All things considered, is an NFT a smart investment?
1. If you’d like to support the artist, yes.
The most sound and logical reason to buy an NFT these days is to support an artist that you believe in.
NFTs are a big risk for artists — they cost time and money to mint, and many artists may not be aware of the limited buyer pool until it’s too late.
Therefore, you can seriously make an artist’s day by purchasing their NFT and flouting it on social media, helping them drive more traffic.
2. If you’d like to profit, probably not.
If investing in cryptocurrency itself is 100% speculation, investing in NFTs is even more so.
Simply put, NFTs are “not primarily an investment” and are “even crazier than investing in crypto.” That’s coming from Vignesh Sundaresan (aka MetaKovan), the guy who paid $69 million for the Beeple NFT. He told Bloomberg that anyone trying to profit from NFTs is “taking a big risk.”
Beeple told CoinDesk in March 2021, “I do think there is a bubble,” and sure enough, NFT sales plummeted in April. Melissa Gilmour, founder of NFT agency Lily & Piper, commented, “A drop in value was inevitable.” As the initial craze faded, NFTs faced growing pains with oversaturation, compatibility issues and a rise in scams.
But by late summer, investors were again bullish on NFTs. Trading volume hit $10.7 billion in Q3, according to CNBC, largely driven by support from A-Listers like Shaq and Snoop Dogg.
But even if a Snoop Dogg NFT seems like a good investment, which one should you buy? Will there be a buyer for your specific NFT in three months? Three years?
Therein lies the challenge of investing in non-fungibles. There’s no guaranteed buyer on the other end of your investment like there is with shares of stock, less so one that will pay a higher price than you paid.
Will some NFTs skyrocket to the value of a house? Probably.
Does that make them a good investment? No.
If you’re looking to grow your money in a way that involves significantly less time, effort and risk.