Welcome! So word on the street is you’re looking to learn about NFTs. Well, you've come to the right place!
In this guide, we will be cbreaking down the basics of NFTs:
- What is an NFT?
- How does one buy an NFT?
- How do I know it’s a good/valuable NFT project?
- Some extra tips and tricks to keep you safe in the space!
What are NFTs?
So lets start off with the term NFT, it stands for Non-Fungible Token. Which means there is only ‘one’ specific copy of that NFT in existence, this makies it unique and irreplaceable. They are "digital assets" that are stored on the blockchain; which means they can be any sort of digital asset, such as art, games, real estate and a whole lot more.
If you were to purchase an NFT on a marketplace such as OpenSea (which is currently the most popular one and at the moment the most trusted one) then the wallet address you used to purchase the NFT will be verified on the blockchain. This means that no one can take or copy your exact NFT. And yes ofcourse, people can screenshot NFTs and ‘say it’s theirs’ but it’s not really their NFT and has no value. It’s like having a copy of the declaration of Mona Lisa and someone taking a picture of it and saying they own it. It’s just not how it works. The only one with value is the real one which is verified by the blockchain.
NFT's can belong to collections. You've probably heard of some of these collections such as the: Bored Ape Yacht Club, Crypto Punks or Thugbirdz. Because of the fact that they are in a collection, popular NFTs will be verified on OpenSea with a blue tick, like every social media platform.
Projects that copy other NFTs [which does tend to happen quite often so be wary!] do not get verified and along with that, must be trading a specific amount of volume in order to be considered for verification. These are called ‘Blue Chip’ NFTs.Blue chip collections are few and far between but will be life changing for many if you manage to get in on them early.
Buying NFTs
So we have a whole article o How to Buy NFT's but let's sum up the steps for you here. The most popular place to buy and sell NFTs as mentioned earlier is OpenSea. The OpenSea marketplace runs on the Ethereum (ETH) main-net; which means to purchase NFTs you will need ETH or WETH which are a cryptocurrency. In order to get this, you’ll need a MetaMask wallet on either your phone or as a Google Chrome Extension for your computer.
As we mentioned ETH and WETH earlier. WETH stands for ‘Wrapped Etherium’. Meaning it can be traded on what’s called decentralized exchanges or DEX for short. The only time you’ll ever need to use WETH is when you’re placing bids on auctioned NFTs. In most cases, bids are usually placed by bidding bots, which bid under the ‘floor price’ of an NFT to try and get cheap NFTs. The floor price, as I mentioned, is the cheapest NFT in a collection that is for sale. [It might seem like alot but these are terms you'll quicky get used to]
When looking to purchase an NFT from a collection you’re interested in, you want to buy one of the following:
- Floor Price – Buying a floor price NFT which stands out from the pack, has good colors, and is visually appealing is more likely to get you a sale than one that blends in with the others.
- Rare NFT – To find out if an NFT is rare, it’s often advised to check Rarity Tools which will tell you which NFTs and what attributes are rare for your particular collection. You can do this by using their built-in filtering system and looking at the top candidates.
NFT Roadmaps
Essentially a roadmap is a step-by-step plan that the creators/team members of the NFT collection are going to follow. It outlines the main stages of the project and goes through how the team plan to innovate and add to these stages in the future.
The roadmap is essentially their business plan of how invested and important the project is to the owners, whether it’s for the long term because they’re trying to grow something meaningful or if the owners of the NFT are looking to make some fast money. so this is another thing you'd need to play close attention to when looking to buy into a potential collection.
There are things that can be added to the roadmap to make the project more enticing for future investors like you.These things are reffered to as Utility. This may be in the form of a game, Downloadable content, or a future airdrop (gift) coming your way.
A trend in NFTs of the past was just to make them very aesthetically appealing for use in profile pictures, but the game has changed and along with it so have the people involved in the space. NFT projects rin 2022 requirr a lot more than just good art, having something tangible that comes from your investment is key.
The current problem with NFT's is the fact that with all it's recent popularity of the super successful NFT projects, we've seen a ton of terrible projects flood the space, with the well meaning projects, there comes bad projects and rugpulls who will promise you the world in exchange for your investment.
The key here is to just do your due diligence and try not to get too emotionally invested in a project.[This is key as a project can increase in value overnigght and lose it's value just as fast if not faster] so what you need to do is look for positive signs; for example if they plan to create a game to go along with their NFT, see if the creators have actual game design or programming experience.
Another thing you should be looking for on the roadmap is doxxes or the staff members of the project revealing their true identity. Doxxes don’t always guarantee success of a project, but if someone is putting themselves out there and thousands of people lose money, that’s a good sign they’re trying to do something meaningful. But even with doxxes, please be careful. People can fake a doxx with technology and fake followers.
