Last week, after visiting the gym, I wondered what exciting ways I could
sabotage my crypto portfolio. This question is very odd for someone who wants
to be a safe crypto investor.
The reason why I think like this is that I want to know where the risks are.
If you don’t know what can go wrong, how can you protect yourself against it?
Today, I want to get specific with NFTs (Non-Fungible Tokens). I will show you
exactly how people mess up with NFTs, losing their hard-earned money. But
don’t worry. I am not just going to leave you hanging with the bad news. You
will get tips and advice on how to avoid these pitfalls.
Buy NFTs Like a Kid in a Candy Store
If you want your wealth to evaporate faster than your New Year’s resolution,
buy every shiny NFT you see. No research, no strategy, just pure impulse
buying.
What is the fastest way to avoid this financial sinkhole? Develop a taste for
the bitter pill of research. Always do your research before buying an NFT.
Understand the market value, check similar NFTs, and don’t let FOMO drive your
buying decisions.
Investing in Low-Quality NFTs
Not every NFT is a golden goose. You might find an NFT that looks like a
Picasso but has the community backing of a deserted island.
You need to look for NFTs backed by solid communities. The NFT must have great
utility. And needs to be created by someone serious. Not an artist who didn’t
just discover MS Paint.
Falling for Scams
The NFT space is not immune to scams and frauds. Fake listings, scammy
projects, and phishing attacks can leave you high and dry.
Always verify the authenticity of the NFT and the project. Double-check URLs.
Do a background check on the artist. Know who you are dealing with. Also
remember, your private keys are more private than your diary!
Store Your NFTs Like They’re Worthless
Treat your NFTs like your old high school yearbook and leave them gathering
dust in an unsecured digital wallet. If you’d rather keep your NFTs safe, use
two-factor authentication (2FA) and a hardware wallet to protect your precious
digital assets.
The NFT market sometimes feels like a minefield. You can avoid stepping on a
mine and finding the treasure. The aim isn’t to scare you off but to arm you
with the knowledge to make smart and profitable decisions.
Ignoring the Fees
Buying and selling NFTs involve transaction fees which can eat into your profits if not taken into account.
Always factor in the transaction fees when calculating potential profits.
Different platforms have different fee structures, so choose wisely.
Failing to Understand the Legal and Regulatory Implications
An NFT is an investment but often a piece of art. Therefore, NFTs can have legal and regulatory implications, especially when it comes to copyright and taxation. You don’t want the government or companies knocking on your door and asking about your NFT.
If you are investing serious money in NFTs. You really should consult a legal expert or a tax advisor who understands the NFT space. Also, stay informed about the latest regulatory developments in your region.
The NFT market sometimes feels like a minefield. Be careful and avoid stepping
on a mine while finding the treasure. Start small and get experience. The aim
isn’t to scare you off but to arm you with the knowledge to make step-by-step,
smart, and profitable decisions.
Stay safe, and best of luck.
Daniel Donselaar
