How to Invest in NFTs: What You Need To Know

By Emma Martin | Published on 20 Jul 2023

How to Invest in NFT

If you’re following the news or using social media, you’ve likely come across non-fungible tokens (NFTs). It is the latest status symbol for art lovers and trendsetters. For everyone that is except Canadians. Canadians don’t yet know enough about how to invest in NFTs.

What’s up, Canada? Our homegrown hero, Justin Bieber, is all about Tim Hortons and NFTs. There are articles out there explaining all you need to know about NFTs.

Well, its not the lack of information, its a lack of knowledge. A significant portion of Canadians claim that they have no knowledge about how to invest in NFTs. If you’re one of those who doesn’t know what an NFT is, you’ve come to the right place.

While NFTs have been all the rage worldwide, they haven’t yet broken into mainstream adoption in Canada. Even though there are more a lot of NFT marketplaces in Canada, only 5.6% of Canadian adults own NFTs, whereas countries like the Philippines, Thailand, and Malaysia lead the world with groundbreaking shares of NFT owners. Malaysia leads the world with 32% of its adult population investing in NFTs. The Philippines and Thailand are not far behind, with 26.6% and 23.9% of its adult population owning NFTs respectively.

NFTs are changing the world as we speak; we’re seeing games, sports events, organizers, celebrities, businesses, and more, utilizing the technology and heavily endorsing it on their social media. Knowing how to invest in NFTs will revolutionize how we perceive and deal with digital ownership. It’s opening a lot of opportunities for different sectors, and you’d really want to be a part of it when it is globally mainstream. Learning how to invest in NFTs could help investors prepare for a potential new internet. Here is a quick primer to explain how to invest in NFTs so that you can discern what is going on not only in the news but in your portfolio.


What’s an NFT?

NFTs, short for non-fungible tokens, are digital cryptographic assets that reside on a blockchain network and have the ability to tokenize or digitalize anything, whether it’s art, real estate, concert tickets, and more. NFTs are tokens with unique IDs and metadata that distinguish them from each other. They’re ushering in a new era of digital ownership and have come into prominence over the last year in various sectors such as games, art, memes, and more.


So what does non-fungible mean?

Government-issued currencies, cryptocurrencies, and digital assets are examples of fungible currencies or tokens. It means each token or currency is identical to each other and is mutually interchangeable. The following is a good way to illustrated the point. A 100 CAD bill can be replaced for two 50 CAD notes or five 20 CAD notes. Similarly, one Bitcoin can be replaced for 100 million satoshis.

So it makes sense that non-fungible tokens work in the opposite way. Non-fungible currencies, assets, or tokens are non-transferrable, interchangeable, or replaceable. Therefore, they can not be exchanged or replicated like fungible tokens. The metadata inside each NFT is immutable and permanently stored on the blockchain, which is why it’s able to represent real-world items and can be used to prove ownership.


Why NFTs?

Why are people so eager to learn how to invest in NFTs? It is like discovering and laying claim in a brand new world. The distinct characteristics and features of NFTs allow them to represent real-world items like artwork, real estate, memes, videos, events, and more.

Blockchain technology has proven to be revolutionary, thanks to cryptocurrencies. Blockchain’s main selling point is its transparency, decentralization, and immutability. NFTs are one of the many impressive and ground-breaking applications of using a transparent, secure, and decentralized network to tokenize real-world and digital objects and allow owners to prove their ownership on a global scale.


How are NFTs changing the world?

NFTs ushered in a new era of digital ownership that has seen its way into the art and gaming sector. As a result, NFT art or blockchain games are undoubtedly one of the fastest-growing sectors in the NFT space. There are metaverse coins that power blockchain games. While stablecoins are becoming mainstream in Canada, specialized regulated metaverse coin exchanges like VirgoCX are popping up. The Art sector raked up almost 127 million CAD in the last few weeks, while the gaming sector generated about 416 million CAD in the same month.

