Why should you invest in Cardano NFTs (CNFTs)?
- You can make money
- We’ve moved beyond ‘just’ art
- It’s fun and you meet people and contacts
- It’s an opportunity to learn more about the Web3 space
- You can get a sh*t tonne of free stuff
- Low (relative) cost of entry
- It’s a relatively small community right now
- Despite what you may hear, Cardano is a great blockchain
Okay, you’ve heard about Non-Fungible Tokens. NFTs. They sound, on the face of it, like a ridiculous scam. They really do.
Are people seriously paying thousands of dollars for a picture of an ape?
Dude, I can right click that sh*t and have a copy of your dumb cartoon ape on my computer.
I’ll be the first to admit that I was sceptical. I remember first hearing about NFTs and couldn’t believe there were in so much demand. I figured it was another craze that would blow over. And it still might by the way.
But as I looked into it more, it transpired there were some real opportunities. Bare in mind that people pay good money for collectable items that others see no value in.
For example, I have an old Star Wars figure from my childhood that turns out to be worth $1,000. I would never pay that money for it. But many certainly will.
Some people will pay over $100k for a first-edition copy of Harry Potter and the Philosopher’s Stone. I own a non-first edition copy of that. Are they worth the same?
This “collectibility” and rarity angle is where the space began. But it is innovating at a rapid pace and becoming much more intriguing. The use cases are growing on a daily basis.
As such, I wanted to go over a few of the reasons you might want to get into NFTs. Then I’ll cover why on the Cardano blockchain (where I operate most of the time).
Why should you invest in NFTs?
You can make money
You already guessed this one.
This has to be one of the single biggest reasons people get into them, to begin with. Yes, people love art and NFTs are great for artists and collectors.
But by and large, most people get into it for the money.
And it’s easy to see why. The volatility of NFTs is such that there is an opportunity for large, asymmetric gains. 10–20x profit on a single NFT is not unheard of and, depending on the rarity, it can be a lot more.
This does not mean NFTs are not without risk. On the contrary, they are very risky. But with good research and due diligence, you can help to mitigate your downside.
We’ve moved beyond ‘just’ art
Whilst artwork is still a major part of most NFT projects, rarely these days it is the only thing the project is about.
More and more NFT projects are expanding into wider forms of holder utility including bridging to “real life” use cases.
The types of utility are almost endless. Rewards for staking NFTs (such as a project token). Ability to purpose discount NFTs with rewards. Analytical tools. Alpha/information services. Fractionalized crypto mining. Metaverse land. Free merch/discounts. Holder-only real-life parties. The list goes on…
You might not see the value of many of these proposed “utilities”. And many of them will never see the light of day. But the point is that space is transcending the pure art sector to other valued applications.
It’s fun and you meet people and contacts
There’s no doubt you get a “thrill” from minting and trading NFTs. There is a certain rush about sending in your transaction and waiting to see what you receive back. The gambler’s hopium that you receive back something rare.
And that feeling when you flip something for a great profit is second to none.
This rush is both exhilarating and dangerous. It can cause you to FOMO into projects without the necessary due diligence. And worse, chase losses to only end up in a bigger hole. Be. Careful.
The other side to the “fun” is that you will end up engaging with a lot of people over Discord and Twitter. I’ve met some really interesting people through NFTs. Had some great conversations and made some great friends.
Yes, we all want to make money. But doing it in a way you can interact with others and build relationships is the icing on the cake.
It’s an opportunity to learn more about the Web3 space
Web3 is the latest iteration of the internet. It incorporates blockchain technology, tokenization of assets and the principle of decentralization.
Anyone who tells you Web3 is not here to stay is, frankly, wrong.
What is true though, is that it can be a little inaccessible. The average person still doesn’t really understand it or engage with it. Other than perhaps to have bought a little crypto on an exchange.
Personally, I found getting involved in NFTs has deepened my knowledge of the whole space. I had a reason to find out more about blockchain technology.
I learnt what a non-custodial wallet is and how to set one up. I got to grips with concepts of Defi, yield farming and impermanent loss. I’ve played around with decentralized exchanges (Dexes). This is all stuff which now I take for granted. But having these skills and knowledge I will wager will put you ahead of the majority of people when it comes to Web3. And it’s coming.
I’m a believer in exposing your investments to different asset classes. NFTs provide another opportunity for such diversification. Yes, in a very volatile asset class, but a different one nonetheless.
The thing about NFTs is that (often) there are opportunities to make gains that are uncorrelated with other assets. Sometimes NFT prices are even not correlated with the price of the underlying crypto itself.
For example, we all know crypto is in a bear market right now. During the last year, by trading and investing in NFTs I have mitigated the vast majority of my wider crypto losses.
