Non-Fungible Tokens: My Journey
Though NFTs have been all the rage for the past two years, I’ve been a non-believer. Many have “invested” without truly having any degree of expertise or knowledge about the whole crypto world. They seemed to have bought the hype, but decided to call it an investment. Valuations of NFT projects reached never-heard-of-highs. No financial or strategy analyses supported most high prices. And for projects with true potential (based on management team, creators, following, collaborations, etc.), the prices were/are exceedingly high. Yuga Lab’s famous Bored Ape Yacht Club collection, which serves sort of as a high net worth crypto-owners club, entry prices start at around $40,000 (now that ETH pricing has dropped). Yet, while NFTs still need to prove me wrong, as an investor in and aficionado of emerging technologies I decided to find a project with potential and experiment in the NFT world.
I do not know why Twitter has become the prominent platform for the venture capital and web3 industries (Maybe Elon will explain). However, I do know that people more experienced than me int the crypto world frequent Twitter. Hence, my search started by following web3 news sources and advocates. After about two months of research, I found a project that caught my attention. The project is led by a serial entrepreneur and a talented and well-regarded artist. The team is using aspects of their local culture as inspiration to offer not only the NFTs themselves, but also limited merchandise from local businesses. NFT holders can redeem special spirits bottles; buy limited merchandise in collaboration with a local restaurant; and attend local parties. Similar to Bored Ape’s collection, this project also serves as a club of sorts for more local crypto advocates. Now that I had identified a project, I just needed to figure out how to buy it.
Buying an NFT
My researched into the NFT world led me to OpenSea, the largest NFT marketplace. Yet, to buy an NFT on the platform you need a specialized crypto wallet. Wallets are offered by many different providers. Coinbase, Metamask, Trust, Math, and AlphaWallet are among the most popular ones. I decided to use Metamask mainly because the creators of the NFT collection I intended to purchase recommended it.
Now armed with a crypto wallet I just needed the “money” to buy my NFT (money meaning Ethereum units). Thankfully, for reasons not worth exploring now I had purchased Ethereum units a few years ago and just needed to send my units to the wallet. A few clicks later, the units arrived into my wallet quite seamlessly after loosing a small percentage in transaction fees. As I got ready to buy my fist NFT, I was shocked by a big up-charge in the final stage disclosed as “gas fees.” Gas fees are essentially a payment owed to “miners” who dedicate computing power to validate blockchain transactions. Most shockingly, after doing even more research, I found out that these fees change throughout the day and are lower from midnight to 6am. Therefore, I decided to wait until the gas fees were lower. Once the fees got to a level I was comfortable paying, I finally got my NFT.
It was certainly interesting to learn and experience the world of NFTs. However, as an investors I remain skeptical. The collection I’m now part of has lost steam. The NFTs are trading for less on OpenSea and the events organized by the team have not receive the best feedback. Additionally, rising inflation and weak capital markets have diminished investors’ appetite for emerging sectors. Will I recoup my “investment”? I honestly don’t know. For now, I have a nice looking “image” with full ownership of all intellectual property rights.