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The Complete NFT Introduction
Here is an article that I hope can help many people, especially beginners, learn about NFTs and change their lives.
So, I’ve been very busy with my projects recently and fitting into my “founder” role more. But, I’ve been thinking more as the space grows about how hard it is to keep people up to date with the side of NFTs that I believe they should know about.
Compared to around a year ago, when I started to share more information about NFTs on Twitter, many articles, videos, and sources of information are now dedicated to “teaching people about NFTs”. Some amazing, and some that will lead you down the wrong path. My Twitter has grown to a point where it’s impossible to have 1-1 conversations with relatively new people, and I do not have time, so I hope this article can help any of you reading. And, if this article pushes you to make your first 6-7-8 figures or helps you pay off debt, do send me a message on Twitter :]
This will be a fairly long article, and I am not pushing you to read it if you don’t want to, but rather if you are truly eager to learn about this space - then I suggest you do. Many “beginner NFT” articles teach you how to “trade NFTs” rather than ones that teach you how to participate in the community, and I think this is the most critical part of it.
Before you start anything, let’s start from the basics of the basics and help you understand some core things that you need to know.
→ What is an NFT?
An NFT (non-fungible token) is a way to prove ownership of an asset, both digital & physical — an asset could be anything ranging from art, gaming items, music, etc. It proves ownership of an asset by utilising the blockchain; a public, permanent and immutable ledger which contains all transactions that occur between parties. This allows anyone to view the current owner of an NFT as well as all previous owners. Think of a ledger as a book that holds every detail of a specific transaction on it, but that book cannot be erased or destroyed.
Each NFT has a unique ID on the blockchain meaning it cannot be forged or duplicated by any means. If you and your friend were to upload the same image onto the blockchain as an NFT, the images files will both be the same but the token IDs will be unique.
But can’t I just screenshot it for free?
This is a common question asked by many when you first hear of NFTs, but the answer to it makes much more sense than you think. I can go the generic route using the “Picasso” example which is:
You can buy a painting by Pablo Picasso online for $100 that looks exactly the same as his other paintings but it won’t be worth millions like his original paintings because you have no proof of ownership. It’s just an artwork. Collectors are buying the NFT so anyone online can verify the authenticity of it.
Or, one that leads you to the answers:
A) When you buy a digital game item, if your friend takes a picture of it, does it mean he now owns it?
B) If you buy a ticket that gives you access to an exclusive club with benefits, and your friend prints out a ticket that looks the same, is your ticket now less valuable?
In the NFT world, the general currency you will have to get used to is Ethereum, but this isn’t the only thing you need to understand.
A crypto-currency is a digital asset designed to work as a medium of exchange where the transactions are all recorded on the blockchain. You can buy goods & services or trade them for profit. The top coins are also liquid meaning that you can transfer them into real cash (fiat) using exchanges whenever you want.
Typically in the NFT space, platforms require you to own a wallet where you use these Cryptocurrencies, to control your artwork and mint it or buy and sell an artwork. These are usually non-custodial wallets which are different from the Cryptocurrency exchanges that are custodial. Non-custodial meaning you have control over your private key (which is basically access to your account) & custodial meaning someone else owns the private key of your account.
→ NFTs on Ethereum
Hopefully you understand what an NFT is by now and more about Cryptocurrencies. Again, these are the basics of the basics. Now, here is an article — “A detailed beginner's guide to collecting NFTs on Ethereum.” — that will help you understand more about the Ethereum blockchain and how to get started trading NFTs.
Here are a few things I look for in potential projects that I want to invest in:
What are the holders and community around this specific project interested in? Are they spamming in the Discord when price drops a bit? Is price their only main focus?
I tend to avoid projects that focus too much on price even if the project isn’t utility based. A strong community isn’t one that reacts negatively because of -10% price movements.
How is the volume of the project? Is it completely artificial? Is there any wash trades going on behind the scenes? When was the last sale?
This isn’t a key definer, but something I definitely take into account. It allows me to understand things like volatility better. Strong signs of volume compared to high volume days and 0 volume days is important to me.
Are founders focused on this project? Do they have multiple that they are working on without giving updates to this particular one? What’s their background?
This is dependant on a lot of variables of course. And sometimes, I invest into a lot of anonymous founders - it may pay off but understand your risk/reward in situations like these. Builders who work in the bear market and bull market are what I look for.
Who owns most of the supply? Is it a flipper? How was the initial project distribution like? Is the top holder selling or holding?
Another factor that isn’t a key definer compared to the others, but at least something that helps me understand when to enter and when to leave. If distribution is at a point where price can be suppressed by a large holder looking to exit, I am more cautious.
Now, I am a short-term trader in most projects, as I do not believe that a majority of projects will exist 1-2 years from now let alone 5. Projects with a long-term vision are more attractive to me than short-term pump announcements.
And, as the tweet above says, there is more than 1 strategy to investing. It’s more of how you approach it. Are you willing to stay illiquid or liquid most of the time? Do you believe in 1 project more than 10 promising ones coming out?
→ Other Blockchains
A key thing to note is that there are multiple blockchains that exist. Ethereum is one of the few. To name others that support NFTs: Tezos and Solana. I started on Ethereum and I use it to this day, it’s important to understand the pros and cons for them all, and the usage of the different chains. The article above is the typical route on how users trade NFTs on the ETH blockchain.
