Episode 36 – How to buy your first NFT
We’ve spoken about NFTs more than once in School of Block, and there’s a very good reason why. The way they can transfer DATA and VALUE without a third party is unprecedented. And what that could mean in terms of their potential applications is absolutely MIND BOGGLING.
The problem is though, that the JARGON, MARKETPLACES and DROPS are equally MIND BOGGLING if you’re new to the space. This is a digital universe unlike any that has come before, and the CULTURE and RULES of ENGAGEMENT are equally unique.
So if you want to enjoy the unlimited possibilities of NFTs, you’re going to need to know how to navigate this daunting quest.
And that’s why today I’m going to take you through a STEP by STEP journey to buying your first NFT.
Fren, you’ve taken your first step into a larger world.
Welcome to School of Block.
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NFTs aren’t just jpegs that go up massively in value, although you could be forgiven if that’s what you thought all this hype was about.
Back in Episode 11 we introduced the spectacular potential for the non fungible token, in Episode 21 we covered the ways NFTs are used in crypto avatars, and in Episode 29 we discussed the ways you could get a piece of the action even with the most expensive of their kind.
We’ve talked about them a lot. And it’s because they’re important.
Why? Because they are driving a paradigm shift in the way CULTURE is CREATED and SHARED, REMOVING THIRD PARTIES from the equation and enabling an UNPRECEDENTED CONNECTION between CREATORS and their AUDIENCE – as the two interact and transact directly.
NFTs aren’t just ‘images’ you can right click and save as – they are TOKENS with a TIMELINE, that contain DATA and VALUE – and with that, the ability to MONETISE behaviour and work that has previously not been possible.
It’s quite a lot to get your head round, and that’s probably why the CULTURE that’s developed around them is as SPECIFIC as it is. The USER JOURNEY is uniquely unlike any other asset, and this has crafted and selected the behaviour of those early adopters to generate something that on the outside might seem a little IMPENETRABLE.
But – the CONTRADICTION is that the space is actually incredibly INCLUSIVE and FRIENDLY, once you’ve got your head round it.
Let’s start with the LANGUAGE.
This is a whole new world of text speak – frequently seen on channels like Discord or Twitter.
In no particular order:
I mean – what’s all this about? Fundamentally – SHARED EXPERIENCE.
We’re all going to make it
Let’s Frickin’ Go
What sense do you get from this language? That WE’RE ALL IN IT TOGETHER? That’s kind of what it’s all about.
Everyone who’s become part of this space has gone through this same learning curve and feeling like an NFT impostor – so don’t feel like it’s trying to keep you out, it’s really not. This community is inclusive and will be very pleased to have you part of it.
It’s not like you’ve crashed some rad point break full of locals… this is one line up that will encourage you to paddle for the next wave with them .
So, now you know what they’re all talking about – what are the steps to actually buying an NFT?
Well, we’ll break it down into four of them:
and HOLDING for the LIFE CYCLE
So let’s dive in.
How do you identify which NFT you want to buy? Well, you could just jump onto one of the marketplaces – OPENSEA being the largest – and browse. But it might pay first to ask yourself some questions.
What kind of NFT do you want?
Are you interested in particular community membership or benefits?
How do you see yourself using the NFT – as an avatar perhaps?
How important is capital appreciation to you?
Are you looking to build a balanced collection, be part of a community or own a special artwork?
The answers to these questions might steer you in a particular direction. And once you know what that direction is – it pays to find a DISCORD CHANNEL either run by the NFT creator or by its fans and owners.
NFT TWITTER is a vibrant community and it pays to find a few choice tweeters – like punk6529, for example – who will make your journey into this world that much smoother.
It won’t be long before you hear about some choice NFT DROPS. What are these? Well, simply the LAUNCH of a new collection. Again, it pays to know who the CREATOR is – as new collections from well known entities like LARVA LABS will gather much more of a feeding frenzy than those from a little known COPYCAT.
Once you’ve decided which NFT floats your boat it’s time to BUY. Or is it? It might be time to MINT your own.
Here’s the difference:
ROBIN ‘MARKETPLACE vs MINT’ TUTORIAL – where Robin discusses the merits of minting your own NFT as opposed to buying one on a marketplace. An obligatory mention of gas fees and what they’re comparable to in the real world.
There are a couple of pitfalls to be aware of in this process – BLIND SIGNING being the big one, which we touched on in Episode 34. Essentially this is where you sign a transaction with your private keys without knowing exactly what that transaction is. It is a normal and legit process in crypto, but that doesn’t mean that some scammers don’t take advantage of it.
Just like with any crypto token, it pays to be careful with how you store your NFT. Back in Episode 19 we talked about how to protect your crypto goodies. I strongly recommend having a watch of that one if you haven’t already as the lessons also apply to NFTs.
One difference is that the option to hold your NFTs on an exchange is not yet universally applicable – which leaves you with the choice between a HOT WALLET, or COLD STORAGE – or some kind of HYBRID.
Unsecured HOT WALLETS such as metamask are certainly convenient, but not the most secure – so if you value your prize NFTs, it’s worth securing your SOFTWARE WALLET with a HARDWARE SOLUTION like a Ledger Nano, which avoids the risk of MALWARE, FRAUD or PHISHING. For more information on how that works, go to LEDGER LIVE online.
Other risks involve the process of buying the NFT itself. Have you come to an unfamiliar DROP site that’s asking you to sign in with your wallet? Well then I recommend you check out Episode 34 to see what that looks like again.
So, once you’re happy you’ve bought and secured your NFT, what next?
Well, as I’ve previously said – NFTs are TOKENS with a TIMELINE. What happens next might well be important.
The NFT creator might have embedded benefits inside the NFT that unlock after a given amount of time.
The NFT may be part of a system or game – like LOOT, for example. You can’t play the game YET – but it’s being built as we speak.
The NFT may also offer IRL benefits – like fashion wearables, event access, discounts or club membership.
The NFT may also offer benefits in the MULTIVERSE, whether it’s use an AVATAR, or access to certain spaces, games or events.
It may also offer fractional ownership of something tangible – an ART COLLECTION, a SPORTS CLUB or give you VOTING RIGHTS over something you care about.
It’s safe to say we’re only just scratching the surface of the possible use cases for NFTs, and yours might well evolve over time to offer a very different value proposition in the future to what it does now.
By all means flip it for a profit, if that’s what you’re into. But if you do, be aware this is one long game that’s only just beginning.
Ser, I can’t tell you for sure that WAGMI, but know this: The OGs are going wild for NFTs, and for very good reason. This space is still VERY, VERY YOUNG.
You might not have bought Bitcoin in 2010, but choose your NFTs wisely and the same level of opportunity is presenting itself out there right now.
Take your time. Choose wisely. And join the party.
LFG, Fren. LFG.
You’ve been watching School of Block, presented by Ledger and the Defiant, demystifying decentralisation, one block at a time. Don’t forget to subscribe, drop us a like if that’s what you’re into, and as always – here’s to your financial freedom.