NFTs have taken the world by storm with investors pouring money into the new asset class at record-breaking rates. According to a NonFungible.com report, which was created with support from L’Atelier BNP Paribas, the total value of all NFT transactions worldwide jumped by 21,350% to more than $17 billion in 2021, from $82.5 million in 2020. The 200 x increase in the NFT market was 100 times as great as the percentage increase in the electric-vehicle market over the same period, the report says.
Investing in new digital assets is high risk, and there is a chance you could lose most, if not all of your investment. However, there is also a chance you could make a lot of money. When selecting which NFT projects to invest in, it’s important to consider the following:
What is the team behind the project?
Can they deliver what they promise?
How is the project being received by the market?
What is the potential for the project?
Is the token undervalued?
Celebrities such as Gary Vee, Elon Musk, Jimmy Fallon, Jay-Z and Justin Bieber have bought NFTs and shown them off on their Twitter profiles, increasing the demand for limited-edition tokenized art.
Below are some NFT projects you might want to invest in.
CryptoPunks - Larva Labs
CryptoPunks NFTs started in 2017 as one of the 1st non-fungible token projects on Ethereum. Each punk was algorithmically generated, and the collectibles were limited to 10,000 Punks. Human Punks are the most common, but there are other species of Punks. There are just 9 Alien Punks, 24 Ape Punks and 88 Zombie Punks. Alien Punks have fetched over $8 million dollars on auction. The cheapest CryptoPunks is CryptoPunk 2821 which is currently valued at $234,939 as of April 2022.
Axie Infinity
Axies are the creatures used to play the popular blockchain-based game Axie Infinity. You need 3 Axies to play the game, so as the platform attracts more users the price of Axies will naturally increase. Axies vary in price depending on their attributes, but you can pick one up today for around $200. You can start your journey with Axie Infinity by purchasing their Ronin wallet which is your boarding pass to their digital nation.
Bored Ape Yacht Club - Yuga Labs
Bored Ape Yacht Club is similar to CryptoPunks in that these NFTs are commonly used as online avatars. The project features cartoon apes that have different attributes and rarities, with the cheapest Apes costing roughly 100 ETH. When these NFTs originally came out you could get one for around 1 ETH. This was less than a year ago, making it one of the fastest appreciating NFT collectibles in the industry. Since its inception, BAYC has airdropped token holders Bored Ape Kennel Club (BAKC) and Mutant Ape Yacht Club (MAYC) NFTs, which have accrued floor prices of 10 ETH and 25 ETH, respectively. Bored Ape Yacht Club also throws exclusive events for token holders, such as a private concert featuring The Strokes and Lil Baby in New York City.
Meebits - Larva Labs
Meebits was launched by Larva Labs, the same company that own CryptoPunks. At the time of release, Meebits sold for around 2.4 ETH. At the time of writing this article, prices ranged from 5 ETH up to 100s of ETH, depending on the rarity of the Meebit.
Meebits are intended to be used in the metaverse, as they’re 3-dimensional characters that can be used in open world blockchain applications.
Proof of Beauty Studios
Proof of Beauty is an innovative NFT project focused on documenting the history of the Ethereum blockchain. Its first NFT series, HASH, allowed users to take personal and historical blockchain transactions, and turn them into beautiful NFT artworks.
Some examples are Vitalik's first Ethereum transaction and Jay Z's Cryptopunk purchase. Proof of Beauty's algorithm integrates the transaction metadata into color pallets, shapes and textures.
Proof of Beauty's second series, LONDON, is a sold-out collection of 8,888 generative art pieces. The London gift NFTs became available during the hard fork, and the first transaction that occurred post the EIP-1559 upgrade was a London NFT sale.
Metaverse Land NFTs
Virtual Reality Land is one of the most unique ways to invest in nonfungible tokens. The top four marketplaces to buy and sell VR Land are Decentraland, Somnium Space, Cryptovoxels and Sandbox. These platforms allow you to monetize your land through development of real estate. Some investors have made casinos, amusement parks and NFT museums to monetize their land. Others simply buy this virtual reality land as a speculative investment to sell at a later point in time.
Upland: A Metaverse Based on the Real World
Upland is a leading blockchain metaverse that is mapped to real-world addresses. Investors can monetize their land within Upland, allowing for play-to-earn mechanics within the game. UPX is the token that's used within Upland to buy and sell NFT land, and new users can get a starting bonus of 6,000 UPX. Upland is among the most accessible metaverses, as land within the virtual world starts at just a few dollars.
Mutant Ape Yacht Club - Yuga Labs
The Mutant Ape Yacht Club is the follow up to Yuga Labs smash hit, the Bored Ape Yacht Club. While the Bored Apes are being hoarded by the celebrities and venture capitalists, the mutant apes offer a more affordable way to access the same network. On Opensea you could probably get a BAYC for 20 ETH, at the time of writing this article.
There are a total of 20,000 Mutants, which include a handful of "Mega Mutants". The Mutant Apes were made available to Bored Ape Yacht Club holders via an airdrop. All 30,000 apes (bored and mutant) were granted early access to Adidas "Into the Metaverse" NFT project which currently reseIls for over 3x the retail price. It pays to be a member of this club, and investors see the value of MAYC mainly because it is a more affordable option to Bored Apes NFTs.
NFTS are a Growing Industry
The cryptocurrency and NFT markets are still in their infancy, and will likely continue to grow over the coming years. From a technology perspective, NFTs have a lot of potential, serving a wide range of use cases, including representation of ownership, inheritance, title and payment, among others. From an investment standpoint, the market is still in its infancy, and there is a lot of growth potential. As the market continues to grow, so will the opportunities for those who are able to identify high-risk investments that will likely deliver great returns.
The large number of trading partners that exist within the NFT markets provides significant liquidity. This means that even for assets that have a low trading volume, there will almost always be someone willing to buy or sell at any given time. This in stark contrast to traditional assets, where liquidity can be hard to come by.
Conclusion
While there is clearly a lot of interest in NFTs, it is important to remember that this is a relatively new market, which means that there are still considerable risks.
Investments in NFTs are very high risk and speculative, and there is a chance that you could lose your entire investment. This high risk nature of the investment opportunity does not mean that NFTs are inappropriate for early-stage investing. On the contrary, the high risk nature of investing in new digital assets means that those who are willing to take high risk will likely reap very high rewards.
There remains hope that regulation will come to the NFT markets, which could lead to safer and more predictable investment opportunities in the future.