What is a NFT

A non-fungible token(NFT) is a unique and non-interchangeable unit of data that is stored on a blockchain. NFTs can take the form of photos, videos, audio clips, and various other digital files, and uses blockchain technology to help give it a public proof of ownership. To put it simply, NFTs are just proof of ownership and not the item itself. 

Why NFTs

I started getting into NFTs a little over three months ago, and I mainly focus on Solana NFTs. One of the biggest reasons I believe that Solana NFTs are better is because you do not have to pay for the ridiculously expensive gas fees that Ethereum NFTS are known for. Gas fees are incurred when you transact on the Ethereum blockchain, and unfortunately, Ethereum gas fees can cost you as much as 100 USD as compared to Solana gas fees will only set you back around 0.00025 USD, that is a 400,000 times difference!

In this article I wanted to share my main motivations for getting into NFTs, and break down the lessons I have learnt from my experience thus far. The three main reasons why I got into NFTs are:

Hype: I started getting into NFTs because there was a lot of buzz surrounding NFTs recently, and I wanted to join in on the action. Many different people were hyping up NFTs to be the next big thing, additionally, there were celebrities such as the two-time NBA MVP Steph Curry picking up an expensive NFT, fueling the NFT craze. One notable “celebrity” that has released his own collection of NFTs is Ross Ulbricht, the founder of Silk Road, which was an online black market for illegal and illicit items. Ross Ulbricht has created a series of NFTs on the Ethereum blockchain that consist of writings and handmade art; this series of NFTs has already seen bids of up to 2.6 million USD. 

Source: Bitcoin.com

Money: We have all seen news headlines of NFTs being sold for ridiculous prices. For example, one of Beeple’s NFT sold for 69 million USD and a CryptoPunk NFT sold for 530 million USD. Like the gold rush in America in the past, seeing the potential profits that NFTs can make, I too, jumped at the opportunity to try and earn some money from NFTs. 

Source: The Verge

Collecting: I felt that the ability to be able to collect something unique that no one else in the world has is what makes NFTs so appealing to me. Furthermore, some NFTs are very visually appealing to me and I felt that they would make great profile pictures, or can even be displayed like real works of art on a canvas. 

One of the NFTs in my collection

How to get started

It is very easy to get started in NFTs, all you need to have is a wallet and the native cryptocurrency that corresponds to the chain that the NFT is based on. This can vary from Solana, Ethereum to Cardano. There are 2 different ways to get your first NFT, you can either buy NFTs that are listed on an exchange such as Opensea and Magic Eden, or mint an NFT as part of a new project. To better understand the difference, a simple analogy would be that buying NFTs from an exchange would be similar to buying art from an art dealer while minting an NFT is buying art directly from the artist. 

Generally minting NFTs is much riskier compared to buying an NFT from an exchange. The price of NFTs after mint can fluctuate greatly, and there is no telling whether the price will go up or down. Hence it is much safer to buy an NFT from an exchange that allows you to view how much NFTs from the same collection are going for, ensuring a fairer and more stable price. 

One thing to keep in mind is that 99% of NFTs will not make good investments. For every NFT that you see out there selling for millions, there are hundreds, if not thousands, of other NFT projects whose value goes to zero. Thus, if you do decide to get into NFTs, please do not invest money that you cannot afford to lose. 

Over the past few months, I have taken part in various NFT mints, doing my research, and seeing many NFT projects rise and fall in the Solana NFT space. I would like to offer you some pointers that I wish I knew before buying and minting my first few NFTs. I hope that these pointers can help you find good projects and also protect yourself. 

1. Burner Wallet: If you choose to mint NFTs you should always use a burner wallet. A burner wallet is a wallet that is separate from your main crypto wallet. Currently, the NFT space is heavily unregulated, leading to a prevalence of scams in the NFT space where NFT developers abandon their projects and run away with the cryptocurrency generated from mints. Additionally, NFT developers are also able to code their NFT projects in a way that makes it possible to drain your entire crypto wallet when used to mint their NFT. Hence, to be safe from such scams, please always use a burner wallet to mint your NFTs. For example, a few months ago, I wanted to mint a few NFTs from a collection called “Solducks”. I was interested because of its low mint price, low supply, and some decent hype from its community. I made a mistake of not using a burner wallet when minting “Solducks” NFT, and it turns out this was a scam and I lost my entire Solana balance. Luckily, I did not have much Solana in my wallet, but I have seen people lose over 1000 USD from these scams, so please take precautions and use a burner wallet, I cannot stress this enough!
2. Twitter and Discord numbers: One of the better indicators to help find good NFT projects are the number of followers the project has on their Twitter profile and Discord channel. Community is very important to NFT projects, and usually projects with a strong community will have much higher prices as they are much more desirable as compared to projects with a poor following. However, there are NFT projects that use bots and fake accounts to help boost their following on Twitter and Discord, hence you should not solely rely on these numbers alone.
3. Mint price: With community being very important to NFT projects, you should look for NFT projects with reasonable prices that will help the project to build up a stronger community by being more accessible. Usually, projects with a high mint price will prevent more people from minting the project which can hinder its efforts to build a strong following.
4. Supply: This is simple supply and demand, typically projects with smaller supply will have an easier time for its price to increase as compared to projects with a larger supply as the NFTs are rarer. However, there are NFT projects with large supplies that are very expensive due to their strong community so please do not use supply as the only indicator when finding NFT projects.
5. Roadmap of the project: This is the single most important indicator of whether the NFT project will succeed or not. A roadmap is basically what the NFT project has in store for the minters and buyers of the NFT once the NFT mint is over. This can range from rewarding them with more NFTs, creating a new cryptocurrency that is given to them daily, creating an NFT game, a minority stake in an online NFT marketplace or casino, etc. There are many different possible roadmaps for NFT projects and it is usually the  projects with a strong roadmap that rewards people from buying and holding their NFTs, that will appreciate the most.

A great example of a project that I minted and managed to earn some money was “Baby Samo NFT”. This project rewarded its minters by allowing them to exchange their NFTs for a certain amount of cryptocurrency, thus their NFTs values are backed by a certain amount of cryptocurrency. Due to the project having a good roadmap and achieving the goals in its roadmap, their NFTs appreciated and I managed to earn some money from it. 

All in all, this is not financial advice. Please do your research before purchasing any NFTs as an investment, I am just an average guy interested in NFTs. But I hope that these pointers will help to increase the chances of you picking a good NFT project to buy. I believe that the NFT trend is here to stay and it is exciting to see big corporations such as Adidas and Nike jumping on the NFT bandwagon and releasing their own NFTs. This is still the beginning of the NFT revolution, and it is exciting to see what happens in the near future.