Non-fungible tokens (NFTs) can be good for investment if properly invested. The industry is now worth billions, and the prospects keep increasing. However, not every NFT project is likely to become a good investment in the long run.
Therefore, it is important to evaluate the quality of an NFT collection to ensure you make the right investment decision. This may sound intimidating, but it is easier to do than it sounds, and the little effort you put into evaluating an NFT can save your investment in the future.
In this guide, we highlight six factors you can use to assess an NFT. There are many NFT projects that are overhyped, but if you use these points, you’ll be able to identify a project that is safe to invest in.
The team behind any project is very important, because it directly determines if the project will succeed or not. This is because they make all the decisions, develop the strategies for growing the project, and ultimately drive value to the project.
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Do the members of the team have a track record of success? Are they willing to share information about their background, or try to protect their identities? A team that has something to hide is most likely a disaster waiting to happen.
An NFT project without utility is a useless project. It was possible for NFT projects to get away with whack projects with little or no utility when the hype around NFTs was high. Those days are long gone now, and any NFT project without real utility isn’t going anywhere.
There are many big projects with more capacity coming into the game, so only projects with strong utility can compete. Check if the project has any real utility, or leave it alone.
Web3 projects thrive on communities. This is what separates them from wb2 projects. Therefore, for an NFT project to make it, it needs to have a strong community. The community is what builds the reputation of the project and bring it to limelight.
If the project does not have an engaged community that is regularly in touch with the team, the project is likely to flop ultimately.
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It is one thing to have a project with a strong team and great ideas, and an entirely different thing for those ideas to be adequately executed. There must be a proven track record of strict execution to ensure that the great ideas of the team translate into results.
To do this, compare their roadmap and plans with what the team has achieved so far. Is it making progress? And is the progress in line with its spelt out plans or is it just random things coming into place?
Art is great and high-quality art means a lot. However, it’ll take more that quality art for an NFT project to succeed. For a project to succeed, the artists behind it need to be in demand and of good reputation.
Does the art resonate with a lot of people on social media? You should also pay attention to how major industry influencers feel about the art. This can tell a lot about the project’s ultimate future.
Historical and Cultural Value
Before investing in an NFT project, ask yourself if anyone would like to place the art in a revered museum a decade from now, and if the art will be worth much by then. With good innovation, an NFT collection can remain valuable many years into the future.
Is the NFT collection pioneering anything that will make it to be remembered for ages? If no, then you’ll need to rethink it.
If you wish to invest in an NFT, it is important to take the time to investigate the project, just like it is critical to research crypto projects before investing. If you consider all these factors before choosing any project, you’ll be much more likely to succeed.
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