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Non-fungible tokens (NFTs) are a relatively recent phenomenon that took the world by storm in 2021. NFTs were selling for hundreds of millions of dollars and hundreds of celebrities were buying their favorite projects. While NFT trading volume has declined significantly since highs in 2021, there are still a large number of enthusiasts looking to get their hands on the latest NFT projects. These users are hoping to find projects that are valuable, so they can either store them in a collection or flip them for a quick profit.
Most of the best NFT projects have a strong community and/or powerful utility that drives volume and prices.
What is an NFT?
An NFT is a unique digital token that cannot be replaced. An NFT is stored on the blockchain, which allows its ownership to be verified. The ownership is stored publicly, so it cannot be replaced. This factor gives NFTs value and allows for them to be traded.
The largest use for NFTs is that of pictures. Much like how you can be the owner of art pieces, you can be the sole owner of an NFT. You cannot take a screenshot of an NFT and own it because the sole owner has the records of ownership stored on the blockchain. Just as you cannot take a picture of a famous painting and own it, you cannot take a screenshot of an NFT and own it.
How to Find an NFT Community
New NFT projects make strong waves in the crypto world, so it can be difficult to discern the good from the bad. However, you can look at a few key things in each NFT community.
Almost every NFT project will have a Discord community powering it. This platform acts as the staging ground for the project and allows the creators to talk with prospective buyers to build hype and give away exclusive rewards. A good way to see if an NFT community has a big following is to look at the Discord server. If there are lots of members and these members are active in the chat, then this could be a sign of high demand for the project. Additionally, if the creators of the project have a strong presence and are open and honest about the project, this is another good sign.
Another way to find a solid NFT community is to use social media sites such as Twitter and Instagram. It is not enough for a project to have lots of followers, as these can be bought. A better way to check for true popularity is to see if members of the community are liking/retweeting/commenting on the posts. This factor is a bit more difficult to fake and can indicate a solid community.
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Best NFT Utilities
Another aspect that can make for a good NFT project is the utility that owning an NFT can provide. This benefit can increase the incentive to buy the NFT and increase demand. Here are a few of the most common NFT utilities:
- Club membership: Since the ownership of NFTs can be verified, an NFT project can allow an owner admittance into private clubs. These clubs can provide exclusive networking and access to events and airdrops.
- Airdrops: An airdrop is when a project gives out either free crypto or NFTs to a certain subset of holders. For example, all owners of the Bored Ape Yacht Club NFTs were given Mutant Apes for free. Airdrops like these can incentivize the purchase of the original NFT.
- Staking rewards: Many teams let you stake your NFTs to earn rewards, which can come in the form of utility tokens, governance tokens, raffle tickets and exclusive merch.
- Merch: The creators of NFT projects have access to the wallet address of all holders. Many projects create merchandise featuring the NFTs or brand in some way, which are exclusive to holders. Merchandise could be anything from shirts to physical vinyl replicas of the NFT.
- Games: Some NFT projects aim to create a game to work hand-in-hand with the NFTs. These projects use NFTs in a game, which can create demand for the NFTs. Most of these games are play-to-earn as well, meaning you earn some kind of reward (usually tokens or more NFTs) by playing them. These games can range from player vs. player games to large-scale open-world games. However, it is important to note that some NFT projects claim to be in the process of making a game to draw attention with no intention of following through on this promise.
How to Buy An NFT
Now that you know the factors needed to look at when finding an NFT project, all that is left is the steps to actually purchase an NFT. Fortunately, this process is extremely easy and only takes three steps.
Use a cryptocurrency exchange to buy crypto: Most of the time, NFTs are created separate from crypto trading platforms and are bought and sold via wallets. However, you need cryptocurrency (almost always Ethereum) to purchase NFTs, and crypto trading platforms are the easiest way to get crypto. Uphold, eToro, WeBull, Public.com are some of Benzinga’s favorite crypto exchanges.
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