Super excited for this drop as Rodney takes us through the A-Z of of his first foray into NFT art space. He has a useful guide too so check it out when you’re preparing to start buying your own!
In The Beginning
Regret is an interesting emotion, and so is the fear of missing out. Both have played an important role in my crypto, Decentralised Finance (DeFi) & Non-Fungible Token (NFT) journey, providing me with numerous learning opportunities. For example, I first heard of bitcoin (BTC) in 2014, yet it wasn’t until 2017 I purchased the cryptocurrency on an exchange. And while that was still considered ‘early’, I was very conservative with my investments which meant I missed out on significant upside across BTC, ETH and other tokens by: 1) not deploying enough capital, 2) not deploying enough capital earlier.
Nevertheless, since then, one thing has consistently remained true - we’re still so early in this space. With that in mind, though I failed to enter the NFT market as soon as I heard of it, I did eventually enter with the understanding that there’s so much more to come.
This post will provide an overview of my journey into NFTs starting from 4th September 2021(you can track the tweets here). I’ll touch on a number of topics; however, as there’s so much to cover, I’ll keep it quite brief. You can read more (as well as tips, etc.) in my e-book.
What is an NFT?
Ranging from art to music and gaming, an NFT is a ‘one-of-a-kind’ asset with proof of ownership backed by blockchain technology (whether the ethereum blockchain or Solana blockchain, etc.). If you don’t know, blockchain is a digital ledger of transactions that have occured between parties, with these transactions being public and immutable. This means anyone can view current owners and previous owners of NFTs and no-one can change it. Due to the nature of NFTs (i.e. the unique ID associated with each NFT on the blockchain), it is impossible to duplicate that specific NFT. So just because you can right click and save the image, if the saved image is uploaded to the blockchain it would have a different token ID. In layman's terms, you can print out an image of the Mona Lisa and mount it on your wall, but at the end of the day, it’s not the original.
Cryptocurrencies/Tokens & Wallets
Used as a medium of exchange, a crypto-currency is a digital currency where all transactions are recorded on the respective blockchain. The Nizzynomics team delves more into this in their ebook (check it out here).
Though there are multiple cryptocurrencies/tokens, more often than not you’ll interact with ETH (the token derived from the Ethereum network) and SOL (the token derived from the Solana network) depending on where you’re buying NFTs.
To mint or buy and sell NFTs, you need to own a wallet loaded with the relevant cryptocurrencies. Unlike the custodial wallets on cryptocurrency exchanges (which means you don’t completely own your account as the private keys do not belong to you), the non-custodial (hot or cold) wallets you own give you more autonomy. Though more secure, it’s worthwhile highlighting there are also risks with the latter.
I won’t go into the history of it all but the Ethereum network has seen the most success with NFTs. There are a number of NFT marketplaces that allow individuals to buy NFTs with ETH (the token associated with ethereum) or other tokens, with the most popular being OpenSea.
My experience
Buying NFTs on the Ethereum network:
Jumping in head first, the first NFT I bought was part of a collection called YoMoji! created by Michael Shillingburg. I did so because someone else I knew bought one and I thought it was cute. At the time, I had little understanding of how important it is to have a strong community behind a project as well as a number of other things I expand on in the e-book I’ve written. The aim of this purchase was to get a feel of how it all worked as well as potentially flip (sell for a profit) what I considered to be a cute piece. The former was a success, the latter is still yet to take place.
From that purchase I learnt that to buy an NFT you need to consider a few things including:
having a (hot and/or cold) wallet which will allow you to purchase on platforms such as OpenSea.
your wallet needs to be loaded with token(s), which can typically be done by transferring a cryptocurrency or token from an exchange (i.e. Coinbase or Binance) to the designated wallet.
paying platform fees when transferring from an exchange to your wallet (i.e. the fees the platform might charge you for the transaction).
paying gas fees for all types of transactions (i.e. when buying or selling on the marketplace, when minting, and more) which can be significant depending on how busy the network is.
swapping your ETH for WETH (which you can use to bid on pieces)
After having bought that YoMoji I joined the associated Discord. From there I began understanding the link between Twitter, Discord and OpenSea when it comes to investing in NFTs.
As I continued seeking alpha, it became more and more apparent the extent to which people rely on projects having a website, a ‘’great’ community, a following, a level of ‘hype’, as well as some other factors. These all play a part in the credibility the creators hold and builds on the (social-)network effect that draws more and more people in.
Consequently, I saw myself jumping into More Loot, a derivative of the Loot Project due to some of the aforementioned reasons. In addition to teaching me about the risk of following the hype, I did learn something else: how to mint, especially directly from a smart contract. From using etherscan to experiencing the fluctuations in gas fees and being stuck in transaction queues, it became more apparent that what may seem like a free project in actuality can leave you out of pocket more than a few $s.
By observing the landscape, I noticed that:
People may sometimes sell pieces on the secondary market below mint price (if it wasn’t a free mint), which means you can take advantage of that opportunity
People sometimes sell free-to-mint pieces on the secondary market for a cheap price, which can be an opportunity if you buy it at a time when gas fees are lower than what they were during the minting period
While MetaMask wallets may show estimated gas fees and the stage of your transaction, it’s only through taking these risks did I learn how to navigate this space. For example, I was in a few situations where I locked in a low gas fee but the network was extremely busy so I had to wait hours for the transaction to go through and eventually ‘speed up’ or cancel the transaction by paying more ETH. Had I been given the tips above, I would’ve saved $.
Long story short, I probably spent more in gas fees than I have on food in 6 months. This played a part in my decision to explore NFTs on other blockchains, namely the Solana blockchain.
Buying NFTs on the Solana Network
Pleasantly surprised to see the evolution of NFTs beyond the Ethereum network, once again I dived headfirst into NFTs on the Solana blockchain. With Solanart and DigitalEyes being two well-known NFT marketplaces that allow you to buy NFTs using SOL (the Solana token), I applied my learnings to this space. Once again, to mint or buy an NFT I had to:
create a new hot wallet
load it up with SOL
scour the twitterverse for interesting projects
Join the Discords
I found a few projects that looked promising, and I was able to buy some NFTs. Thankfully ‘gas fees’ were extremely low compared to the ethereum network, and since SOL is trading lower than ETH in dollar terms, I was able to make the most of this situation.
Unfortunately, while it may be cheaper, I noticed that there is a lot of work that needs to be done with regards to projects being built on the Solana network. For example, the UX and UI needs significant improvements.
In addition to that, what was evident (across the whole NFT space) is the lack of:
projects that hold substance;
projects with strong communities that care about more than just the financial return;
great development teams working on long-term projects;
management of bots in Discords, during the launch of projects (when minting), and on marketplaces;
management of scams across platforms
Conclusion
I am yet to venture into selling NFTs (I’ll be doing that in the coming days); however, I hope this overview of my experience thus far has been illuminating. Despite being in its nascent phase, it’s incredible to see the work that has been produced and wealth accumulated. So just know, if you’re reading this today, you’re still early.
My role isn’t to convince you to buy or sell NFTs, just to inform. My wish is that if you do embark on this journey, do so with an open mind while making sure you protect yourself. This space may be extremely lucrative at the moment but it can also lead to significant losses (whether through bad investments or scams).
None of the above has been financial advice; however, the one mindset I would implore you to adopt is:
For more on NFTs (a beginners guide of sorts), check out my ebook and follow my thread (and me) on Twitter.
If you want to keep up with all the investment plays & drops over the year, join us on the premium channel.
Until next time,
Peace!
[If you’re a corporate person don’t forget to check out the crypto drop ➡ Trad-Fi to DeFi]