What Can You Do With NFTs?

Should I Collect NFT Art?

By Roksolana Leus
Posted January 17, 2023

In recent years, many NFT artists have struck proverbial gold as a result of NFT art collectors, speculators, and the blossoming market. These collectors are avid admirers of both crypto and art, shelling out huge sums to buy unique NFT collectibles. Additionally, NFT flipping is becoming quite common as traders do their best to “buy low and sell high”. No matter what their motivations for collecting are, a large percentage of NFT art collectors ultimately want tokens with values that will appreciate over time, mirroring the traditional art market.

If you want to get into collecting NFT art, you should know that since digital art marketplaces are still emerging, prices and valuations can be quite unpredictable. Many experts suggest purchasing pieces that you enjoy rather than simply buying one and hoping it goes up in value. It’s also important to do your research – a large part of the draw of several NFT projects is the community of fans and owners behind them, so don’t be afraid to join fan forums on Twitter, Telegram, Reddit, Discord, and other platforms.

Speculating vs. Collecting

Though collectors make up a considerable part of the NFT ecosystem, these assets are similar to every other speculative asset; thus, they attract their fair share of speculative flippers. A lot of people buy NFTs and expect that their value rises over time (or even overnight) and make a profit on their initial investment by selling them. However, like all speculative assets, NFTs are prone to volatility, and there could be a steep price drop when no one expects it.

However, the price fluctuations of NFT assets will have little to no effect on collectors who purchase NFTs solely for their artistic value. Since they are buying assets they have a genuine interest in, the prices of their assets will not matter to them nearly as much as for speculators. The sentimental value their assets have will always surpass the perceived market value, regardless of a high or low price.

Buying Entire Collections or Separate Pieces

While news about collectors dropping large amounts of money on NFTs within a collection is quite common, it’s much better to start smaller if you’re just getting involved for the first time. If you admire an artist but can’t afford to buy a whole collection, or the top pieces within the collection, this is totally okay; you can simply buy the pieces of the collections separately as you can afford them.

Is fractionalization a possibility with NFTs?

Yes, fractionalization is also a possibility with NFTs. The artwork is shared and split among the group, just like you would anticipate when buying stock in a firm. Instead of owning the entirety of an NFT, you would own a portion of it. This concept isn’t entirely new in the art world; budding collectors frequently band together and buy as a group, but this is a novel application of the concept.

What Are NFT Auctions and Their Benefits? 

In a volatile and emerging market, auctions offer a means to establish liquidity and set prices. A collectible NFT has no definite intrinsic value—as some have pointed out, when you buy an NFT, you don’t know what you’re getting except the artwork and the right to own the NFT itself. As a result, auctions are an excellent way to bring together interested buyers and establish a valuable reference for new asset classes.

Auctions held on the blockchain are fully transparent: each bid is made public and documented in perpetuity, making bidding more secure and auditable than a closed auction or auction house.

Additionally, on-chain auctions can be employed without the need for a mediator. The buyer and seller have a higher sense of ownership in the bidding process and can inspect the smart contract that determines the cost and manages the final settlement because there is no auctioneer in the middle. 

Related articles

About NFTrade Academy

NFTrade Academy is a free knowledge base covering everything you need to know about NFTs, from basic to more advanced topics. Utilize our expertise to get up to speed and feel confident about diving headfirst into the world of NFTs.