NFTs are undoubtedly one of the most profitable and game-changing sectors in the world right now. NFTs are unlocking new opportunities for both well-known people and upcoming artists to sign their names electronically into their works and create digital collectibles, another reason why it has garnered so much hype and attention from entertainers and established artists.

The NFT “Everydays – The First 5000 Days” by an artist called Beeple. It sold for 88 million CAD. The artwork was a collage of 5000 pictures of the artist’s everyday life and artwork that took over 13 years to make. Other NFTs don’t take as long but can still sell for a lot of money.

NFTs are not limited to art. People tokenize memes, videos, and even tweets. Twitter’s founder, Jack Dorsey, sold an NFT for his first-ever tweet for almost 4 million CAD. NFTs are opening up gates to a lot of different opportunities.

If you’re interested in investing in the NFT space, then you might want to create a digital wallet that supports NFTs along with the cryptocurrency you can pay with. You need a wallet that accepts the coin corresponding to the NFTs  blockchain. For example, if the NFT was minted on the Ethereum blockchain, your need a good Ethereum wallet.


How to invest in NFTs

NFTs undoubtedly are filled with unicorn projects that can generate astronomical gains; however, they’re still new, and one must know what they’re doing before investing their hard-earned money into them. Learning how to invest in NFTs can help Canadians make safer, or at least less risky, NFT decisions.The NFT space is filled with risks for investors who don’t understand the space or know what they’re investing in.

Use NFT marketplaces

Investors need a lot of diligence before they can invest in a project. There are millions of NFTs being offered at popular NFT marketplaces such as OpenSea, Rarible, and more. You must note that some NFTs are more valuable than others, and there are a lot of factors such as NFT characteristics, ownership history, rarity, and more. You need to apply the same due diligence you use to invest in a stock when you consider investing in NFTs.

NFTs are becoming a part of your digital presence. As a result, NFTs are starting to see celebrity appeal. Recently, popular rapper Eminem bought an NFT for almost 500,000 CAD. Not only that, but NFTs are also making their way into the virtual real-estate in the metaverse, an online virtual reality world that visitors can digitally visit.

Metaverse NFT marketplaces

Can you imagine visiting metaverse Disney? Would you consider investing in it? Well, first you’d need to learn how to invest in NFTs linked to the metaverse. The metaverse is developing virtual real estate and experiences. When you think about it, owning the property where an advertiser wants to place its ad can be a good idea. Think about all the different definitions of real estate and its investment value. If you wanted to find metaverse coins, it would be in metaverse marketplaces like VirgoCX.

Consider this: a leading virtual real-estate project, Decentraland, sold parcels of its digital real estate for as high as 3 million CAD. Decentraland has its own metaverse coin which helps maintain Decentraland and powers its growth. In addition, companies, investors, and businesses are using the opportunity to advertise their products on a global scale and even hold virtual events.

How to invest indirectly into NFTs

NFTs are garnering a lot of attention and generating a lot of money for investors; however, they can be a little complex for the average user, and it can be hard finding a decent and rare project. NFTs are also very volatile. They’re more volatile than cryptocurrencies and carry a lot of risk.

Of course, you can learn how to invest in NFTs indirectly. For example, you could settle for buying stocks of NFT generating companies. First, however, you must perform your due diligence and invest in companies generating promising revenue traction.

Not only that, but you could also invest in NFT ETFs. ETFs short for exchange-traded funds are investment vehicles representing their underlying asset’s value. A popular NFT ETF is the Defiance Digital Revolution ETF.

There are a lot of opportunities in the NFT market; however, it’s a fast-moving space with very little regulation.  An increasing number of products and projects are popping up. Maybe this is why Canadians are hesitant and are waiting for a clever investment direction. You can stand on the sidelines or dip your toe in the NFT pool. There is no right or wrong decision as long as you make the one that is best for you. That’s why it is important to learn how to invest in NFTs so that you can make an informed decision.

Emma Martin writes about the curiosities of finance. Her obsession with cryptocurrency keeps her writing most days about the best exchanges and wallets, and the wild world of NFTs. Her favourite exchange right now is Bitbuy. Emma also invests in the stock market using Wealthsimple Trade.