THIS IS NOT INVESTMENT ADVICE
This post is about the current state of NFTs and how to begin playing NFTs at the moment of writing, 2021-10-30. I took a look at NFTs over the last few weeks to see how NFTs work and how to play NFTs for gain. This is my personal experience.
NFTs are a scam filled part of the Internet. They are high risk and you participate in all of that at your own risk.
Do not doxx yourself, it’s generally advised to use an alias for all accounts. If you do not know what doxxing is yet this isn’t the game for you.
This is not an intro course to crypto or a philosophical discussion on NFTs. If you don’t understand how to get ETH and transfer it to another wallet this is not for you.
WHY ARE NFTs A PLAY ???
NFTs can appreciate rapidly and currently have a hot market. The highest value NFT collections have NFTs selling several times a day for hundreds of thousands of dollars.
SHOULD I PLAY NFTS ???
Most NFTs are not trading for a lot of money and will likely not appreciate in value over time very substantially.
NFTs are also a highly unregulated market full of manipulation, wash sales, scams, and rug pulls.
NFTs are complicated to get in to and in general its very small overall profits.
If you break any of these rules you will get 100% fucked out of all your NFTs and all of your ETH immediately and no one can help you.
- NEVER GIVE OUT YOUR 12 WORD PASSPHRASE FOR YOUR WALLET.
- ALL DMs ARE SCAMS, DO NOT CLICK ANY OF THEM.
- TURN OFF ALL SERVER DMs FOR ANY NFT PROJECT DISCORD SERVER THAT YOU JOIN.
- ONLY CLICK OFFICIAL LINKS FROM THE PROJECT DO NOT CLICK STRANGE LINKS.
- IF YOU GET AIRDROPPED AN NFT YOU DO NOT KNOW ABOUT, DO NOTHING WITH IT. DO NOT CLICK IT OR SELL IT OR ANYTHING.
People get scammed every day so be alert & don’t be stupid. Don’t sign your wallet to strange websites and things.
Each one of these terms is a whole thing.
- NFT - a type of crypto token you hold in a crypto wallet. It can have extra data attached, like a URL for an image, and can be sent to other crypto wallets.
- Collection - A set of NFTs in the same theme. Often an NFT project will mint 10,000 NFTs in a collection. The term is used on OpenSea.
- Asset - the image of the NFT
- Project - most NFTs are created by a project that is a group of people or a business, the general term refers to the collection of the NFTs and their assets, Discord community, etc.
- Bored Ape Yacht Club, BAYC - One of the highest priced NFT collections, features cartoon apes.
- Mutant Ape Yacht Club, MAYC - A derivative collection of BAYC, made by airdropping BAYC holders a “serum” that allowed them to mint a new MAYC NFT.
- CryptoPunks - One of the highest priced NFT collections, features 8-bit heads.
- OpenSea - An open marketplace for NFTs. Has auction and Buy Now ability. When an NFT is sold the creator gets a % of the resale price.
- MetaMask - A crypto wallet with good plugins. The current “standard” for use with NFTs.
- Gas, Gwei - The cost to complete a transaction on the ETH network, can be adjusted for priority.
- Gas Wars - When many people are trying to mint a popular project at once they can increase gas prices substantially to get priority for a mint.
- ETH / Ethereum - The most popular crypto blockchain for NFTs.
- Polygon / Matic - A new blockchain popular for NFTs but very scammy because of its low cost to mint.
- Airdrop - a new NFT given out to holders of an existing NFT
- DAO - a way to collectively give holders of an NFT a say in what the NFT should do in the future.
- Rarity - NFTs often have various properties or traits and each of those properties only appear in a certain % of other NFTs within a collection. Rarity can determine price.
- Rug Pull / Rugged - A scam NFT project.
- Floor - The current lowest price an NFT in a collection can be bought for.
- Snapshot - A snapshot occurs at a moment in time and is a record of all the wallets that hold a particular NFT. Used for airdrops.
- Mint / Minting - Being one of the first to get a new NFT, often at a low price. Minting is random, so you do not know the rarity of what you are minting.
- Private Mint - Before being available to the public you can get on a project’s whitelist, private mint is within a 24-48 hour window to avoid gas wars.
- Public Mint - Anyone can mint one at the minting price. Projects can sell out in minutes and gas can be >$2000 sometimes.
- Reveal - Many project mint their NFTs but they cannot be seen for a few days after launch. Rarity is also not yet revealed. They can still be traded on OpenSea but you do not know what it is yet.
You will need to do some prep before entering the NFT space. You will be going full Gen Z tech boi. Turn on 2FA for all accounts.
Most of the NFT stuff happens on Discord in text chat.
- Twitter account
- Discord account (Buy Discord Nitro)
- Twitch account
- Chrome browser on desktop
- MetaMask plugin for Chrome with an Ethereum wallet.
