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SCALE 89 Guide to NFTs
Hey👋, I’m James and welcome to SCALE 89. This is a special article about the NFT mania and I plan to update this article as I learn more. Thank you for reading and sharing SCALE 89
We are in the middle of a new craze sweeping the internet and social media — NFTs. Some people are buying and selling NFTs for crazy gains in weeks or months time; in some cases making $100K plus on an NFT sale. Here is the free SCALE 89 guide to NFTs to help you get started in this wild new online craze.
What are NFTs?
Non-Fungible Token (NFT) is a digital asset on the Ethereum blockchain. They are unique digital assets that live online in the blockchain which is an digital ledger of transactions and transfers. NFTs are unique, one of a kind, and show proof of ownership so you can see who created it, who has sold it, and who owns it. This list of transactions all lives on the Ethereum blockchain. The vast majority of NFTs today are on the Ethereum blockchain but there are some new projects on Solana. Most NFTs will require you to have Ethereum and a crypto wallet like Coinbase wallet or MetaMask. The newer projects on Solana would require you to have Solana coin and Phantom wallet.
Where can I buy one?
Solanart.io (Solana NFTs)
You can purchase an NFT on OpenSea or Rarible — these are the two main platforms currently. I have been using OpenSea and it is easy to use and it is the most popular site. On the OpenSea website, you can connect a wallet like Coinbase wallet and browse for NFTs. They also have a ranking system to see what is popular and trending. Since there are thousands of options, the ranking system and stats are super helpful. OpenSea also has special projects that they promote and they have a trending system.
Solana NFTs are new and run on a website called Solanart.io but this site is still in beta. The fees on Solana are much lower and around 1 cent but there are few NFT projects available on Solana at this time. I personally see Solana NFTs as being more risky at this time.
Ranking and Stats: Top NFTs
In the Ranking, you can filter by 24 hours, 7 days, and 30 days. This is a great way to see what is popular right now.
The Floor Price is the baseline price for an NFT in the collection. The floor price moves up and down depending on the current demand.
When you view the collection, you can see if they are verified by OpenSea with a blue check. Verified collections have had more transaction volume.
You will have to connect a wallet like Coinbase wallet or MetaMask. I have used both options and they are very similar. Personally, I prefer the Coinbase wallet.
Keep $150 or more ready for the Ethereum Gas Fee. The gas fee is the cost of doing a transaction on Ethereum. The fee will vary based on the time of day.
DO NOT share your wallet key with anyone! Be careful about people that will try to help you in Discord as they might be a scammer.
There is no guarantee that you will make money with NFTs — You could invest in a project that goes down in value. Please do your own research into the NFT project.
How To Pick an NFT
When I was getting started, I relied on the OpenSea ranking system. I felt more comfortable buying something that already had a Top ranking. The first NFTs that I purchased were from Parallel Alpha and they had a Top 3 ranking at the time. Projects that are brand new tend to be more affordable, but they may lack a large following and might not be verified. When you pick an NFT, look for projects and artists that you believe will succeed. Here are some other ideas to help you get started:
Twitter is a great way to learn more about the NFT project. You can see how many followers they have, how many people like posts, comment, etc. This is a great way to gauge the engagement of the NFT collection. This also gives you insight into the marketing and communication style of the NFT management. Do they have a dedicated marketing person running social? Do the likes and retweets seem legit? There are a lot of scams and bots in NFTs.
Join the Discord Channel
Most NFTs have a Discord channel that you can join. This is a fantastic way to learn about the project, founders, and engagement. You can see how many people are in the Discord, how many people are online, and read through the posts. Is the Discord channel active? Does the channel seem positive and forward looking? Do the people in the Discord seem real?
Project Roadmap / Website
NFT projects usually have a roadmap for their plans in the future on the project website. You can see their plans for marketing, growth, and new releases. Many projects have giveaways in the roadmap to attract new people. They may also have online events, new releases, or plans for new development like a game. This can give you a sense to see where the project may go in the next 6-12 months.
Social Media Influencers
We live in a social media world filled with Influencers and many of them are getting into NFTs. This can also be a way to gauge popularity in a NFT project. If an Influencer has millions of followers and they start promoting a specific project, this could be a good sign. The power of viral marketing and Twitter is really important with NFTs as their followers may start buying those NFTs.