If you believe in the future of crypto then NFTs provide a way to grow your exposure during a bear market. And when the run comes you will be in a better position.
You can get a sh*t tonne of free stuff
I mean, who doesn’t like a freebie?
I’m not sure I’ve ever seen anywhere like the NFT space where you can get so much free sh*t.
There are all sorts of ways. Twitter giveaways. Discord giveaways. YouTube channel giveaways. Prizes for playing various ‘silly’ games. NFT airdrops. Token airdrops. The list goes on.
It all adds up. Many people have won several thousand dollars worth of prizes in a year. It also means there are opportunities for those with a very small initial investment to get involved. Win a few big giveaways, flip yourself into some crypto and then trade up from there.
Why invest in NFTs on the Cardano blockchain?
Okay, if you’ve read this far I assume you may want to get into NFTs. But where to start? There are so many different blockchains now that have NFTs. Ethereum is by far the biggest. Solana and Cardano are also very popular.
I don’t want to turn this article into a “my chain is better than your chain” argument. There is enough of that already. You can enjoy the above benefits and experience many of them.
So I’m not here to point out negatives but just talk about why I like Cardano and got into it.
Low (relative) cost of entry
When I first started looking at NFTs, the gas (transaction) fees on Ethereum were very high. Often well over $50. They have come down a lot since then but this factor definitely put me off at the time.
Cardano fees on the other hand are really low. You pay on average about 0.2 ADA per transaction. At today’s low price that is only 6 cents.
What’s great is it takes the friction of moving assets away. You can focus on the actual trading and gains without worrying too much about transaction costs.
Another advantage is that there is (in general) a low cost of entry for lots of Cardano NFTs (CNFTs). You will find projects that mint for the equivalent of $20. This is an entry point which means most can get involved even if they don’t have a lot of starting capital.
It’s a relatively small community right now
Now, this point is both a plus and a minus. What I like about it is that it’s not too overwhelming. You can get to know the space pretty well. And you come across the same individuals in Discord across various projects.
I like this “community” vibe you get.
However for us to do well, the space as a whole needs to grow. As I said in a previous article — new entrants bring new money, ideas, innovation and relationships.
But the fact there is still so much room for growth is positive. It’s a cliche but it does mean we are still early.
Despite what you may hear, Cardano is a great blockchain
There is still a lot of criticism thrown towards Cardano. Partly because the ethos is that they take their time and get things right. But this impatience and missing deadlines inevitably draw criticism.
And the Cardano community sometimes does not help itself in this regard. There are some who can get defensive and become quite vitriolic to those attacking the chain. We need to get better at this and focus on education and inclusivity.
I’m not going to go into the Cardano chain in-depth, but some key well-publicised points include:
- Low transaction fees — already mentioned above.
- Proof of Stake (PoS) — Cardano did not invent PoS. But it has helped to popularise it as a mechanism for validating transactions. PoS avoids the computational cost and environmental impact of energy-intensive Proof of Work schemes.
- Liquid staking — Cardano supports “liquid staking” of your ADA. This means you can earn staking rewards by delegating to a stake pool without your ADA being locked up. You can access it whenever you want.
- Extended Unspent Transaction Output (EUTXO) — this is as opposed to a UTXO model which some other chains use. Without going into the details, EUTXO offers security and performance benefits. For most the main benefit is you don’t pay fees on failed transactions. Also, the fees can be accurately predicted prior to submitting your transaction.
- Decentralization — Cardano has one of the most decentralized Proof of Stake networks out there. Currently with more than 3,000 validator stake pools.
Cardano has a real commitment to the key tenets of decentralization, scalability and security. If you have a little time, here is a link to a great article that was released recently by IOG. It sums up some of the history, advantages and players around the ecosystem.
I’m in, how do I get started?
Woah, Woah, Woah!
Before you get too excited, we need to examine some of the drawbacks. My next article covers some of the things to be aware of before you jump in head first. Please read that next!
In summary (TLDR):
- Whilst NFTs might seem like a ridiculous concept, there is more to them than at first meets the eye.
- There is real money to be made in trading and investing in NFTs. You can benefit from a lot of free giveaways and airdrops to help you build your fund.
- It’s an opportunity to have fun, and build relationships whilst also learning about Web3.
- Cardano is a great chain to start trading NFTs on. It has low transaction fees and many projects have a lower relative entry point.
- The Cardano blockchain brings many advantages. The community is dedicated to building a highly secure, decentralized and scalable network.
If you want to access my other content about getting started in CNFTs then head over here.
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This article is for informational purposes only. It should not be considered Financial or Legal Advice.