Now, before buying, remember that most NFTs are not worth very much. Just like any other investment, you should take the time to understand the space, what you’re buying, and how to keep your digital assets safe. I’m not a financial advisor, I’m a random internet jpeg trader on the anonymous web – so do your research, make sure you’re confident in your decisions, and also be aware that this market is very new and thus also very risky. In other words, only invest what you’re comfortable losing.

OK, I’m ready to buy…

Well, let’s make sure. First a few questions to help gauge how and where you should buy:

• Do you own cryptocurrency, such as ETH… and want to spend it?

• Do you have a crypto wallet… and know how to use it?

• Do you know how to keep your wallet safe… really safe?

If the answer to the above is a “Yes,” well then you’re ready for a more “crypto native” platform such as Opensea. If the answer to any of the above is a “no,” then I suggest starting on a more “curated platform,” such as Nifty Gateway. This is especially true for wallet safety – in 2021, $14B worth of NFT assets were stolen from people not practicing proper wallet safety. It’s a real issue, but curated platforms like Nifty Gateway make it easier and safer to buy for the novice – so don’t be scared. More on both of these platforms soon, but first…

Things you should know before buying…

Before you “go somewhere and buy something” it’s important to first understand that there are 2 types of buying – you could buy from the artist/project directly (commonly referred to as “minting”), or you could buy from someone who minted and is now reselling (commonly referred to as “buying in the secondary”). These are very different things, so let’s talk through each. 

Minting: If you are an artist or a dev team looking to create and sell an NFT project, you have to have a “project drop” – a date, time, and location where people can log on and buy your NFT. If you are a collector, you have to be aware of these drops, their date, time, and location. Some drops are done on “curated platforms,” such as Nifty Gateway or MakersPlace, where every night a different artist releases a public drop. These curated platforms are great because the day/time is predictable and the art is curated by the platform so you can trust the NFT project/artist is legitimate and from top artists. However, some drops are done on (literally) random websites that you have to find and know about; “discovery” is half the battle.

Buying Secondary: If you aren’t minting a project, you are buying the project “in the secondary” from someone who previously minted or previously bought in the secondary and is now reselling. You may be buying at a higher price because the person who is reselling the piece is trying to earn a profit themselves. Sometimes minting is better because it’s often cheaper, but the benefit of buying in the secondary is you have more information and data to make a purchase decision, such as demand (volume, resell rate, distribution of collectors) for the artist or particular piece.

Got it, so where should I buy these things…

There are many platforms you’ve likely heard of in the news, such as OpenSea, LooksRare, Foundation, Nifty Gateway, MakersPlace, SuperRare, and others. Coinbase is coming out with their own platform, and many projects (such as Gutter Cat Gang) are launching their own dedicated platforms on a dedicated site just for their collection. These platforms are very similar, just different locations to discover and purchase NFTs.

For the sake of this post, let’s focus on what are arguably the two main platforms, both of which were mentioned earlier: (1) Opensea [opensea.io], and (2) Nifty Gateway [niftygateway.com].

OpenSea: Opensea is the primary trading platform, with over 1-million unique wallets, over 300,000 monthly active wallets, and over $14B in traction volume in 2021. While this is the primary trading platform, it’s important to note that Opensea is fundamentally a peer-to-peer network to resell NFTs. It’s also a very “crypto native” platform, which has some notable impacts.

• When buying on OpenSea you are in control of your NFTs. Buying from OpenSea is a lot like paying for a physical item with cash from your wallet as opposed to paying a credit-card. By that I mean you have to keep the cash in your wallet safe, and you don’t have a third party (like a credit-card company) to help you dispute charges if someone steals your card. I’ll talk about wallet safety in a later post, but this is a huge, huge requirement.

• OpenSea is an open, decentralized network – meaning anyone can list anything. It is your responsibility to know if the “picture of an ape” is a real “bored ape yacht club” NFT or a fake. You have to know to verify the collection is real, and buy only real NFTs vs someone else’s fake.

• Lastly, most NFTs on OpenSea were initially minted somewhere else, and thus the majority of OpenSea is “secondary marketplace” sales. While some artists do release new NFTs on OpenSea, this is a minority of the transactions and listings

It is my personal opinion that buying on OpenSea requires you to have a “more than basic knowledge” of NFTs and crypto. You have to buy using cryptocurrencies (usually ETH), you have to buy using a crypto-wallet (such as MetaMask), and you need to know how to keep your crypto-wallet safe and secure (if you lose your secret-phrase password or get hacked, you could/will lose everything in the account). Additionally, for the novice I feel it can be a bit overwhelming – there are endless choices of NFTs (including many “fake” projects) and there are fees for almost everything you want to do (changing a sale price, canceling a sale, etc can cost literally hundreds of dollars in “gas,” a fee imposed to compute an on-blockchain transaction).