- 2ETH in your Ethereum wallet. ($4K - $8K at time of writing)
- OpenSea account linked to your MetaMask wallet
HOW TO FIND GOOD NFT PROJECTS
I regret to inform you that there is no such thing as free money, you will have to do some homework.
- Follow accounts like The Drop on Twitter and look in the replies for people shilling
- Use NFTCal to find new projects in advance
- You are not seeing a lot of Discord spam about the project
- You are not seeing a lot of Twitter spam about the project but you are seeing hype
- Featured on several “upcoming project” type YouTubes, podcasts, and articles
- Smallest Discord size of about ~10K-20K but rising daily
- Really large projects are >50K people in the Discord around launch
- Discord is active with real people
- Discord mods do not allow scam bots
- Discord is organized
- 2 weeks out from mint for time to get on the whitelist.
- Team seems reputable
- Project has something going for it outside of NFTs (known software company, large social media following, celebrity, known artist, online game, etc.)
- Roadmap seems realistic
- Art does not look like trash
- Art may have broad appeal to some demographic
- They keep 3-5% of all resales
- Whitelist is competitive to get & appears it will sell out
- Every project has a shilling channel, you can look through it to find new projects
NFT PLAY #1 - Buy Low & Sell High
When an NFT does a mint the price is generally very low. For medium size projects with 10K sized collections minting cost is usually anywhere from 0.05ETH to 0.1ETH (~$200-$500).
The cost of gas when minting can sometimes be very expensive. During a public mint on a popular project gas can cost >$2000 and the mint can happen in less than 5 minutes. Private mints allow you to mint during a long window so you can get the cheapest gas. Gas is cheapest around 3AM US Eastern time and can be as low as $60. The difference in gas price makes the public mint higly speculative.
You can get in a private mint by joining an NFT project’s Discord server and being active on the server or winning giveaways. Private mints will often allow whitelisters to mint more than one in the project.
If you can mint an NFT in a private mint you can often resell it before reveal or after reveal at a profit. If you minted multiple you may be able to cover the cost of all your minting.
The time it takes to get on a whitelist can be exhausting and time consuming. You need to join Discords for projects 1-2 weeks out from mint to get enough time to get on the whitelist.
If the project is not popular and you can only resell for +10% above mint + cheapest gas. It’s really not worth the size of the profit.
Assuming you are picking good projects I don’t recommend selling before reveal if you private minted. If you are picking good projects you should also be able to hold past reveal and see the floor increase over time.
After reveal your NFT’s image and rarity properties will be shown. Depending on how rare your NFT is it may increase or decrease in value. There are services which can tell you what your overall rarity is for a single NFT within a collection.
NFT PLAY #2 - The HODL
If you want to hold your NFT there can be benefits depending on the NFT.
Some NFT projects have a floor price that has appreciated enormously in the last several months. BAYC and CryptoPunks really only skyrocketed recently, and some NFTs have been turning small investments in a mint in to incredible gains.
Given a truly random mint you may have minted a rare. Rare NFTs in an average collection can fetch premium prices, often around 4-5ETH or more. On popular collections rares can sell for extremely high prices particularly as the project gets popular.
The market is saturated with bad projects so it can be difficult to tell what to hold. Picking high quality projects is important.
Some NFTs are actually tokens to a DAO and your membership in the DAO can have benefits.
Here are some examples of benefits from holding certain NFTs:
- Airdrops of new, free NFTs
- Guaranteed access to mint whitelists of other projects
- Access to “holder only” chatrooms
- Access to “holder only” giveaways
- Access to real world events, conferences, and project members
- DAO will take a portion of the profits from NFT resales and buy other NFTs to giveaway to holders.
- Exclusive merch
- Status symbol
NFT PLAY #3 - Go Big, Start an NFT
This is mostly in here as a joke but when you mint an NFT the people who made that NFT get that mint price.
If 1 ETH = $4,000 USD and projects mint 10,000 NFTs at 0.05 ETH they just got paid $2MM for launching that NFT.
NFT project owners then get a % every time one of their NFTs is resold, and it can be as high as 5% per transaction. Forever.
Q: Can I buy NFTs on OpenSea?
A: Yes. If you see something you like on OpenSea or you find a project you like you can buy on OpenSea.
Q: Is it really that rife with scams?
Q: Did you make money on NFTs?
A: I have not sold any of my NFTs but they are all worth more ETH than I paid for them, one of them is up 20x. I am not sure how actively I will participate in the NFT space but big projects could appreciate enough in value I am keeping an eye on it.
Q: Will NFTs be valuable long term?
A: I do not know. I believe if crypto or BTC tanks the value of NFTs will also fall rapidly.