NFT: Your Investment Primer

If you’ve browsed any news outlets lately or sifted through any new social media trends, you’ve likely seen the letters N, F, and T embedded within headlines and captions. What do these letters mean? Why are they growing in popularity? How do they work, and why are they important? How has this new fad already reached $22 billion in market value? If you’ve been asking yourself these questions, scroll down for your long-waited answers.

NFTs are non-fungible tokens. Fungible means interchangeable; there’s nothing unique about it. NFTs are, by definition, unique and individual. They cannot be replicated or replaced. Bitcoin is fungible as it is traded like money because we can create more of both of those entities. Though NFTs also operate on the same blockchain network, they do not work like Bitcoin. NFTs are a digital slice of time and space; they can be anything from art to music to video game items. They can be trading card collectibles or big sports moments, memes, domain namesvirtual fashion, or even digital real estate.

Real-world items can also become NFTs. For example, if you digitize the deed to your car, it can be sold or traded to another owner. This is as sure and legal as any other way to sell a vehicle.

If it’s on the internet in its own unique, nonreplicable space, it can become an NFT. People could sell their Facebook statuses or Snapchat stories if they wanted to. Perhaps the most famous NFT is Twitter CEO Jack Dorsey’s first tweet. He brilliantly sold the digitally autographed imprint of his first tweet ever for a whopping $2.9 million, which he promptly donated to Give Directly’s Africa Response fund for COVID-19.

How do NFTs work?

At its most basic, NFTs offer the ability to claim or assign ownership of a unique piece of digital data. Most NFTs are part of the Ethereum blockchain, which also supports cryptocurrencies such as Bitcoin and Dogecoin. Other blockchains like Solana and Polkadot have also implemented their own versions of NFTs, but Ethereum has remained at the top of the pyramid.  

Built on the Solana chain, The Solciety launched an anime-style NFT Project where your NFT (Solmate) has a unique personality (Myers-Briggs Type Indicator) and a spirit animal attached to it. The project focuses on a repopulation mission where your Solmates can interact with each other to see if they're compatible.  

Example: An ESTP (Extroverted, Sensing, Thinking, Perceiving) type, aka the Entrepreneur, will be super compatible with both ESTJ (Extroverted, Sensing, Thinking, Judging) and ESFP (Extroverted, Sensing, Feeling, Perceiving), which makes sense due to having so many similarities.

Source:  https://www.thesolciety.gg/

What are the top NFT Marketplaces?

These are the biggest NFT marketplaces:

  • Looksrare made $4.72B in sales with 15k buyers *new marketplace*
  • OpenSea made $3.74B in sales with 473k buyers, almost a 57% increase in sales volume last month.
  • Magic Eden made $370.09M in sales with 209k buyers, almost a 41% increase in sales volume last month.
  • Solanart made $36.5M in sales with 38k buyers, almost a 59% decrease in sales volume last month.
  • Rarible made $14.92M in sales with 7,500 buyers, a 24% decrease in sales volume last month.

How are NFTs traded?

Each NFT can only have one owner at a time, verifiable via public record. With access to a revolutionized global marketplace, owners can sell their work while retaining ownership rights and resale royalties. 

Owners can sell their NFT for money or barter it for anything built atop the Ethereum network. You could trade an NFT for another NFT. However, they do not act as tokens do. They are not interchangeable at a 1:1 ratio; some NFTs are worth more than others. These trades are all trackable by Ethereum’s position as a digital, public ledger.


How to invest in NFTs?

You'll need a crypto wallet on an NFT marketplace to bid on digital assets. Obviously, your wallet must have enough of the right funds to purchase the NFT at hand. For example, an NFT sold on the Ethereum network may demand its purchase specifically in Ether tokens.

The next step is the same step investment bankers have been practicing for decades: choosing wisely. If you're purchasing an NFT as an investment instead of personal expenditure, you'll want to buy something that has lasting value. Like a fine wine or collectible, something that appreciates as time passes, leading to a healthy return on investment.


How to sell NFTs

Once an NFT is purchased, it is yours to do with what you wish. Some display it for others to drool over; some keep it as a collectible; some sell it. To sell an NFT, it's uploaded to an NFT-backed marketplace. You can either list it for sale at a set price or opt for an auction-style sale where the NFT goes to the highest bidder. 

Marketplaces charge fees for NFT sales, but these fees fluctuate based on how much energy computing the NFT takes, also known as a gas fee. Once the NFT is sold, the marketplace will transfer data points and currencies to each respective wallet.

What kind of NFTs should I buy?

The good thing about NFTs is they span over many genres of entertainment. Meaning you can invest in your own interests. Passionate about basketball? Buy an NBA Top Shot NFT of Stephen Curry making the game-winning shot. Obsessed with memes? Buy a gif of Nyan Cat. Then sell it when you lose interest or think you’ll get an impressive ROI. The revolutionary aspect of NFTs is that it personalizes investing.

Coinful Capital’s top NFT selections are in the highest traded collectible space: 

  • Bored Ape Yacht Club
  • CryptoPunks
  • Mutant Ape Yacht Club

What role could NFTs play in your portfolio?

Like any other investment, NFTs can act as a solid portfolio diversifier. 

Holding an NFT grants traders exposure to the chain itself as well as the chance of capital appreciation. If you choose wisely, NFTs can collect jaw-dropping rewards.

What are the risks?

As with all investments, there is the risk of losing capital.

If you choose unwisely, NFTs offer an equal chance of capital depreciation. Like all investments, traders must be confident in the success of their purchases.