NFT Marketing
Possibly the most important and interesting part of NFT projects is their marketing. Marketing helps to spread awareness about products, services, and their benefits to people who have never been exposed to them. NFT marketing in particular is a little different from traditional marketing.
NFT marketing is a massive part in whether a project is successful or not. You need to pay close attention to whether or not the project is using genuine marketing tactics and not loading the discord server, instagram, or twitter with fake accounts and engagement, this will save yourself from getting burned by a project’s failure.
A lot of groups out there have fake members, the best way to ensure you’re part of a real and active discord is to ensure the discord server in particular has verification methods in place for accessing the server and its channels, as bots don’t particularly have the capacity to get past the verification protocols.
Don't Fall For Hype
Now I'm sure you’ve seen the twitter threads, the TikTok videos, that talk about this project that is blowing up and you don’t want to miss out! But HOLD UP, For real, just wait and take a breathe. You may want to try to get into the pre-sale for a super hyped up project, this is also known as a whitelist. This will allow you to mint the NFTs before everyone else (sometimes even with a discount), and when a project sells out, it will allow for an easy flip of often 2x -3x what you bought it for. But as mentioned earlier, do your research. These projects that are beyond hyped will sell out and getting on the whitelist may just be a waste of time. Try to catch projects as early as you can. I recommend Twitter for this one. If a project is finding you by ways of TikTok its probably already gone viral. which means your chances of getting in on it's whitelist at an affordable price are slim.
So up til now, this this beginner’s guide to NFTs has only mentioned brand new projects. however we have yet to go over what you should be looking for in old projects, for which, all of the previous things mentioned still do apply.
However if you’re looking to invest into a project that has been around for a while, you’ll want the community to still be around and active, making friends, and creating a warm and welcoming environment for newcomers to the NFT. If you’re entering an older project that is 3 or 4 years old, you’ll be at lower risk for problems because they’ve already survived through multiple different years and crypto markets!
Lastly, the final way to check the hype is by looking at the ‘activity’ of the project on the applicable marketplace. Since OpenSea is the most common one and the one with the most resources and tools, we'll use them as an example. Go over to activity and sort by ‘all time’ as shown in the image below. Some of the older projects may never move again, it’s important to understand the activity. 
NFT Rarity and Value
When it comes to NFTs, you're definetly going to want to know how to tell if you have a rare one, especially after mint. In general, NFTs tend to have more ‘traits’ than other NFTs in the collection. These extra traits add value and rarity to them. The very rare ones in the collection are usually hand made by the artist and not generated with random attributes like the rest of the collection. See the below example
In general, NFTs have a ‘base’ that they start with. For example, with Bored Mummy Baby Waking Up, a project that I am invested in, they are little hand illustrated mummy baby's [from the same team that did Bored Ape Yatch club] and It’s the accessories they come with that make them rarer.
Minting Your First NFT
Hopefully by now you should have it branded into your brain how important it is to pay attention to what you’re investing into and to get involved in the community. If you’ve finally found a project that you feel confident that you want to invest in, and you believe in what the project stands for. Then it’s time to make one (or multiple!) NFTs.
When NFTs are about to be released to the public for everyone to mint, there are usually two ways that this is done. The first is minting, which is the traditional approach. How this happens is that they put the NFTs on a buying or auction website, where you buy the NFT and it instantly goes into your wallet. This usually requires gas fees depending on what main-net you are purchasing from.
Since Etherium is the most popular one, expect a heavy ‘gas’ fee which is from $40 to $300 per transaction. If you were to mint a Solana NFT for instance, there is no negligible gas fee [$0.0004]. Which is why many projects are moving over to Solana, to make them more accessible for the public and this is why I'd suggest if you're looking to get started try Solana first as it's got a great community and is alot more affordable when getting started.
The other way you might end up minting an NFT is through the process of airdropping. Now, I mentioned airdropping way back in this article. It’s essentially when an NFT is placed directly into your wallet without you paying any money at all in gas fees. Projects often do this for long time holders or just as a way to give back to the community.
Words Of NFT Wisdom
When trading NFTs, you can always make mistakes. These can be massive losses or even accidental wins (my first NFT was airdropped to me and was worth $20, two days later it was over $400) I've evn had friends that have been given NFT's worth $15 000 at its peak just beacuse he was very active in their community.
There will be plenty of people in this space who try to take advantage of you and get to you. With that said, you’ll often see fake collections popping up on marketplaces that try to mimic the real collection before or even after launch. You’ll also receive lots of dms from people trying to get you to mint from fake websites to steal your money. NEVER ANSWER DMs IN DISCORD!!
When selling your NFT, make sure that you list it on a timer. This is so you have a price that you hope it sells at, but if it doesn’t, you can relist it for free instead of paying gas fees again.
And do your damn research, due diligence is key, without it you're a sitting duck for scammers and people looking to make a quick buck. Now go have fun with Web 3!
P.S Still not financial advice.