Choosing your first NFT
- Wanpy
- Mar 22, 2022
- 3 min read
An ape? A 3D ape? A GIF of an ape? The options are endless
We've got the basics down. We know what to avoid. Now for the fun part. Choosing your first NFT starts with a simple question:
Are you here to make money? Be a visionary early investor? Join a community and reap the access and benefits? Collect digital art? All perfectly valid, but it's important to understand what you're trying to get out of this. That said I know nothing about art so this article will generally be speaking to people trying to understand if a project has legs.
THINGS COST MONEY
Firstly, it's important to understand your budget. An unfortunate fact of NFTs at the moment is high transaction costs, meaning it's difficult to buy anything worthwhile for less than 0.2 ETH, especially on the secondary market. Many plays will cost between 2 and 5 ETH, and lower cost can mean higher risk.
DON'T JUST GUESS
OpenSea has north of 2 million projects online, and as an estimate, I'd say 1,999,000 of them are junk and will eat your cash, so the guessing odds aren't in your favour. At this point in the space it's not just about the art, so take time to read a project's website, their roadmap, see how they promote themselves on social media and if anyone else seems to care. Things move pretty fast but there are always opportunities over the horizon, so practice by making a few hypothetical trades before you're comfortable putting your money down.
THINGS TAKE TIME
A new hot project is being retweeted across NFT Twitter every day so it can feel like the space moves at a million miles an hour. When you do make an investment, put faith in your logic and research (if you don't have faith...don't put your money in and get back to research) and be patient. Prices can be very volatile so it's easy to get spooked by a 10% drop or fired up by a 10% bump - remember your reasoning for getting in and try to stick to that.
PRIMARY OR SECONDARY MARKET?
Short answer - primary. If you can mint a project, it's more often than not better than buying it up on the secondary market for a premium, but good luck - mint flipping is well established so there's hot competition for those whitelist spots.
THE SAME OLD PRICE STORY (USUALLY)
Mint, pump, dump, pump. Recite that aloud until you're on the verge of being sectioned and you'll do well. There aren't as many sophisticated players (or professional institutions) in NFTs as there are in crypto, which means you do see a lot of common pricing patterns around events like minting.
Key point: the project has to be not shit
People mint the NFT. Hype and FOMO are at an all time high and there's a chance of minting a rare and valuable trait, so secondary market price is high while art is yet to be revealed.
Art gets revealed and those waiting for a rare drop sell their NFT. Sellers exceed buyers so price decreases, spooking more holders into selling, so price decreases further.
Price settles and everyone relaxes, realises why they wanted in on the project in the first place and see this low price as a good buying opportunity. Price goes up and buyers get FOMO, further increasing price.
This isn't always the case but for real "everyone is talking about it" kind of projects like Invisible Friends and TastyBones it's served me well.
SUMMARY: GOOD LUCK, KEEP READING, GO MAKE YOUR MILLIONS
And so concludes the NFT basics course - thanks for reading! If you have any questions or comments, feel free to get in touch - we have some free resources to get a feel for what you can gain from being a site member.
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