→ Discord & Twitter
I would say “Social Medias” but Discord and Twitter are the best and only places to learn more about NFTs and find the latest alpha by far *imo. In the private channels and groups, people are making millions through NFTs, or x100'ing their net-worth over night. And no, I am not talking about “paid groups” or “paid courses” but something more wholesome — friend groups. That’s it. Your goal shouldn’t be to “get into” these friend groups. It should be to leverage Discord & Twitter to become more knowledgable on the topic of NFTs while simultaneously communicating with others who are striving to do the same.
As said at the start of this article, this article is going through for how to “participate in the NFT community” rather than just trade. You can just trade, but I honestly recommend you to do both. And, there are also no experts in this field, but follow the right people at least. The wrong people have ulterior motives that benefits them at the cost of others. Following the “right people” is not something that can be recommended but rather learnt through participating in the community. Usually, the individuals respected by the individuals who are respected is a good start to understand who to follow.
As you scroll through your Twitter feed or Discord channels, your brain will begin to memorise some key things that are essential to know.
→ Understanding the NFT (& Crypto) lingo
Yes, you heard that right. If you did not understand some of the words used in this article, go over this and then read from the top again.
It’s crucial to understand the words you may see flung around and here is a thread that is perfect for you:
Moving onto a bit more why I believe you should participate in the community — building a project, investing in the ecosystem, talking with builders in the space, finding a friend group.
Because, ultimately, I wholeheartedly believe NFTs are going to be massive. Verifiable digital ownership.
The sooner you understand, the faster you will get that “aha” moment. I’ve spoken with a bunch of people who believed in NFTs early, they are all financially free and have no need to be, a) buying NFTs. b) talking with people in this space. c) building something in this space. There is another motive here, one not particularly financially driven. But, the reason why I mentioned hitting 6-7-8 figures at the start of the article is because it’s entirely possible and the Crypto space has proven that already. The NFT space has also proven that with even less infrastructure built around it. If NFTs are going to be huge, being early to projects with potential will reward you as an investor. It’s that simple. And, true believers will carry on building/learning in the bear market — it’s demotivating but those who last will strive in the bull market.
Using an example of blockchain gaming, a field that I am actively working on, it’s something I believe will overshadow the traditional gaming industry. Most traditional games are extractive of time & value affecting them irl, they give players a sense of achievement and reward them with items that aren't player-owned. And, digital assets being purchased with $ is a norm already. But, this time the digital assets will be player owned thanks to NFTs.
Example 2, digital subscriptions of companies that provide a service. Whether that be Netflix or Spotify. It’s a norm to pay for these digital subscriptions that come with utility. Same as NFTs, it’s not just a “JPEG”, some are fully utility based. You can’t replicate some of these experiences because a lot are community-driven.
And, last example, the “JPEG” one. Crypto Art is a part of the NFT space. Digitally-native artists don’t have to sell prints for $10 each on a third-party platform. They can sell individual 1/1s to collectors just like paintings sell in the real world, without the hassle of a physical. And, it goes a lot deeper than this. I’ve been in the scene for around a year and I’ve seen at least a dozen artists I can name that went from being underpaid to being financially free—and they are still making art.
･ *ﾟ “The JPEGs”
･｡ *･. The first thing that comes to mind when people think about NFTs is
｡ *.｡ ｡･ what they visually see on the outside, but the more you research, the
°*. ﾟ more you’ll understand that it’s a lot more than that.
ﾟ*. ｡｡ The JPEGs is just a meme on the NFT side of things that originated ･ ｡ ･ﾟ from people who did not see the value in what they visually saw first
*.｡ but rather dismissed it as “why did this JPEG sell for this much”.
｡°*. ｡*･｡ A reminder: Something is worth whatever someone will pay for it.
At the time of me writing this, the NFT space has multiple million dollar sales that will occur randomly, and no one will bat an eye. People will shout “steal” at an NFT of a monkey that sold for $150K, because the rest of his look-a-like NFTs are selling for $200K.
It’s important to understand the level some people are playing at. And, the USD value of things will hurt your head if you try too hard to understand it. It’s better to not. I recommend pricing in ETH terms.
→ The Metaverse
So, arguably, the hardest topic to put in words. And, a word that you will see every big company start to use. Just like every small project in the NFT space is starting to use it. My simple definition of the “Metaverse” that I like to use, and it’s subjective, is:
A virtual world, and a world that can be as simple as… a game, social platform or as complex as our current world in digital format.
I won’t speak too much about the Metaverse in this article, but it’s something I highly recommend you research (as you’ll see it mentioned everywhere) if you are looking to get into NFTs. The reason why I believe the “Metaverse” aligns with the concept of NFTs is my initial reason that NFTs are Verifiable Digital Ownership. The Metaverse will make you extremely excited about the idea of NFTs.
To conclude, this article is a brief summary of things that are essential to know if you are excited to learn more about NFTs and/or participate in the community in some way. Share this articles with your fellow friends if this helped. I hope to see many more of you find success in this space, a few years down the line - we will look back at this as a moment of time where it was so obvious to learn more about NFTs.
I truly believe that. Anyways, WGMI.