Nifty Gateway: I consider Nifty Gateway to be the best “beginners” platform. The platform’s entire goal is to make NFTs more accessible to everyone, even the crypto-novice. The advantages for a novice NFT collector include: (1) you are able to buy NFTs using $USD, including using a credit-card, (2) your NFT will be held in your account within NiftyGateway’s custodial wallet, making it more safe/secure, and (3) there are no transaction fees to make sales adjustments, such as listing for sale or changing the listing price (again, called “gas”).

Nifty Gateway offers daily drops, where you can mint and buy directly from the artist. They also offer a dedicated “secondary marketplace” that you can buy almost every popular NFT, even those available on Opensea. Additionally, if you ever want to move your NFT out of your Nifty Gateway account into your own, preferred wallet (such as MetaMask), you can easily do that for free (Nifty Gateway will even pay the gas transaction fee for the transfer).

Because of this, my personal advice to start your NFT investment journey is to use Nifty Gateway. Get used to the space with more mildly priced items, understand the artists/projects, and educate yourself before completely going all in on your own in a peer-to-peer network like OpenSea. Additionally, because Nifty Gateway offers daily drops, this is also a great way to participate in “minting” directly from an artist, which is often (although not always) the best opportunity to earn a profit with lower investment risk.

Initial buying & mitigating risk… 

As mentioned previously, if you are new to NFTs and want to start to invest, I strongly suggest starting on Nifty Gateway. You can set up an account with an email, link a credit-card, set up two-factor-authentication with your cell phone, and you’re ready to buy.

Again, there are 2 options to buy:

• Buy from the artist during a daily "drop [niftygateway.com]" (essentially an initial release during a set day and time)

  • Note: This is usually your best choice to earn profit b/c you're buying direct from the artist vs from someone who initially bought and now wants to resell for a profit

• Buy from the secondary "marketplace [niftygateway.com]" from someone who bought the initial release.

  • Note: Since you're buying from someone who is trying to make money, usually (although not always) this is more expensive.

At the very beginning, I suggest trying to buy during a "drop," which happens daily – or buy art you like in the secondary knowing there might be lower/upside, and/or knowing it might take longer to sell for a profit. There are 3 main types of drops, in addition to traditional auctions that work like regular 'highest bid wins' auctions (which I don’t recommend if you’re just starting out, that is unless you really like the art for the sake of art). For drops, to give you an idea of the expected value of an artist’s work you can easily Google the artist's name and look up past NFT sales – because all NFT sales have transparent transaction details, stored on the blockchain. More often than not, the artist has done other drops on Nifty Gateway or released artwork on another platform (such as MakersPlace, Foundation, SuperRare, etc) where you can see historical price/demand and gauge expected value.

To illustrate the types of drops, let's use the following Nifty Gateway drop from back on Oct 7th: https://niftygateway.com/collections/itwasalladream 

Drawing -- this is essentially a raffle where there's a set number of art pieces for sale, and you try to "win the chance to buy." If you don't win, you don't pay anything. If you win, you pay the listed price. And because of this, this is your highest chance to earn money (because supply < demand), but also your lowest chance to win (again, because supply < demand).

• Example: For this [niftygateway.com] drawing on October 7th, 345 people tried to win 1 of 30 editions (a set, finite amount of limited copies). If you had entered to win, but didn’t win, you wouldn’t be charged anything. If you entered and you won, your credit-card or crypto wallet would be charged $999. However, now [niftygateway.com] (at time of publish) this piece is selling for roughly 3x the mint price in the secondary marketplace – and price is set by current owners of the artwork.

• It’s important to note that drawings aren’t always a quick profit, but it does make sense this piece is selling for this rate as the artist, Brendan North, has historically sold single editions (the only copy) for $40k on other platforms (example [superrare.com]).

Pack -- this is the same thing as a raffle, but you don't know which piece you'll win. Similar to drawings, you only pay if you win, but if you win, the NFT you win is randomly chosen from “the pack” of available NFTs.

