Up Your Investing Game With NFTs
For some months all I kept hearing about was an online piece of work called an NFT. If you have been living under a rock you more than likely have no clue what I am talking about. In the cryptocurrency space it is all the rave right now! But what are they?? According to coinbase, NFTs (or “non-fungible tokens”) are a special kind of cryptoasset in which each token is unique — as opposed to “fungible” assets like Bitcoin and dollar bills, which are all worth exactly the same amount. Because every NFT is unique, they can be used to authenticate ownership of digital assets like artworks, recordings, and virtual real estate.
Non-fungible - What is that?
Non-fungible means that something is unique and cannot be replaced with something else. Bitcoin, for example, is worth as much as every other bitcoin. A dollar bill, is worth exactly one dollar. “Fungibility” refers to goods or assets that are all the same and can be swapped interchangeably.
NFTs on the other hand are unique and cannot be swapped interchangeably. Concert tickets are non-fungible. Even if every Drake concert ticket is the same price, they aren’t directly exchangeable. Each represents a specific seat and a specific date — no other ticket will have those exact characteristics.
The reason why they are such a big deal is because they are appreciable assets, you can buy and hold or you can buy and sell these digital assets for a lot of money! Some of the more recognizable ones on the marketplace have come from projects by Bored Apes and Crypto Punks - earlier this year the Crypto Punk NFT(crypto punk 7524 aka Covid Alien) shown below sold at Sotheby’s for 11.75 million!! The creator put them up for auction, starting at $100 and the winning bid was astronomical.
This NFT titled Everydays: The first 500 days by Beeple was put up for auction at Christie’s starting at $100 and sold for $69million!!
The below NFT, also by Beeple was purchased for $66K and sold for $6.6 million - 10 times the purchase price!
Why are NFTs Important?
You can think of NFTs as being kind of like certificates of authenticity for digital artifacts. They’re currently being used to sell a huge range of virtual collectibles, including:
NBA virtual trading cards
Music and video clips
Video art
Digital art
Virtual real estate (in a place called Decentraland)
As with Bitcoin and other crypto that has boomed in popularity over the last year, NFTs have also soared — growing to an estimated 7 billion. Each NFT is stored on an open blockchain (often Ethereum’s) and anyone interested can track them as they’re created, sold, and resold. Because they use smart contract technology, NFTs can be set up so that the original artist continues to earn a percentage of all subsequent sales (royalties).
I am a new comer to the NFT space and only purchased my first in September of this year. Some NFTs that I have personally invested in are from Boss Beauties, World of Women, Women Rise and Alpha Girl Club. I purchased a Women and Weapons NFT for 0.175 ETH which is roughly $700 USD and have gotten a few offers, the best so far being for 1.18 ETH which is roughly $5000 USD. I have not sold it - I will be holding on to it for now or until I get a much better offer. The reason I chose to invest in some of the above NFTs is because they embody a cause or a mission that I can get behind. For example, Boss Beauties has a mission to educate and empower the next generation of Women and Girls through scholarships and mentorship programs.
Tweet from Reese W.
A recent tweet from Reese Witherspoon on NFTs and the need for more women to take up space in this arena. Reese is also one that I follow on Twitter as she is part of the large NFT twitter community.
How to Purchase NFTs
NFTs are bought and sold through an NFT marketplace built specifically to handle the blockchain transaction. NFTs can cost anywhere from a few dollars to millions of dollars for a digital asset thanks to the scarcity model. To buy NFTs, you must have a cryptocurrency and seek out a purchase through an investment marketplace. Most NFTs are sold on the Ethereum blockchain, meaning you must have the cryptocurrency Ethereum to purchase. Another crypto that’s used to purchase some NFTs is Solana (Sol).
Here’s how I purchase my NFTs:
You will need the cryptocurrency Ethereum (ETH) to purchase NFTs. I purchase all my cryptocurrencies on Coinbase. If you use my referral link to purchase your first $100 worth of crypto you will get $10 worth of Bitcoin. You will also need a wallet, such as the coinbase wallet or metamask and a marketplace to purchase your NFT on, such as Opensea.
Create an Opensea account - Go tot the website opensea.io and create an account. After which you can connect your crypto wallet to OpenSea, edit your profile, and begin interacting in the space. Here’s a video on how to open an account.
Connect your wallet - A crypto wallet, such as coinbase wallet or metamask, stores your Ethereum and processes transactions on the Ethereum blockchain. A unique wallet address will be generated and you will use this address to complete transactions. Here’s a short video on how to connect a wallet to your opensea account - in this case it shows how to connect a metamask wallet, but any wallet you choose will be set up in the same way.
Fund your wallet with Ethereum - You can get ETH, the digital currency that fuels transactions on the Ethereum blockchain, from a digital currency exchange like Coinbase. You will need ETH to "mint,” create and purchase an NFT.
Research available NFTs on Opensea - You'll want to choose an NFT that you feel has an upside value potential. The NFT can be some art, music, video, or even an item within a video game. You can even search Google or Twitter for NFTs. When looking at the upcoming NFTs, note when the sale is, what the cryptocurrency requirements are, and how many of the NFT are being sold. This helps you better understand the scarcity behind the NFT you are choosing. I am a member of an NFT community where these are talked about all day and I am also involved with a number of NFT communities on twitter (the only reason I am currently on that platform).
Bid on or Purchase your NFT - Make sure that there is enough crypto to conduct the transaction including any relevant fees. Fees can include the costs of purchasing and transferring cryptos, converting one crypto into another, and gas fees(amount it costs to process the transaction). When the NFT is purchased, it is stored in a crypto wallet on the same blockchain, on a different blockchain, or in decentralized storage. Mine are stored in my coinbase and metamask wallets.
*Coinbase will launch it’s own NFT platform in Q1 of 2022, I will more than likely switch from opens when that happens*
This information is so new that it can come off very confusing. It’s an entirely new world and a new way of operating and owning assets that it is like a foreign language when getting into it for the first time. There is so much to learn and the information given in this blog post only scratches the surface. Be sure to educate yourself and do your research before investing in any NFT. I can’t wait to see how this shapes the future.
Change is Here!
Another tweet from Reese - everything is changing and we must move with the times in order to not get left behind. Investing in the stock market is great and I encourage that but there’s a new way of investing that is not yet mainstream that in my opinion, we ought to get involved in NOW.
