DISCLAIMER: Nothing mentioned in this article should be considered financial advice. You should be prepared to lose some or all of the money you invest in these projects as they can be highly volatile.
Crypto, NFTs, Bitcoin and Ethereum — these are all terms you've probably heard in the news or in conversation in recent times. But what are they and can you make money from them?
Let's start with the basics.
Crypto is digital currency. There are thousands of different types but the most widely known one is Bitcoin. Some countries, most recently El Salvador, have even introduced it as legal tender to buy things just like you would with cash.
NFTs are non-fungible tokens. You purchase them with cryptocurrency — most are bought with ETH (ether) which is the currency used on the Ethereum blockchain — but NFTs are not mutually interchangeable, hence not fungible. Unlike cryptocurrency which is valued equally for each token, each NFT is valued individually depending on its rarity and the success of the project it is within.
So, if 2022 is your time to get into crypto or NFTs and the metaverse, here are some things to consider.
Do Your Research
Before you invest in anything, do your due diligence, otherwise you're essentially investing your money into something you don't have a clue about.
The projects that I've managed to flip NFTs for the most profit were often the ones that I researched its roadmap and followed its community's Discord and Twitter channels before purchasing to see if there was mass interest or hype.
Also, invest in something you believe in or are interested in. I just got into Ozzy Osbourne's NFT Project CryptoBatz (below) because they are teaming up with some of the other biggest projects for spin-off opportunities including MutantBatz, where your bat can bite another NFT to create a mutated version - very rare, hopefully lucrative, and pretty cool, right?
CryptoBatz By Ozzy Osbourne | Opensea
In terms of cryptocurrencies, for me, I believe Ethereum offers more profit potential than Bitcoin. I also believe that interest and adoption in the metaverse will increase in 2022 and that cryptocurrencies such as MANA used on the Decentraland virtual world network and SAND used on the Sandbox platform offer long-term potential.
The Terminology
A project or cryptocurrency is going to the moon so be a diamond hand and HODL because if FUD kicks in then the paper hands will sell out.
If this sentence above reads like complete garbage to you, you're not alone. It was to me at first, too.
To the moon: This means that people believe a cryptocurrency or NFT project is going to be extremely successful and notice a sharp rise in value soon. But don't take other people's comments as fact, do your own research.
FUD: Fear, uncertainty and doubt - because digital currencies and NFTs rely heavily on rumour and hype, FUD can kill your hopes of making money (especially if paper hands are involved.)
Crypto Bull Society | Opensea
Paper hands: This is a term for people who invested in a NFT project but panic sold lower than what the actual value is worth, which can drive down the value of your NFT too.
Diamond hands: These are the opposite people — they HODL (hold on for dear life) while a project fluctuates in price because they believe the project has long-term returns.
Your Parents Will Think You're Crazy
Hey mom and dad, would you think I was crazy if I told you I'd just spent a month's rent on some JPEGs of apes and pixelated worlds? Yes, absolutely, was their answer.
But I shouldn't have expected any different answer really. They are 65 and 75 years old respectively. Using WhatsApp video calls and clicking on the Instagram app on the phone is the extent of their tech-savvy knowledge.
Trust Your Instincts
It applies to poker, stocks and now crypto and NFTs. Knowing when to hold them and sell them are key components to making or losing money.
Most NFT projects, unless you have faith in its longevity, are reliant on hype, FOMO and excitement to drive the price up.
I've experienced both sides of this. I sold a piece of land on the metaverse under the project NFT Worlds for 1.5 ETH (US$4,700 at the time) - I made a nice profit, but that same piece of land would now be worth double the value.
However, I sold another NFT under the project name Apocalyptic Apes for 1 ETH ($3,100 at the time) and when I checked a couple of weeks later, it was worth half the value. Others that I've bought are now essentially worthless as hype in the project has gone. So, you definitely win some and lose some.
Don't Check The Prices Every Day
If you've done your thorough research, you shouldn't need to check the prices every day. Sure, maybe once a week, but if you've taken a long-term position because you believe that cryptocurrency is the future or that buying metaverse land is the future, then the day-to-day price doesn't change that.
It'll save you a lot of time, energy and phone battery.
The Scammers
Don't trust anyone, if it seems too good to be true it probably is.
Because I didn't thoroughly research how to use the NFT trading platform Opensea, I naively thought you could trade NFTs. Someone took advantage of this and I basically sent them an NFT (worth about $1,000) for free expecting one in return. Guess what, it didn't arrive.
It was a lesson learned for me, and hopefully a mistake anyone who reads this won't make.
In conclusion, only invest money that you can afford to lose. There is money to be made, but do your research and invest in things that you believe in or that are close to you heart. Start slow and don't try to get rich overnight.
The opinions expressed in this article are the author's own and do not necessarily reflect the views of Narcity Media.