I bought my first NFT and this is what I learned
Recently I have been following a few NFTs projects on the Solana network and, after some time and hesitation, I finally decided to buy a few.
Learning as much as possible and…why not…making some money were the my main goals and in 2 weeks I ended up owning a total of 10 NFTs from 6 different collections.
Even if I don’t consider myself an expert by any means, I learned a few things which I’m happy to share here.
Photo by Andrey Metelev on Unsplash
Where to buy NFT.
There are basically two ways of buying NFTs:
Primary Market: here you buy directly from the creators when NFTs are generated (minted). In this case there's no possibility to choose your NFT since it will be randomly assigned to you and sent to your wallet after the purchase.
Secondary Market: here you buy from other collectors on marketplaces like OpenSea or Solanart.
I went for the primary market because I wanted to try it out and also because mint price is usually lower that what you would pay in a marketplace. Of course there’s no guarantee that the price won’t dip below right after launch so it is extremely important to make a sort of due diligence before buying.
As most of you would do before buying anything, I made my own research to avoid scams and to increase the chances to bet on the “right horse”. It took some time (and some mistakes) to find the right set of information to make a kind of informed decision and here follows what I discovered:
Based on my experience, 3 are the main elements you want to check before buying NFTs:
Considering that the supply is constrained (NFT collections consist of a limited number of digital assets) the higher the demand the higher the price. You can get a good sense of the demand by "measuring" the interest around a specific NFT collection. Twitter is a good place to start but Discord is where the “community” really gathers.
The size of the Discord community, as well as the number of followers on Twitter, is a good indicator of the level of interest. As a rule of thumb, +15K community members is a good start!
It is not only about size though, engagement of the community is an important parameter to consider as well. Unfortunately there’s no magic number here so my trick is to simply compare different Discord communities against each other. It will not be hard to spot which one has the highest level of engagement.
General warning about Discord: It can be very hard to navigate all channels and cut through the noise. My advice is to only check the "announcement" channel which is used by creators to share official information.
Before buying NFTs you wanna know more about the team of creators:
Who are they?
What is their background and specific skillset?
What’s their track record?
You can find the creators team on the collection official website and then google around to grasp as many info as possible.
Before buying NFTs you wanna know how the project will evolve over time or better how the creators team would like the project to evolve over time:
Does a roadmap exist?
What’s the short, mid and long term plan?
Does the roadmap make sense to you?
When looking at the short, mid term plan (3-9 months) I would like to see concrete milestones with clear indication of what will be released and when.
When looking at long term plan (> 9 months) I would like to see the team vision, the end goal (metaverse integration, multi player game, toys collections, etc ).
In general I tend to focus more on the short, mid term because the longer the time horizon, the higher the uncertainty.
How to buy NFTs
Decision taken...based on due diligence outcome you are going to buy your first NFT!
Buying on the primary market is pretty straightforward:
Before the mint date. Follow the official website or any other official channel (Discord, Twitter) to know when the collection will be created and sold (mint date)
At the mint date. From the official website connect your wallet and click on the mint button (they will make the button more than visible). Consider that, in case of very popular collections, minting could not go through due to congestion problems so I would advice to always verify the transaction by checking if the NFT has reached your wallet.
Be aware of the high risk of scams. I suggest to always to always make sure you are connecting the wallet to the official website and follow instructions shared through the official channels.
What happens now
Congrats! The NFT is in your wallet now and you can enjoy your new "digital toy" as much as you want.
In case you want to sell your NFT instead, you only need to "list" it in a marketplace (secondary market) and wait for a good offer to come.
Be aware that the NFT price can be very very volatile which makes this form of "investment" very speculative and risky.
At this point you might be curious to know if I managed to achieve my original goals:
Learn as much as possible. I would mark this one as Done. Lots of learning about NFTs in general and the "world" around them.
Make some money out of it. I would mark this one as Partially Done. I sold some NFTs with a decent gain but I still own most of them either because I really like them or because I'm waiting for their price to raise.