So, you want to get into NFTs?
But… you probably don’t know where to begin or how to pick which NFTs to buy, right?
This article aims to guide you through the process of evaluating and choosing NFT projects before you buy.
Please keep in mind, you should always do your own research or DYOR (as you’ll learn). The information in this article is not intended to be investment advice.
Alright, let’s dive in.
1. The Artwork
We don’t think this is mentioned enough… but the first thing you should consider about a project is the art itself.
Don’t look at previous sales numbers or anything like that.
Just ask if you’d want to own it just to own it. If not, it’s likely not a good project to explore further. This is the easiest way to rule out a project.
Of course, everyone has different goals by getting into NFTs. You might just want to make a quick buck and get out. If that’s the case, this probably isn’t the right article for you, either. We’ll show you how to pick a good project with a good community but can’t tell you that it’ll hit the moon.
These are just the things we’ve noticed that make the most significant difference when you’re getting into the space.
2. Participate in the Community
Unless you’re buying NFTs purely for the art or only as an investment, one of the first things to research (after the artwork) is the community surrounding the project.
Take note of where they’re building community (or if they’re trying to at all).
Many projects just launch a place for people to connect with each other but don’t engage with their holders (those who aren’t selling their NFTs). So, it’s always a good idea to engage with the community, read Twitter posts, get a sense of what they’re saying and what other people are saying about the project. Spend time in the discord and ask yourself if it is a place you would regularly want to hang out and spend time.
Take note if the conversation feels helpful or toxic. You likely don’t want to join a toxic community.
3. Utility or Promise of Utility
The next thing to look for is the project’s utility or promise of utility.
What’s utility? Great question. A lot of people are still defining what utility means inside the NFT space. Utility is defined as “the state of being useful, profitable, or beneficial.”
So, just looking at the straight definition of utility as it connects to NFTs, you can think of an NFTs utility as the benefit it brings to you (the person owning or holding it).
There are many ways that projects attempt to add utility to their holders (those are the people who have purchased an NFT and are not selling it). Let’s go over a few of the common ways:
The first level of utility is what you could call “internal utility.” This is utility within the project itself.
For example, holding a specific NFT may generate a certain amount of coins or tokens you can use to perform different functions inside that project’s ecosystem. Perhaps you want to add a bio to an ape from the Primate Social Society (PSS) or change its name. You could use their SILVER token (earned by holding one of their Silverback NFTs) to do that.
Another example of internal utility is the promise of future airdrops. These are usually more NFTs like kitten companions for a PSS Ape.
How NFTs will provide utility in the metaverse is still in conception.
This type of utility is probably the least developed so far. It could look like NFT holders gaining access to certain areas in online communities and games… or extra perks.
Real-world utility is likely the most valuable type.
This type of utility takes the form of exclusive benefits or opportunities that only the holder of an NFT has access to. A well-known example of real-world utility is Gary Vaynerchuk’s VeeFriends project which gives holders access to his in-person conference VeeCon.
As more and more businesses begin to use NFTs, you’ll see more and more ways they utilize real-world utility to drive engagement and sales.
For more information on Utility in NFT projects, check out this article.
4. The Dev Team
Next, you want to check out the team behind the project.
Get a sense of how involved they are in the community. Do they respond to questions in Discord? Do they put people down? Are they constantly pushing people to buy into their project, or do they honestly want to help people get started?
Also, take special note of the diversity and gender balance on the team. Most people launching NFTs are led entirely by men and only have men in the community. It’s rare to find a project with women involved at all.
You’ll also want to check on their roadmap. What’s that?
Most NFT projects usually have some kind of a public roadmap. You’ll likely find this on their website.
These roadmaps lay out their plans for the future of the project. For example, in our roadmap, we promised to donate $50,000 to OneTreePlanted.org and fulfilled in doing so. Check it out:
You’ll want to look at where the project is going. Does it inspire you and make you want to join their community? If not, it’s probably not a good choice for you.
Take note of whether or not the project is fulfilling its roadmap. If it isn’t, you likely don’t want to join.
To see an example, check out our roadmap here.
Red Flags (Watch Out for These)
Below you’ll find an assortment of red flags to guide you in your research. If you see one of these in a project, watch out!
Promise of a MetaVerse game!
These games take months, if not years to develop. Red flag if the team says the game already exists.
Promise of financial reward!
Red flag, especially if the team is promising specific numbers in financial earnings.
Any project promising passive income or distributing royalties to the holders is at best going to get blocked from marketplaces, and at worst, is a scam.
Overnight growth (Especially Social)!
Do you notice that their Discord channel and other social channels increase by 10x overnight? This is another red flag! The team is likely investing in bots and scam accounts to make their numbers look higher than they actually are.
Check the online member ratio to total members count. If there are many members in a Discord server but very few online, this is another red flag. Also check twitter engagement, 10k followers and 3 comments do not add up!!!
Want More Help Getting Started?
If you’d like more help getting started and navigating NFTs, join our Discord server. It’s completely free and filled with helpful people ready to lend a hand.
You’ll also need a wallet if you want to buy NFTs. If we haven’t already, we’ll release a complete guide on how to set up a wallet, connect to Open Sea, and purchase your first NFT.