Investing in artwork may feel like a roll of the dice than an investment. In May 2019, gallerist Robert Mnuchin, founder of Mnuchin Gallery in Manhattan, bought a record- breaking $91.1 million sculpture of a rabbit. The art that was auction by Christie’s became the most expensive art ever sold by a living artist. Barely, two years later, in March 2021, the same auction company made a massive sale of digital art worth $69 million. The record sale of the non-fungible token art (NFT art) represents the latest massive development in the art industry.

The NFT Art Boom

In 2021, the world witnessed the growth of a new genre of art. NFT craze started at the beginning of the year and quickly escalated into the second quarter. The market recorded massive deals. Christie’s sold Mike Winkelmann’s digital art, Everydays: the First 5000 Day, for $69.3 making it the most expensive NFT ever sold. Nifty Gateway sold another art by the same artist, Crossroads, for $6.6 million. Other mega sales followed including Beeple’s Ocean Front ($6 million), Mad Dog Jones’ Replicator ($4.1 million), and Kevin McCoy’s Quantum ($1.58).The global boom in the NFT art market is not just a seasonal passing fade. Individuals and companies have invested in these arts and netted serious returns. However, before you invest your funds in arts, you need to understand the way the market operates and the latest developments.

The Concept of Value as it Applies to NFTs

The brands are appreciating and leveraging the functional and hedonic values of NFTs. The concept of the functional value of NFTs deals with what the user of the digital asset can do with them. This type of value includes the idea of flexing with their NFTs and displaying their taste in art music. It also includes how much money the NFT
 holders can get from their assets. The hedonic value of NFTs deals with how much the holder of NFTs can like them. NFTs give intrinsic, endowment value to assets that were once treated as interchangeable on the internet space.

Characteristics of NFT Art Investments

NFT arts can have many functions in an investment portfolio, which makes it attractive to retailers.First, you can invest in NFT arts to diversify your portfolio. Allocating part of your portfolio to NFTs arts reduces your risk exposure by spreading your money across various investments. NFT adds a new line in the art industry. It has significantly different characteristics compared to those of the existing ones. NFTs operate in a decentralized environment. It has a close connection with the cryptocurrency market. Investing in NFT arts means moving away from the centralized economy into a decentralized economy run by digital currency. A centralized economy and a decentralized economy have different dynamics. They experience different market cycles at different times. NFT may hold your market value in case other investments perform poorly. If you are an art collector, then you should start thinking of adding these new types of art to your portfolio.

Second, investors can preserve their wealth by investing in NFT art. It serves as a hedge against inflation. NFT arts are digital assets hence may perform well during inflationary times. NFT arts are also international assets. Investing in these digital assets can protect your funds when a local currency falls.

While investing in digital assets has its risks, one advantage that NFT arts have over physical arts is volatility. In the course of2020, the value of some popular NFT arts increased by over 2,000%. Some arts that were initially sold for few dollars were later sold for tens of thousands. Investing in such assets may lead to high profits within a short time.Like any other investment, investing in NFT arts has some risks. One of these risks is a lack of liquidity. NFT arts are rare, especially those that have a high value.

They may not be readily exchangeable to cash. Unlike bitcoin, NFT art sellers need to find a buyer who is willing to pay a specific price for unique art. Illiquidity may give collectors a hard time when the market is falling and they want to exit the market. Nonetheless, illiquidity can help collectors avoid irrational decisions when the market trend changes over a short time. It makes NFT art more of a buy-and-hold asset class.

Evaluating NFT Art Investment Opportunities

NFT art market is diverse. It is important to understand the artists, market, and art management. Identify artists and consider how they have grown their brands over time. Evaluate the growth and see whether it is sustainable. Compare the growth rates of different arts to find a suitable one. Top collectors buying from an artist is an indication that the artist’s NFT arts will continue to appreciate moving into the future.

You can also choose to get creative with NFTs. In this case, look into emerging technologies that encourage the creator economy.

How to Buy NFT Arts

First, you must visit an NFT market place. Websites such as WSUM. art allow you to buy listed NFTs arts. After creating an account, you will be able to view all the NFT arts, their description, and prices. The next step is to fund your wallet. You must have a digital wallet with digital funds such as BNB and WBBW before buying NFT arts. Finally, browse the platform and select your favorite art piece. Make a bid to purchase the art.

Final Takeaway

NFTs arts are getting more popular as many people are attracted to the relatively new market. NFT arts provides a good opportunity to diversify your investments. This digital art market is relatively volatile to the physical art market. However, the volatility also means that you can make huge profits when the price of art rises. Do you want to try out this booming art market? WSUM.art enables a smooth entry into the market for both experienced and beginner traders. Sign up with WSUM.art and start collecting NFT arts.

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