There's a sentiment in mainstream media that non-fungible tokens (NFTs) aren't a "serious" digital asset.
There's no denying it: Plenty of NFT creators have their tongue firmly in cheek. It's also undeniable that some $26.9 billion in cryptocurrency was spent on NFTs this year - $10.7 billion in the third quarter alone.
Mega-cap companies like Disney, ViacomCBS, and Nike, to name a few, are taking notice and diving in headfirst. There's even a new NFT exchange-traded fund - I'll have more on that in a minute.
In other words, you might laugh at NFTs... but you can't ignore them. There's a lot of profit potential to be had for investors who know what they're doing and get into NFTs clear-eyed.
At the same time, there's more to NFTs than just profits. Me? I buy NFTs I like - that speak to me personally.
I'll explain what I mean in a second, walk you through the simple steps I take before buying NFTs, and show you a way you can cash in on this trend...
Do This Before You Buy Your First NFT
It's impossible to tell what will go viral and can sell for big bucks; there is no science or magic formula to follow. There are no technical charts you can use to time your move.
But there are some best practices to follow to minimize your risk. One of the best ways to hedge your bets with an NFT project is to look at the community around it.
That's something I never fail to check out.
See what people are saying on Discord channels, on Twitter, on Reddit, and on other online communities. (It's worth noting here: Never, ever share your coin wallet or account details in these venues. Ever.) If there are vibrant discussions and people seem connected to the projects and just aren't talking about the money they are going to make, you have a project that has support, and therefore, may have a better chance to succeed.
On the other side of the coin, if you find no media presence, that's a red flag. If no one's discussing it, or the people who are discussing it just talk about cashing out, that's another red flag.
Now, when I find something I like and am willing to take a gamble on, I'll sell a few NFTs in the collection to break even.
I let the rest ride. That way I'm able to recoup my initial outlay, and then the rest are just lottery tickets.
Every now and then, you can buy something for $500, and a few weeks later, they are trading for $5,000.
And again, I'd stress the importance of buying something you like, that appeals to you aesthetically, because it may end up not having much monetary value. Of course, if you like and appreciate your NFT, its value appreciation doesn't really matter.
My Alternative Wealth Daily subscribers would tell you, one my favorite NFT projects is Samot Club (samot.club). The NFTs they're creating have huge cultural significance in Central and South America, and Europe, too. (You can catch my interview with the "other" Nick, creator of Samot Club, right here.)
But if you're still not ready to take the plunge, there are ways you can play the NFT trend with regular stocks.
Before You Buy the NFT ETF
The Defiance Digital Revolution ETF (NYSEArca: NFTZ) purports to be a "conventional" way for folks to invest in the NFT economy, but I've recommended that my readers hold off on buying and watch NFTZ instead.
Don't get me wrong: NFTZ likely has incredible potential, but its basket of 34 crypto-based or -oriented holdings don't really offer direct exposure to NTFs. In practice, this ETF will track the fortunes of the wider crypto sector - not bad, but not NFTs.
There are two stocks I'd tell you to look at instead, which are in a far better position to capitalize on the surging popularity of NFTs.
One is eBay - you read that right. eBay Inc. (NASDAQ: EBAY) is, as you probably know, a popular online auction site that draws around 110 million unique visitors a month. It can probably expect those numbers to grow, because it opened its platform to NFTs recently. The edge there is that people can pay for their NFTs with regular old PayPal or a credit card; they don't necessarily need crypto. eBay has its foot in the door of NFT nirvana.
PLBY Group (NASDAQ: PLBY), or "Playboy," if you're of a certain age, is another NFT play. Playboy partnered with an NFT platform called Nifty Gateway not long ago, and the move caused PLBY shares to skyrocket by 80% or so. The company itself plans to create its own NFTs from new artwork, but it will also mine the vast Playboy archive, packed with more than 68 years' worth of photographs, cartoons, artwork, music, and all kinds of multimedia. To give you an idea of the potential here, Playboy offered $9 million worth of "Rabbitar" NFTs for sale not long ago, and the collection sold within hours.