Certain non-fungible token investments have vastly outperformed cryptocurrencies like Bitcoin, Ethereum and Dogecoin in the past months. Celebrities among the likes of 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.
Touted as the best NFT investment of the last year, Bored Ape Yacht Club released its 1st collection of NFTs in the spring of 2021. Taking over a day to sell out at just $200 each, the cheapest Bored Ape currently for sale is around $100,000! Not only this, but Ape holders were airdropped Mutant Apes and ApeCoin for simply owning their Apes, which amounts to an extra $50,000+ in profit. While most NFTs haven't shown similar returns, this is a prime example of how profitable NFT investing can be when done right. Learn more about the NFT craze and how you can start investing today.
Best NFT Projects
It’s important to do your own research before investing in non-fungible tokens. These projects can be hard to value, and many NFTs are illiquid, meaning you may have a hard time selling your collectible in the future. Just because something is an NFT doesn't make it valuable –– there needs to be utility of some sort to make a collectible valuable. This could be access to events, discord groups, or simply art with established clout in the NFT ecosystem. Undoubtedly, many NFT projects will fail, leaving investors with a worthless JPEG.
CryptoPunks - Larva Labs
CryptoPunks were created 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 $10 million dollars on auction.
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 $2.
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, and the cheapest Apes cost about 70 ETH ($400,000). Less than two years ago you could get your hands on an Ape for around 1 ETH, making this project 1 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 6 ETH and 13 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.
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Meebits - Larva Labs
Meebits was launched by Larva Labs — the same company that made CryptoPunks. At the time of release, Meebits sold for around 2.4 ETH. Today, prices range from 3 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 and celebrating the history of the Ethereum blockchain. Proof of Beauty's first NFT series, HASH, allows users to take personal and historical blockchain transactions and turn them into beautiful NFT artworks. From Vitalik's first Ethereum transaction to 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. Proof of Beauty began by documenting Ethereum history, and then they created it themselves.
Metaverse Land NFTs
Virtual Reality Land is one of the most unique ways to invest in nonfungible tokens. The 2 most robust virtual reality ecosystems where you can buy and sell land are Decentraland and The Sandbox. These platforms allow you to monetize your land through developing your real estate, and 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.
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.
There are a total of 20,000 Mutants, including a handful of "Mega Mutants" with price tags as ~low~ as 3,000 ETH ($5 million). The Mutant Apes were made available to Bored Ape Yacht Club holders via an airdrop. All 30,000 apes (bored and mutant) were also granted early access to Adidas "Into the Metaverse" NFT project which currently reseIls for over 5x the retail price. It pays to be a member of the club, and investors see the value of MAYC with a price floor of around 13 ETH ($21,000).
What are NFTs?
To understand what non-fungible tokens are, you need to learn the difference between fungible and non-fungible assets. Fungible assets are items that can be directly interchanged for each other, such as an ounce of gold, a Bitcoin, a barrel of oil or the U.S. dollar.
Non-fungible assets are assets which aren’t interchangeable for each other. Some non-fungible assets are plots of land, art and trading cards. Through tokenizing non-fungible assets on the blockchain, users can verify the authenticity of the asset they're buying. Currently, these assets being traded through NFTs digital collectibles, art, and in-game items, but the future applications for NFTs are limitless.
It’s important to note that a non-fungible token by itself has no value. The value accrued from NFTs is from the media attached to it. For example, a CryptoPunk NFT is just as valuable as the CryptoPunk, and a plot of land on Decentraland accrues value from the location and size of the land within the virtual world.
Are Non-Fungible Tokens a Bubble?
Sought-after NFTs are going for huge money. At the time of writing, the least expensive CryptoPunk you can get your hands on will cost you around 75 ETH, and the cheapest Bored Ape Yacht Club will set you back over 100 ETH. These "floor" prices are for the cheapest pieces on the market. If you want a top tier Alien or Ape Punk, you’ll need around 2000 ETH (about $6 million).
With prices this high, it’s hard to not acknowledge the possibility of a bubble. However, some see these NFT collections as becoming the next big entertainment companies. With hundreds of millions of dollars backing them, projects like Bored Ape Yacht Club is able to throw exclusive yacht parties, private concerts, and more for those who own an ape. Plus, owners have IP rights to their apes, and companies like Happy Dad Hard Seltzer and Diamond Supply Co. have purchased apes to use them in branding.
How to Buy NFTs
The best place to buy non fungible tokens is on OpenSea. This NFT marketplace has the most non-fungible tokens for sale, and you’re able to buy all of the previously mentioned NFTs through the platform (except CryptoPunks). To buy a CryptoPunk, you'll need to use Larva Lab's website.
To use OpenSea, you’ll need 2 things: an Ethereum wallet and Ether tokens. The best Ethereum wallet to use with OpenSea is MetaMask. It’s easy to set up via Google Chrome and easily connects to websites through your Chrome browser. If you don’t already have a cryptocurrency exchange account, you’ll need to make one to buy Ethereum.
Cryptocurrency Exchanges for Ethereum
Because Ethereum is the most widely used currency to buy and sell NFTs, you’ll need to purchase some on a cryptocurrency exchange. Some of the most secure and robust exchanges that support Ethereum include Coinbase, Gemini and eToro
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Fractional Shares of CryptoPunks
If you aren’t willing to shell out thousands of dollars for a CryptoPunk, Unicly is a platform where you can buy fractional shares of a collection of 50 CryptoPunks. Although you won’t directly own a Punk to flex with on Twitter, this is a great way to gain exposure to NFTs without breaking the bank.
To use Unicly, you’ll need to connect your MetaMask (or other compatible ETH wallet) to its website. From there, you can purchase these shares, called uPunks, with Ethereum tokens.
Cryptocurrency Price Movements
From what we've seen so far, NFTs often appreciate when cryptocurrency volatility diminishes. Since non-fungible tokens are bought with Ethereum, investors want to be exposed to ETH when the price is appreciating, so some sell their NFTs to regain exposure. Conversely, when ETH goes down, the prices of NFTs often go up in terms of Ethereum, since most investors today care more about the dollar value of their investment. For up to date cryptocurrency prices, check out our crypto table below.
How to Store NFTs Safely
If you’re investing a significant sum of money into CryptoPunk, Meebit or other NFTs, then you should consider a secure storage solution for your tokens. While MetaMask is generally regarded as safe, people have had their accounts hacked because the wallet is connected to the internet.
A hardware wallet is the solution for this. Hardware wallets like the Ledger Nano S store thousands of cryptocurrencies, including non fungible tokens. These devices store your cryptocurrency offline, making it impossible for your funds to be stolen through the internet.
The Future of Non Fungible Tokens
Humans are naturally drawn to flaunting their wealth, whether it be through expensive watches, exotic cars or, now, NFTs. Non fungible tokens offer a novel way to verify the authenticity of rare and expensive items, making it easy to let everyone know you spent thousands of dollars on a JPEG.
It’s likely that notable projects will survive in the long run, but it’s clear that there’s a lot of hype around NFTs at the moment. If you plan on investing in NFTs, make sure you do your own research and only invest what you can afford to lose.
Disclosure: Authors may own non-fungible tokens in this article. Make sure to do your own research before making any investments with your hard-earned money.
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