as Cinema 4D or AutoCAD.
The process of Minting NFTs will be different based on the Marketplace and the platform that you choose.
How to create your own NFT
Create a high-quality file of your piece of art and send it to the platform to get minted. On some platforms like OpenSea you need to pay an initial gas fee but the upcoming mintings will be free of charge. Then you can activate the bid option and create an auction. Users of the marketplace will check out your NFT and if they decide to buy it, they will pay with cryptocurrencies. The terms and conditions of the deal depend on the creator. You can choose how long to keep your NFT in auction and whether you want to send the physician piece of art or just the digital picture.
Whichever path you chose to get involved with NFTs — the market is remarkably diverse and exciting, there is a lot to learn and explore, enjoy!
About Paycer
Paycer’s goal is to aggregate DeFi investments multi-chain and make them available to users without the need for their own wallet nor the expertise. This should allow anyone to generate a passive income in a world where banks no longer pay interest. Hence the Paycer team is developing a bridge protocol for DeFi and TradFi to combine the best of both worlds and make it available for retail clients #CeDeFi. Apart from the technical matters and the creation of a super easy to use final product. The goal is also to create a regulatory framework that allows the legal operation of a DeFi platform within the EU first and subsequently in other regions.
Currently, a DeFi platform is already available on paycer.finance on which Paycer tokens PCR can be claimed and staked. More features will go live soon. At the moment on Polygon but other blockchains will be integrated in the near future. Paycer is also working on a banking partnership to be able to combine DeFi with a traditional bank account. In addition to the development of the DeFi platform, the development of the final consumer product is also in progress.
Be sure to follow Paycer on social media for all the latest updates on product development. We have further exciting announcements to share very soon.
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Source: Wilson, Brad, and Katina Hristova. “How to Get Started with NFT Trading.” Finance Monthly, 31 January 2022, https://www.finance-monthly.com/2022/01/how-to-get-started-with-nft-trading/. Accessed 27 June 2022.