While NFT’s reach is impressive, it leaves room for scammers. Anyone on the internet can create an NFT out of, well, anything. There are many useless NFTs out there; investors must take great pains to decide what is worth their money.

Some common tricks played by NFT scammers are easy for experts to see but not as noticeable to the untrained eye. Wash trading, the practice of pumping up the sale price by opening up multiple accounts and bidding on your own NFT, is common on the newest digital marketplaces. To succeed in this new NFT world, you need thick skin, an observant eye and a quick mind.

The Bottom Line

NFTs are the freshest wave in digital finance. Consuming nearly every genre, it is unlikely the hype of NFTs will die down anytime soon. Coinful Capital’s humble advice is not to ignore this fad. Research, read the risks and rewards of each possible investment. Think of your portfolio as a whole, not just the sum of its components. Think long-term. It’s still too early to tell, but this may not be a fad after all. This might just be the new normal.

Contact Coinful Capital for more specific information on how to weave NFTs into your personal portfolio.

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  4. An investment in a fund is not suitable or desirable for all investors. Only certain persons meeting certain eligibility criteria may invest in a fund. You must be a sophisticated investor (essentially someone who is regulated by a recognised regulatory authority, or whose shares are listed on a recognised securities exchange, is a high net worth investor or who is reasonably to be regarded as being capable of evaluating the merits of the proposed transaction and invests at least US$100,000 or its equivalent).
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The above summary is not a complete list of the risks and other important disclosures involved in investing in funds. Before making any investment in a fund, investors are advised to thoroughly and carefully review the offering documentation with their financial, legal and tax advisors to determine whether an investment is suitable.

By entering our site, you acknowledge that you have read and agree to this notice as well as our Terms of Use and Privacy Policy and that you are a sophisticated investor.

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Please read this notice carefully and agree below to gain access to our website. This notice relates to our terms of use and privacy policy which we encourage you to please read fully.

Only certain eligible persons are allowed to invest in the funds described herein this website and may only be marketed to certain sophisticated investors (essentially someone who is regulated by a recognised regulatory authority, or whose shares are listed on a recognised securities exchange, is a high net worth investor or who is reasonably to be regarded as being capable of evaluating the merits of the proposed transaction and invests at least US$100,000 or its equivalent). If you are not a sophisticated investor please select ‘I Disagree’ at the bottom of this page.

The information contained in this website is for information purposes only, and should not be regarded as an offer to sell or a solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be in violation of any local laws. It does not constitute a recommendation or takes into account the particular investment objectives, financial conditions, or needs of specific investors. Coinful Capital Fund SPC does not provide investment, tax, accounting, or legal advice to investors, and all investors are advised to consult with their investment, tax, accounting, or legal advisers regarding any potential investment. The information and any opinions contained in this website has been obtained from sources that we consider reliable, but we do not represent such information and opinions are accurate or complete, and thus should not be relied upon as such. Any information with respect to price and value of the investments referred to in this website and the income from such investments may fluctuate and investors may realize losses on these investments including a loss of principal. Past performance is not indicative or a guarantee of future performance.

General Fund Risk Disclosure

The funds or portfolios described in this website (each, a “fund”) may not be subject to the same regulatory requirements as mutual funds in your jurisdiction, including mutual fund requirements to provide certain periodic and standardized  pricing and valuation information to investors. There are substantial risks in investing in a fund. Persons interested in investing in a fund should carefully note the following:

  1. A fund represents a speculative investment and involves a high degree of risk. An investor could lose all or a substantial portion of his/her investment. Investors must have the financial ability, sophistication/experience and willingness to bear the risks of an investment in a fund.
  2. An investment in a fund should be discretionary capital set aside strictly for speculative purposes.
  3. The investment manager of a fund may have certain discretionary authority over the fund’s assets.
  4. An investment in a fund is not suitable or desirable for all investors. Only certain persons meeting certain eligibility criteria may invest in a fund. You must be a sophisticated investor (essentially someone who is regulated by a recognised regulatory authority, or whose shares are listed on a recognised securities exchange, is a high net worth investor or who is reasonably to be regarded as being capable of evaluating the merits of the proposed transaction and invests at least US$100,000 or its equivalent).
  5. A fund may invest in a limited number of securities or instruments, which could result in a limited degree of diversification and higher risk.
  6. A fund may employ certain investment techniques, such as leverage and other investment techniques which may result in increased volatility of the fund’s performance and increased risk of loss.
  7. A fund generally involves a complex tax structure, which should be reviewed carefully. A fund’s investment strategy may cause delays in important tax information being sent to investors.
  8. A fund may trade in commodities, futures and other derivatives, which may increase the risk of loss of the fund. Fund investments are to be considered illiquid and there are generally significant restrictions on transferring interests in a fund. There will likely be no secondary market for the interests in a fund.
  1. The fees of a fund’s investment manager may be substantial in some cases regardless of whether the fund has a positive return, and may offset the fund’s profits.
  2. A fund may have limited or no operating history.
  3. A fund may not be required by regulators to provide periodic pricing or valuation information to investors.
  4. There are likely to be a number of conflicts of interest or potential conflicts of interest in connection with an investment manager’s management of fund assets.

The above summary is not a complete list of the risks and other important disclosures involved in investing in funds. Before making any investment in a fund, investors are advised to thoroughly and carefully review the offering documentation with their financial, legal and tax advisors to determine whether an investment is suitable.

By entering our site, you acknowledge that you have read and agree to this notice as well as our Terms of Use and Privacy Policy and that you are a sophisticated investor.