Non-Fungible Tokens
Working Towards Buying Your First NFT
NFT’s are not the most affordable digital assets out there, but if you’re thinking about getting one — here’s what you need to know.
If you think this article is a ‘How-to” guide on buying your first NFT’s, I have to apologize in advance — you’ve come to the wrong place. This article will lay out the process of how someone who cannot afford an NFT will have to go through. Work hard, save and be patient.
You hear about the latest NFT’s that just launched on OpenSea and you’re ecstatic to see the prices of these newly minted pieces of digital art. You’re logged in and ready to go, and you see a Pudgy Penguin #4298 NFT selling for Ξ0.5 roughly $1,488 (at launch). You don’t have that kind of money and now you’re backed up leaning in against your seat with yet, another expensive ‘out of your budget’ NFT.
So now what?
You continue looking out for cheaper NFT’s that may be more affordable and within your price range. But you will soon realize that you will be in a dilemma between getting a cheaper and meaningless NFT or wait for another opportunity for digital art that will have more value and meaning to you and other people — you choose to go with the latter.
Realizing that you have not done much research on NFT’s and how they work, you go back to the drawing board and did some research on these digital assets. You’re amazed by your findings and now you’re feeling more pumped to get your hands on the next rare, meaningful, and valuable NFT’s next time around. So you learn from your mistakes.
NFT’s and what they are
NFT’s, or when defined in their full form, are Non-Fungible Tokens. To understand a little more what a Non-fungible token is — we can dissect these words in two parts. Non-fungible is an economic term used to describe tangible and intangible items such as; music, stationery, furniture, and pictures to name a few. In today’s day and age, these items are not interchangeable with other items as each item has a unique property that differentiates them.
On the other hand, fungible items are interchangeable because their value defines them and not their unique properties; fungible items come in the form of 1 ETH/$1 USD can be exchanged for 1 ETH/$1 USD.
When we tie these words together, we get non-fungible tokens or NFT’s. NFT’s are unique tokens that represent ownership tied to a unique item. These could be in the form of anything such as artwork, music, photos, collectibles, and real estate.
NFT’s have become hype for a few great reasons, but more on that later. All unique non-fungible tokens can only be owned by one official owner at any one time, and are secured by the Ethereum blockchain, which further removes any opportunity for a copy of the original unique properties of the NFT to occur. These digital assets can also be traded on secondary markets like OpenSea Nifty Gateway.
The NFT hype
NFT’s started in 2017 when Dapper Labs launched their digital kitty game called Cryptokitties. Cryptokitties are digital cats that users can buy and own. These digital cats have unique properties attached to them which gives them the value that it has today (also because of the demand they get). During this time, the Ethereum network experienced immense congestion with 12% of the total network transactions were contributed from Cryptokitties.
At the same time, many people were skeptical of these digital cats and had no idea why these cats had any value at all. Below is an excerpt from a TechCrunch article in 2017.
A bunch of disbelievers during the 2017 hype might I add — but times have changed and now NFT’s are back to clogging the Ethereum blockchain and contributing to the rising gas fees. As early as Tuesday this week, average gas fees were up around 125% USD 17.50 from earlier this month (August) at USD 7.80. Believers in this space go through a phenomenon called mimetic desire derived from mimetic theory. Mimetic desire is essentially the human desire to have something that someone else wants. This creates demand.
NFT’s can play a significant role
NFT’s have shown us the capacity of what is possible and this begs the question: Can NFT’s play a key role in real and virtual life settings?
These non-fungible tokens are more than just pictures, videos, or music formats. They are a store of value. Each one is created uniquely with a sense of meaning and importance and this is part of why NFT’s are valued so much.
There is a place for NFT’s playing a key role in society whereby going to certain high-value events could provide you a badge saying “You have attended The Bitcoin Conference”, This exists now, they are called Proof of Attendance Protocols (POAP), time will tell when these badges can become high-valued NFT’s in the future.
This form of digital asset can become the storage of memories. Imagine — one day if Beyonce creates an NFT of her 2021 moment of being named “Winner of the Best Music Video Award”. This NFT can be sold in the open market and whoever has this NFT can be eligible to have a meet-up with Beyonce herself sometime in the near or far future. NFT’s can present themselves as a ticket for opportunities like these as well as for events like the Superbowl. Imagine how much these could sell for in the future as collectibles. This could be mind-boggling.
Working towards your first NFT purchase
We have finally reached the end and the end is to reveal how you can work towards purchasing your first NFT. Like myself, I have yet to purchase my first NFT. I went through the same experiences of not having enough funds to purchase my first NFT.
Here are some tips
Be patient, don’t rush
One of the few things that have been positive about being in the cryptocurrency market since 2016 is that it has taught me to be a patient believer in the industry. Watching Bitcoin and Ethereum go up and down every day Is exciting but it can also blind you from the real reason why you started investing in the first place — technology right?
If you missed out on an opportunity to get a hold of the latest NFT releases, don’t fret. There will always be other opportunities for you and everyone else in the markets. The NFT space is still young and blossoming into something incredibly big for the future. If you missed an opportunity today, look forward to the future.
Get greedy with your spending
Start doing what any minimalist would. Save up and cut down on unnecessary expenses, and start budgeting (if you have not already started). Eventually, after saving up, living like a minimalist, and following your plan — you will soon realize you’re edging closer and closer to your goal of finally owning your own NFT.
This process may take you a few months and up to a year; depending on your geographical location, risk appetite, salary amongst other factors. It will be different for everyone and your persistence and hunger for that goal should motivate you.
Do your NFT research
Owning an NFT is a wonderful achievement, especially if those pieces of digital art are first editions or have a great volume of demand. However, many people fail to do their research and jump into buying an NFT.
“If you fail to plan, you are planning to fail”
— Benjamin Franklin
Anyone thinking of buying an NFT should always be prepared with their research of the market. Find what works and what interests you. If you are looking for a NFT as an investment, you need to know which releases will be the most hyped up among them all, this creates demand. You can do this by scanning through marketplace platforms like OpenSea, SuperRare, and Foundation; and analysis sites like nonfungible.com and Dune Analytics.
A bright future for NFT’s
In 2021 alone, OpenSea has seen a surge of over 12,000% in trading volume from NFT’s. The NFT market has its seasons but critics who said NFT’s are a bubble have been wronged. As of July 2021, Dune Analytics shows that the NFT market has done sales north of $2.5 billion so far and still growing as we speak.
Furthermore, in the gaming aspect of NFT’s and collectibles — Axie Infinity (AXS), a play-to-earn game where players can own collectibles called “Axies”; play against other players and win tokens which can be converted to fiat. Axie Infinity recorded $1 billion in sales which is currently the highest in NFT history so far. The game had become so popular within the unemployed communities in the Philippines it made headlines and more players started to come on board the game to play and earn a living from it.
The result of Axie Infinity is a show to all gaming developing studios and companies that there is money and growth to be made here. Recently, Polygon Network launched Polygon Studios to assist in this new economy.
The non-fungible token space is here to stay with data showing growing demand in this space. NFT’s are being implemented in gaming, fashion, identity, and art. These industries are enormous and integrating new innovations such as NFT’s; this will grow both industries even more.
Disclaimer: Thanks for tuning in, Any expression of opinion (which may be subject to change without notice) is personal to me (the author) and I (the author) make no guarantee of any sort regarding accuracy or completeness of any information or analysis supplied.
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