• Example [niftygateway.com] -- For this pack, there were 3 different NFTs with 10 editions (copies) each -- so 30 total NFTs available. 670 people tried to win. Those that won didn't get to choose which of the 3 NFTs they received, it was randomly assigned.

• This is your next tier for trying to make money, because similar to drawings Supply < Demand (although since you don’t know the NFT you get if you win, this is more of a gamble).

Open Editions -- this is the most common type of drop. Essentially the artist says "everyone can buy for x-minutes (usually 5-10)." This way, the Supply = Demand during that 5-10 minutes. You're essentially betting demand for that piece will go up over time – that after the 5-10 minute drop window demand will be greater than the quantity minted during the drop window. Now, historically and statistically the price goes up more than it goes down because NFTs are new and more money is entering the market, but this is not always the case and likely won’t be the case long-term (again because everyone could have bought during that 5-10min period).

• As an example, look at Oct 7ths open editions] -- there were 5,827 "gold" NFTs sold during the 7-7:10 drop window (sale duration) for $69. If you want to buy that piece today, you have to buy from the marketplace [niftygateway.com]. The secondary marketplace price, where you buy from previous buyers, is all supply/demand driven. This is why open editions are more risky -- you're guaranteed to be able to buy the art piece, but afterwards the price is more likely to fluctuate since everyone had a chance to buy originally for the lower price during the drop.

Generally the more editions there are the more competition there is to sell. Everyone has the same or similar piece, so you're competing directly with them to sell (which if desire to sell > desire to buy, races prices down). Because of this, the ultimate goal is to buy a "sleeper" -- an artist/drop that not a lot of people bought initially, and after the drop demand increases. That's the gamble. Although you can offset that gamble by looking up what else the artist has sold each day so you can gauge pricing.

Final Words on buying NFTs…

While headlines of insane valuations might make it seem otherwise, not all NFTs increase in value and even fewer will retain value over time. Take the time to learn the space, identify your favorite artists and artists native to this medium, and always only spend what you’re willing to “lose.” However, the great thing about investing in NFTs is you can never “lose,” you can only end up with a NFT that isn’t worth as much as you paid for it. For this reason, I also strongly suggest investing in NFTs you actually like, as opposed to ones you think others might like. After all, NFTs aren’t (just) a resale market – there are incredibly talented artists making amazing art that just happen to be created within a digital medium. Make sure you enjoy the space, the art, and the larger community aspect of NFTs.

So WTF are these NFTs anyways?...

If you’re reading this post, that means you’re interested in learning more about NFTs. Odds are it also means you’re entering this space with a lot of skepticism and asking yourself “how are these images worth so much f-ing money?” Good question!

Well, spoiler alert – not all NFTs are worth a lot of money. In fact, most aren't. But those that are worth a lot are valuable for a reason. And, despite what “normies” might comment on Twitter, that reason has nothing to do with money laundering or Ponzi schemes.

Now if you’ve googled “NFTs,” most explainers state that NFTs, or “Non Fungible Tokens,” are like digital trading cards – a digital file that is unique and tradable. While that definition is somewhat true, it leaves a lot out. I personally define NFTs as closer to a medium, not an end product. Let me explain…

Let’s say I draw a picture and upload it to my computer. That’s “just a jpeg” – meaning it’s literally just a digital image. All “jpegs” are unlimited. For example, if I email you the picture I just drew, you don’t actually have the image I drew – my computer makes a copy, and sends you the copy. You now have a copy of that image, and I also have a copy. There are now 2 copies of my image, with no record of who drew the image, when it was created, or anything else about that drawing. It’s “just an image,” with millions of potential copies from people right-click-saving and sending, and for this reason… it’s completely worthless.

Enter the completely revolutionary tech of NFTs. Let’s say I take that same picture, and “upload it to the blockchain” (for lack of a more technical explanation). The second that image is uploaded to the blockchain, that jpeg is now an NFT. Why? By adding that image to the blockchain, there’s now a record of who created that image (my account), when they created it (today), how many versions were created (one), along with other information. Most importantly, however, that image can now be transferred from me to you – as in actually removed from my possession (computer/account) and sent to your possession. This is similar to if I had just sent you $1, digitally, via Venmo. This medium of exchange is what makes NFTs so revolutionary, and so valuable.

What makes an NFT valuable?...

An NFT enables a digital asset to be valuable because the medium records who created it and enables it to be sold, but being an NFT doesn’t make that digital asset valuable by default. The digital version of the picture I drew and uploaded to the blockchain is as valuable as the physical picture I drew. Despite my B- in high school art, that drawing is completely worthless. Additionally, so is the NFT version.

