For those deep in DeFi, NFTs can feel like a completely foreign landscape, one where usual financial valuation models do not apply.
But it’s clear that there are opportunities in these alternative assets, so here is a quick sweep of the burgeoning ecosystem.
An Overview on NFTs
Buying a Non-Fungible Token is essentially like purchasing a certificate. Like all certificates, NFTs can confer ownership of something else: art, virtual land, or some other unique asset.
The biggest advantage of NFTs lies in the fact that they live on the blockchain. As NFTs are issued on a decentralized network, there is no centralized party that can revoke the items. This enables true, censorship-resistant ownership.
And unlike physical art, where good forgeries are making it harder to authenticate pieces, it’s impossible to fake an NFT. As all transactions are stored on a public, tamper-proof ledger, it’s free to use Etherscan to verify the authenticity of a potential purchase.
Getting started with NFT
NFTs aren’t a catch-all category. When starting out, it’s best to choose something that you’re already interested in.
Some categories include:
NFT Crypto art
Crypto art has generated some of the biggest NFT headlines, such as the $69M Beeple NFT auctioned by the Christie’s auction house.
Since art NFTs are some of the simplest to create, there’s been an explosion of them, as more and more creators have discovered how to mint their work.
There’s also a wide variety of marketplaces, with one major distinction being the level of curation. Some are very strictly curated by a team, which makes it easier for a collector. These tend to favor already established names, though, and the stiff competition can lead to some competitive bidding wars.
Open marketplaces, then, require more manual filtering, but offers the potential of finding a diamond in the rough.
Unlike regular art, collectibles are usually released as a set, with each piece visually similar to each other. They’re usually designed to have traits and a rarity system.
Some of the earliest NFTs were actually collectibles. Released in 2017, CryptoPunks are considered to be one of the oldest Ethereum NFT projects, and are thus prized and hoarded by collectors for their historic significance.
Another popular project is NBA Top Shot, released in 2020. People can collect short clips of famous basketball plays, known as Moments. As they’re essentially sports cards, it’s found an active userbase of basketball fans. It also helps that Top Shot is affordable ($9 for a Pack of 3 Moments) and offers an easy credit card option.
There are blockchain games that issue their in-game items as NFTs. Since players can truly own their assets, it leads to these game economies having actual monetary value, where people can earn by playing.
Play-to-earn was cemented by the Pokemon-inspired Axie Infinity. Each pet Axie is an NFT, and they can be used to battle to earn tokens. In some parts of the world, it’s actually possible to make a living just by playing Axie
Game NFTs are also more practical than art of collectibles, due to their utility. The Sandbox Game, for example, issued NFT land plots. They can trade the land like any NFT, but down the line, they can also choose to develop the land or rent it out.
For further research, the Play to Earn magazine keeps track of all the different blockchain games.
As NFTs are a visual medium, music NFTs tend to take the form of video clips. Others have also experimented with selling album NFTs.
For example, the musician 3LAU earned over $11.6M by auctioning 33 NFTs of his Ultraviolet album. Privileges for the top tier included a custom song and exclusive access to music.
Other premium perks can include lifetime VIP tickets, backstage passes, and more.
3LAU and RAC are two of the best people in the space to follow. There aren’t any music-dedicated NFT platforms yet, but NiftyGateway has facilitated drops for big names such as Steve Aoki, Odesza, and Halsey.
Once you’ve chosen a category, get familiar with the different platforms available.
It’s also important to identify which options support your budget. Crypto art alone can range from $100 to thousands of dollars!
Some platforms are more accessible than others.. Nifty Gateway and Top Shot were built for a more mainstream audience, so they abstract away gas fees and offer credit card support. This is in contrast to the rest of the NFT platforms, which require owning some ETH cryptocurrency.
As most NFTs live on the Ethereum network, though, it’s best to be familiar with Ethereum wallets. Unfortunately, most of them don’t have native NFT support, so consider the Rainbow mobile wallet for viewing your inventory.
NFTs are a diverse ecosystem of their own, and they offer some fun alternative opportunities.
With their strong ties to real-world equivalents, it’s also a fantastic way to introduce crypto to other friends and family. From basketball trading cards to cute collectibles, NFTs open the gates for more types of people to jump into the cryptocurrency space.
Just remember: buy only what you like!