Good news if you haven't got an NFT yet

The NFT market is cooling off after a year of gimmicks.

• The NFT market is cooling off after a year of gimmicks.

The first tweet by founder Jack Dorsey was converted into an NFT and sold for $2.9m. It's now going for $14,000. Is now the time to get into NFTs?

Last year, the first tweet by founder Jack Dorsey was converted into a non-fungible token (NFT) and sold for AUD$4m.

At the time, the person who purchased that tweet - a chief executive of a Malaysia-based blockchain company - Tweeted himself to say: "This is not just a tweet! I think years later people will realise the true value of this tweet, like the Mona Lisa painting."

Well, it's possible that piece of digital memorabilia which read "just setting up my twttr" wasn't as intrinsically valuable as Sina Estavi originally thought.

When he put it back up for auction last week, the highest bid was $19,450.

Ouch.

The NFT market is plateauing and in some cases plummeting. In March, sales were down to about $3.3 billion from $6.9 billion in August, according to data site CryptoSlam Inc.

Experts say it's a cooling off after NFTs break through year in 2021. The focus now is on broadening the market and shifting to the utility that NFTs can provide, like access to exclusive spaces.

How do you know if an NFT is worth anything?

The problem with "the twttr" NFT was that Estavi likely saw more value in the Tweet than anyone else, Folklore Ventures investment analyst Abhishek Maran said.

"From a utility perspective, what can you actually do with that? Besides it being memorabilia," the 24 year-old Maran said.

In early 2021, when NFTs were first gaining popularity, it was acceptable for the NFT to just be an artwork. But that's now changed.

"(Now) it's important to show the tangible utility to all NFT holders, not just to a subset ... Really strong projects have been able to deliver on running events, physical merchandise for the holder, airdrops and the like. They provide some sort of value back."

He said when you buy an NFT, you're buying into a community and what it can offer.

"You're buying access to a private community - a new age country club in a way. Anyone can buy into it regardless of status, you just need the money."

The community is made up of everyone who purchases that NFT (goes to the country club), and is run by the founders (the country club itself).

Is this your time to get into NFTs?

Maran said now was as good a time as ever to buy into NFTs, but the risks were still high.

"There are always pockets of value in the market, you just need to find them."

With the sideways and muted NFT market, you might not see value instantly as you would in a bull market ... But over time, if you've done your due diligence and the community is strong, and the founders deliver on utility, you can be confident that the NFT will rise in value."

A bull market refers to when the prices of an asset are rising.

"But these are all ridiculously risky decisions to make, and you need to be clear you might lose all of your money in these investments."

How do I start buying NFTs?

Maran's advice is to think about the team building the project. If it's a second-time NFT founder whose first project did well, you might have confidence in them to deliver again.

You should also think about how much you like the artwork, as well as the community.

"The closeness of the community dictates whether the NFT holds value over a long period of time," Maran said. 

"If someone is not vibing with the community, if there's no direction of the project, then the price of the NFT will go down because people are looking for better NFTs to hold and better communities."

Also, scarcity matters. 

"With an abundance of supply and not enough demand, it's hard for the project to gain a lot of traction."