Besides the sentimental value of an image, there are only 2 reasons why NFTs are actually valuable: (1) the creator, and (2) the utility.

Imagine if Banksy spray painted a picture and drove it to your house and gave it to you. That picture would be very valuable to a lot of people, and you could thus turn around and sell that picture for a lot of money. However, that Banksy picture is only valuable if it can be proven to be created by Banksy, otherwise it’s just a random picture “someone painted.” This is the exact same with digital files. A Banksy jpeg is worthless, as no one knows who created it or how many Banksy-created copies there are. However, a Banksy NFT would be incredibly valuable – if created from a verified Banksy address.

The idea of art appreciating in value due to the popularity of the artist -- “buying art now, and reselling it for more once the artist is famous” -- is the entire business model of the traditional art world. In the traditional art world, a buyer buys, and no (monetary) value is derived until the buyer resells it to someone else. The answer to “what do you do with that art” is simply “look at it” until it’s time to sell.

Unlike physical art, NFTs are completely digital. And with digital assets, “if this then that” logic can be built by artists to give utility to those that own their work. Those statements could be “if you own X, you could win Y” or “in order to buy Y, you have to own X.” This simple logic statement is what makes NFTs, as a digital medium, so incredibly valuable -- even compared to traditional/physical mediums. More on utility in a bit, but for now let’s focus on the monetization model.

Monetizing Art…

If you're not a traditional artist, let’s pretend you are for a second -- you’re Banksy before Banksy was famous. You pour your heart and soul into a new piece and sell it for $1k. That $1k is the only money you will ever make off that piece of art. Even if you become famous, and the buyer resells that art for $10k, you get nothing. And because of this model, traditional artists are incentivized to do 2 things: (1) sell their art to the highest bidder, and (2) create a lot of art to sell.

The key difference with NFTs is that they are digital. These digital works of art can contain “if this then that” logic, and almost every artist includes a “rev-share” percentage. That logic is similar to “if this sells, then 10% of the revenue goes to the artist who created the NFT.” Artists can now monetize every resale transaction of their art, forever.

This artist-rev-share is not only incredibly lucrative for artist, but it also changes the monetization opportunity for creators as a whole. Resale volume on old art can actually be more profitable in the long term than initial sales on new art. Volume is an NFTs artists key to success. Due to this, artists are often incentivized to create less art (quantity is tracked digitally), sell for lower initial rates to generate more sales volume, and sell (or give away) their art to previous collectors who are more likely to command higher prices. This “if you own my old art, you can win/discount/etc my new art” utility is how so many early NFT collectors have additionally made substantial money alongside their favorite artists. A small investment early in an artist’s career can lead to multiple discounts or free works of art from that artists at a later time.

Utility, Utility, Utility…

In addition to simply being able to get new art at a discount or win new art by having an artist’s old art, there are endless digital utilities that can be built into NFTs. Within the “if you own X, you get Y” logic, “Y” can be literally anything. It could grant private access to a website, unlock exclusive perks, provide monetary revenue-shares for licensing agreements – the possibilities are literally endless.

This utility is why you see projects like Bored Ape Yacht Club selling for hundreds of thousands of dollars -- the value isn't (just) in the picture of the ape, the value is because the company is creating an entire global brand at the intersection of tech, luxury, and street-wear, complete with merch, concerts, and video games where a portion of the money spent within that ecosystem will be given to NFT holders as a revenue share (via upcoming $APE token). Think of this similar to the Bored Ape Yacht Club NFT representing venture-capital investment share during a seed round, where holders get a % rev share as part owner of this ecosystem.

Obviously utility is only as valuable as the project/artists that created the NFT, but the key differentiator is that the right NFT can actually generate passive income simply by owning it.

Final Words on NFT Value…

It’s important to remember that NFTs are much closer to being a medium than an end product. That medium allows for proof of origin, record of transfer, validation of ownership, and more, all through a decentralized process where no single entity can modify or change any information about the piece. While people today are using that medium to buy and sell art and collectables, the underlying technology has huge implications for other fields. For example, blood donations are starting to be tokenized and tracked via NFTs. Yes, one day an NFT will literally save someone’s life. #RightClickLive

What’s up next…

In the coming weeks I’ll be publishing more content. Up next will be details on buying NFTs -- where to buy, how to buy, and how to decrease your investment risk if you’re just starting out and/or on a budget. So stay tuned!