The NFTs have become one of the most important digital assets, which are usually stored on the blockchain. These are unique and are immutable as two NFTs cannot be identical, which means proof-of-ownership can be easily created.
Also, the digital assets or real-world assets can be easily tethered into an NFT, which makes them perfect for connecting the real-world assets into a digital environment while maintaining uniqueness.
However, it all depends on choosing the right NFT project to ensure you get the best gains. So, with this article, we are sharing different ways of evaluating the NFT projects for getting better gains, such as;
Table of Contents
Utility
Keep in mind that various factors can impact the value of an NFT project, and utility is one of the biggest evaluation indicators. The utility comes from the authentic application of the NFT in the digital world and the real world.
Since both worlds are growing together, the asset class will be needed to translate the asset value from the real world into the digital world.
In addition, the NFTs can perform various actions. For instance, NFTs can be used as spells and power-ups for games, clothing for the game characters, and resources for building infrastructure in the game.
To illustrate, utility is the foundation of every digital asset because, without utility, the digital assets won’t have any use case, resulting in lower demand. Having said that, it’s evident that an NFT project with stronger utility will provide upfront value, which can also increase over time, depending on the popularity of the project.
So, you need to consider the utility and don’t even think about purchasing the NFT with low utility because it’s only a money pit.
Rarity
Rarity is also defined as uniqueness, and it wouldn’t be wrong to say that it’s the core quality of every NFT project. For instance, some NFT projects are established by well-known artists, while others represent real-world and tokenized assets.
Keep in mind that every NFT project is one-of-a-kind, which means the authenticity and ownership can be easily verified, but they aren’t subjected to alteration. For the most part, the high-demand NFT projects are likely to have a higher value.
It is needless to say that high-demand NFT projects tend to attract more purchases and sell them for high prices. In addition, you can use third-party platforms and rarity platforms for gaining an objective perspective on the rarity of the NFT.
This is because these parties provide access to the estimation of rarity while considering different factors, such as owners, trading volume, and popularity of the NFT.
Community Size
Community is one of the biggest decisive factors for evaluating the NFT project because it can directly impact how many buyers and potential users there are on an open market. Having said that, the larger the community, the more attraction NFT will get.
Consequently, the NFT project with a bigger community will gain more buyers in the upcoming future. To illustrate, Bored Ape is one of the most popular NFT projects, and it has the most active and biggest community.
For this reason, you need to check the community size of the NFT project by checking out the social networking pages, and don’t forget to check the subscribers count to gain an understanding of the community size.
In addition to this, you have to consider if the NFTs will be available on a secondary marketplace as well as the wallets that take part in the NFT market. Also, while you are at it, don’t forget to check the NFT’s popularity of Bitcoin trading software on its official website .
Potential
The potential is defined if the NFT has room for growth, depending on the community size and rarity. The potential of growth can be calculated by factoring in the demand and supply. Keep in mind that the NFT project with long-term support from the community is likely to have more value because it will gain attraction in the future, resulting in higher demand.
Provenance
For those who don’t know, provenance is associated with the origins of an NFT project. So, before you make up your mind to invest in a project, you must try to gain information about the creator. For this purpose, you need to understand the origin of the creator, the backstory of NFT, and the popularity of the NFT creator in the market. All in all, choose the NFT project that’s made by a prominent creator.
The Bottom Line
The evaluation indicators mentioned in this article will help gain better insights into the value of a specific NFT project. So, make sure you consider all these factors if you want to turn a few bucks into thousands of dollars’ worth of profits!
