NFT 101: Answering The Questions You Are Too Afraid To Ask
NFT 101: Answering all the questions you need answered: from what are they, to where to buy them, and why are some of them worth $150k USD?
Covered:
- What Are NFTs?
- What Are Gas Fees?
- Where Do I Buy a NFT?
- Which NFT Should I Buy?
- Why Can’t I Right Click and Save?
- Why Are Bored Apes $150K?
What is an NFT?
At some point, you’ve probably asked yourself this question and probably still have no clue. Which is fair. The actual term NFT means Non-Fungible Token, which doesn’t really explain much. But let’s break it down.
When something is fungible it can be evenly swapped, like 4 quarters for a one-dollar bill. An NFT differs, because it is a one of one and impossible to exchange for another or equal to another. The price has many factors, but it is always worth what someone is willing to pay. Just like anything else, the value is sometimes in the eye of the beholder. A real-life NFT may be a trophy you earned and worked really hard for, it has a high value to you or even priceless, but to someone else, it may hold zero value.
What are Gas Fees?
If feeling the pain of gas fees when you are at the pump wasn’t bad enough, you get to experience that same feeling every time you use ETH to buy an NFT.
Gas fees are simply the fees miners charge to facilitate your transaction on the blockchain. When it’s busier, the fee is reflective and higher in price. Ethereum is by far the most popular chain for NFTs (although others like SOL are aggressively entering the space) and it’s the most expensive, the gas fees are set by miners and change every second.
The GWEI gas tracker (small unit of measurement for ETH) can be checked on the Etherscan website. Cost can vary on the desired speed you choose, the higher the fee, the quicker the miner will process the transaction.
Source: Ethereum
Where Do I Buy an NFT?
There are many platforms to purchase NFTs, but the most popular marketplace by far is OpenSea. They recently surpassed 10 billion in total sales volume this past weekend. You can also choose to “mint” NFTs from the creators themselves and these are sometimes hosted on their own website. Minting is when you buy/create the NFT for the first time, once minted it is then on the blockchain and in your desired wallet, making you the owner of that NFT. You can then choose to HODL your NFT or bring it to a marketplace like OpenSea and sell it.
I thought of it like this:
OpenSea – eBay
MetaMask – PayPal
ETH – $
Again, there are many other platforms, wallets, and crypto you can use to buy/mint NFTs, I am just highlighting the most popular ones. If you are looking to buy on OpenSea there is a great article below with step-by-step instructions.
Recommended: How To Buy NFTs On OpenSea
This weekend, the leading #NFT marketplace #Opensea surpassed $10 billion in all-time sales between 629,867 traders. https://t.co/mSVpHOLNUQ
— Bitcoin News (@BTCTN) November 8, 2021
Which NFT Should I Buy?
That’s the most common question, right? Similar to what crypto should you buy, a lot is based on speculation and the unknown. First, in my opinion, you should always buy an NFT you truly like or love- especially for your first one. That way, even if the value decreases, you still hold a piece of art that you personally enjoy. There are many other factors you can use to determine what would be your best plan in the NFT space. Just like any investment, it truly comes down to your personal plan and goals. The difficult part now is it’s the Wild West out there and everyone has some sort of NFT project launching. Sadly, A LOT will end up failing.
Some factors I’d like to highlight are below:
- Community/Discord: This is by far one of the most important factors. In my opinion, communities are the true backbone of any successful project. The art and utility are important, but the project goes where the community takes it. When everyone is bought into a vision and goal, it can create some serious traction (BAYC, more below ). Discord is a great place to get the pulse of any new or existing project. You can get a sense of how the community is and usually get any questions you may have answered. The strong communities are always the welcoming and helpful ones, not the ones where they make it seem as if it’s a special club to be in. The term ” we are going to make it (WAGMI) ” rings very true in a lot of successful Discords/Communities.
- RoadMap: Just like with cryptocurrencies, most NFTs come with a roadmap. It is where the creators show you their plans for their NFT and its utility for the future. We are moving fast away from the PFP (profile picture) 10K collections and moving more towards utility, tokenomics, Metaverse, etc. A lot of people who buy NFTs now are wanting to know what their NFT will do for them or how will it earn them passive income. The Roadmap should lay out the plan clearly with timelines and action plans on how they plan to obtain their goals.
- Utility: Utility. Utility. Utility. Owners of NFTs now want more than just a cool PFP. They want to be paid to own their NFT, they want free mints of NFTs, access to launchpads that get them pre-mints for new projects, etc. With the right projects, your NFT is a vehicle to a lot of different avenues. When looking for an NFT always ask yourself, what does this NFT do for me? One of the NFTs I own is a part of The Doge Pound collection . His name is Doggy #3952 (you might recognize him from the featured photo of this article). Although I love him as my profile picture on various social media outlets, this JPEG is much more than an image. There is a ton of utility with him and the community has been a blast to be a part of. One example of utility is I was allowed to mint the puppy pictured below for free and just minted a Halloween NFT for free as well for having both Doggy and Pup. Find their collection on OpenSea here.
Why Can’t I Right Click and Save?
Well, you can, technically.
You can also go to Paris and take a picture of the Mona Lisa, print it on a nice canvas at a local print shop and hang it in your home. The problem is it’s not the actual Mona Lisa- it’s a copy of the original.
The same concept applies here. When you right-click and save you don’t own the original NFT that is on the blockchain, you own a copy of it. The nice thing with NFTs and the blockchain is you never have to trust, you can always verify. The problem with a lot of physical items/collectibles is there are incredible replicas and fakes out there and sometimes no way to verify authenticity.
Banksy is a great example for physical art collectors- it’s very difficult to ensure you are buying something authentic. When buying physical art or collectibles on the open market, you always run the risk of buying a fake.
Luckily with the blockchain and NFTs, you can have peace of mind knowing you’re buying exactly what you think you’re buying. Yes, there are fake NFTs as well, but you can easily check the authenticity on the blockchain.
NFT 101: Why are Bored Apes $150,000 (30ETH)?
You are reading that right. The floor price (lowest price NFT in that collection) is 30ETH today.
That means some people choose to buy a BAYC over a house, crazy to think- but why? They’ve established themselves as one of, if not the “Supreme” or luxury brand of the NFT world and after celebrities like Steph Curry and The Chainsmokers jumped on board, it was confirmed. Since then, they’ve had multiple sales of over $1 million dollars USD.
Recommended: Steph Curry Goes On Crazy NFT Buying Spree
BAYC combined perfect timing, great art, great community, and people looking to park their ETH somewhere. The prices of each BAYC moved so quick, it’s crazy to think when they first were minted in early April 2021, they were less than $200. They’ve laid the groundwork for a lot of new NFT roadmaps, for example- their Bored Ape Kennel Club airdrop and mutant serum is used by a lot of NFT projects today. It’ll be very difficult to see something like this again in this short of a time window, again they had the perfect storm to get to where they are today.
Bored Ape Yacht Club #8135 sold for 500 ETH ($1.6M) pic.twitter.com/WFFwVooQ7n
— NFT (@NFT) August 30, 2021
Be sure to also check out Georges NFTs on OpenSea. Number 0007 is currently up for bid and more to come!
Below is a very interesting projected timeline of NFTS, as you can see we are very early. We are currently on to gaming, but I am personally most excited to see what the “Brand and Culture” bring to NFTs and overall adoption.
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Text source: CryptosRus
