How to Spot Good NFT Projects
Neither this post nor any other at cryptofal.com should be taken as financial advice. It is not.
The non-fungible token (NFT) space has grown considerably over the course of 2021, generating extreme amounts of interest around the world and producing over $23 billion in trading volume for the year alone.
Celebrities such as Jay Z, Eminem, Tom Brady, Paris Hilton, and many more have entered the cryptocurrency space specifically with an interest in owning an NFT or launching their own collections. Even major brands such as Nike and Disney have begun creating their own NFT collections to solidify their place in the latest trend.
While the possibilities afforded by NFTs can have a transformative effect on how we interact with media and digital assets on the internet, the community is plagued by scammers and low-effort projects that aim to part unknowing investors from their hard-earned crypto. Before jumping into any collection, it is highly advised to do some research on the project and ascertain whether or not it is a legitimate group or just another rug pull.
One of the first things to consider is what your goal is in purchasing an NFT. You may have a hard time if all you want is to discover the next Bored Ape Yacht Club. It may be better to focus on projects that actually interest you rather than ones that promise great financial gains. This could be based on the design/look of the NFTs, their function, the underlying technology, or the community behind it all. Consider reading the project whitepaper and the update schedule to see what it aims to do and how it plans to release content. Unrealistic timetables and objectives can be seen as a sign of a potentially shady project.
Researching the community of the project is crucial to identifying legitimate NFT projects. Beyond joining the project’s Telegram and Discord channels, you should gauge the strength of the community in terms of activity and sentiment. Good projects often have large and lively communities that indicate a strong collector base. This could be seen as an indication that people actually want to buy and hold the NFT, rather than flip it for a quick buck. It is highly advised to also look into the team behind the project.
Are these people that you can actually look up, or do they all have anonymous identities? If you can’t look up the history behind the team and see who they are, that can be seen as a major red flag.
This is not a comprehensive list of all things to consider before jumping on the NFT bandwagon, but it is a first step in navigating the NFT space to avoid potential headaches and financial loss. As always, do your own research before jumping into any financial investments.