Roadmap Example: Lonely Alien Space Club
This NFT project has a great website with the roadmap for future plans.
Ethereum Gas Fee
When you purchase an NFT on OpenSea using Ethereum, you will need to pay the Gas Fee. The gas fee is a payment to cover the computing energy required to process and validate transactions on the Ethereum blockchain. The gas fee will vary based on the time and day and it can range from $40-$150 or more. I’ve heard that the gas fee is normally less from 2am-7am EST. When I started buying NFTs it was normally around $30 but now it is much higher.
Update: The Ethereum gas fee has gone up a lot since I first wrote the article. It is now common for Gas to be $90-300 per transaction.
Minting an NFT?
When an NFT project is brand new and being launched, you have the ability to mint an NFT. This means that you will get a random NFT from the collection. Minting occurs on a specific day and time. Popular collections can sell out in minutes so you might not even get one. I recently tried to mint an NFT from 8 Bit Universe and my transaction was pending for 15 minutes. I was unsuccessful during the minting process so I cancelled the transaction to avoid the fees. I ended up buying two NFTs from the 8 Bit Universe project on OpenSea and they were below mint price.
NFT projects remind me of small Tech startups. They have a lead developer, operations person, and marketing. Many of the NFT projects tend to have 2-3 people in charge so it is like a small company. Other will have more as they grow and expand to add more devs, ops, and marketing. Investing in an NFT is like investing in a startup! There are risks involved with investing in a “company” so small. I predict that many NFT projects will fail, dissolve, and go to zero. When you are evaluating an NFT, do research into the team running the show!
Note: Investing in NFTs is like investing in a small start-up. There are risks with investing in an early stage company / NFT project. Please do your own research!
Many NFT projects have 8,000 to 10,000 items in the collection. Some NFTs are rarer than others based on the attributes in the image. This means the art has features that others do not have making the piece more rare and valuable. For example, in the Lonely Alien Space Club NFT, some Aliens have a fur coat or lazer eyes. These limited features can add to the value of the NFT since fewer than 100 Aliens have them in the collection. When you consider an NFT, look for the attributes or properties that might make it unique. You can also check websites like Rarity Tools to see if your NFT might be rare.
There are tons of scammers in the NFT space. They might reach out to you via a DM in Discord or Twitter trying to “help you.” Do not share private info with people online. Do not share your private key with anyone. Do not share your wallet QR code with anyone. Please be careful as some people will try to get your private info and steal your NFTs and Ethereum.
DO NOT Give your seed phrase to anyone.
DO NOT try to sell or exchange an NFT with a randon person on Discord. This could be a total scam.
Always double check the link for the NFT project before you mint. Some projects use “.io” so please double check the link. If you mint from a scam website, you could lose your money or NFTs in your wallet.
Visa jumps into the NFT space and buys a CryptoPunk for $150,000. This news created tons of online buzz for the NFT space as new buyers rush to get one!
Coinbase announced they will be launching an NFT platform to compete with OpenSea. It will be ready in Q4 of 2021.
NFT Project Ideas
Here are the NFT projects that I am now invested in. Please keep in mind that this is not investment advice. My NFT holdings may change at any time.
Lonely Alien Space Club
Koala Intelligence Agency
Art Blocks Factory
Secret Society of Whales
The Fiiidgt Collection
NFTs are a popular craze the is blowing up on social media as people share and post their NFT purchases. Some folks are walking away with massive gains and in some cases well over $100K in profit. People with Ethereum are ready to spend it after the massive run over the last few years. Many NFT projects are limited to 8,000 to 10,000 items making them unique and scarce. However, there are thousands to choose from so it is hard to pick a winner! Keep in mind that some projects will fail and go to zero so make your decisions with that in mind. I am glad that I own some NFTs and I’m excited to see where the projects go over the next 6-12 months.
I plan to add new updates to this article as I learn more about NFTs!
Disclosure: Not Financial Advice / Not Investing Advice
SCALE 89 and The Author does NOT provide financial, investment, legal or tax advice. None of my content can be construed as advice. The author is not advising you to buy or sell an NFT. This newsletter, article and my tweets are for informational and educational purposes only. By reading my content, you are acknowledging that this is not advice. Please note that my holdings can change at any time.
I own NFTs and my holdings can change at any time. Please keep in mind that some projects will fail and go to zero. Please do your own research and due diligence.