6 Tips for Buying the Right NFT 🐝 🐝 🐝
If you're interested in buying an NFT (Non-Fungible Token), then you've come to the right place. With so many options out there, it can be tough to know where to start.
Here’s a little backstory. 📙
Rewind to 2017 I was working for a fintech, running their digital marketing activities. The first crypto boom is nearing its peak. At the time, I was a naysayer. I was seeing a lot of crypto startups making huge promises, with novice investors opening their trading accounts and buying Bitcoin without really knowing or understanding what they were buying, just hoping for a quick return.
I am fairly skeptical about most things and risk-averse, and I like to understand what I invest in, so I passed on this first wave of crypto investment opportunities.
Fast-forward to 2021. 🔥
₿itcoin is trading at $65,000, and NFTs start popping up in the news. I may be skeptical, but I am also curious. My thoughts were, “I need to understand how this works.” I get cryptos and understand their speculative nature, but now we have NFTs. Why would anyone want to own an image, let alone pay thousands of euros for one?
Finding the right NFT
So I started geeking out on all things crypto. I love to learn by doing. It started with the basics, and I educated myself on blockchain technology (Ledger and the Ledger Academy are great places to start), smart contracts, bitcoin, Ethereum, etc., just trying to understand the ecosystem.
I then looked into NFTs.
💡NFT stands for Non-Fungible Token. It's a unique piece of digital property that shows who owns a certain piece of content, like a painting, a song, or even a tweet. Unlike cryptocurrencies, NFTs cannot be exchanged for something of equal value, as each NFT is unique and has its own specific value. This allows NFT creators to create unique digital assets and sell their digital content as one-of-a-kind items rather than just a digital file that can be replicated and shared.
I created a Metamask, bought Ethereum, went to OpenSea, and looked to buy my first NFT. I had no idea where to start. There was so much FOMO, it was completely overwhelming. I discovered Discord and reacquainted myself with Twitter.
And I waited.
I waited for the right project. The one where I didn't feel like I was just throwing money around in the hope of making a quick buck.
🐝 Cryptobees NFTs by Guerlain
In May 2022, clever PR from the luxury brand (and LVMH-owned) Guerlain caught my attention. They were about to launch an NFT collection called Reaverse, where they were selling 1828 “Cryptobees”, or virtual bees, as NFTs.
The funds would be used to support a re-wilding project in the Vallée de la Millière nature reserve in France, and the project was supported by nature photographer Yann Arthus-Bertrand.
Big names and the financial backing of a large and well-known organisation were signals that this project would be a relatively low-risk first nab into NFTs. I told myself they would at least do everything possible to avoid a PR disaster.
🌿 I also like the idea of my money funding an ecological project (the NFT was launched on the more environmentally friendly Tezos blockchain).
💭 Overall, I don’t regret buying into this project. I was somewhat surprised at the level of FOMO that was associated with the level of rarity during the drop of the NFT. It definitely felt like a live auction, and there was a strong urge to be the first to buy the rarest NFTs, often with the hope of making a quick profit on the secondary market. The team of community managers were transparent as to the limited future utility of the NFTs and that the funds were being used to fund an ecological project. I was ok with this outcome as I enjoyed the artwork and the goal of the project.
6 Tips for Buying the Right NFT
Having gone through the process of buying a number of NFTs, I have learned a few lessons along the way that I wanted to share:
Determine your budget: The first step in choosing an NFT is to determine how much you're willing to spend and give yourself a maximum value. NFTs can range from a few euros to tens of thousands, so it's important to have a budget in mind before you start browsing.
Decide what you're looking for: Do you want an NFT for its collectible value, or are you looking for something more artistic? Today NFTs are mainly pieces of art, therefore it’s important that you like the art that you’re buying. Also, knowing what you're looking for can help you narrow down your options and find the right NFT for you.
Check the authenticity of the NFT: With the rise of NFTs, it's important to make sure you're buying a legitimate one. Check the seller's profile, read reviews, and look for any red flags before making a purchase. As you will hear in this space, Do Your Own Research. I would look for projects that are associated to large brands and that have a reputation risk that will ensure that the project is successful.
Consider the rarity of the NFT: Some NFTs are more rare than others, which can make them more valuable. Consider the number of editions, the artist's reputation, and the overall demand for the NFT when deciding if it's the right one for you. The key here is to check their Twitter and Discord communities. NFTs follow the basic rules of demand and supply with a sprinkle of FOMO. You will need continued demand for the project if you want to resell your NFT at a higher price.
Verify the provenance of the NFT: Knowing the history of an NFT, including who created it and where it's been, can give you insight into its value and authenticity. Again, check the news, Discord and Twitter to verify the source of information and to check the strength of the community.
Take your time: NFTs can be investment, so it's important to take your time when choosing one. Do your research, compare different options, and make sure you're comfortable with your decision before making a purchase.
So this is how I got into the Web3 “rabbit hole.”
What’s your story?