NBA star Steph Curry has invested - will you get involved too?
NFTs - the use of blockchain technology for creating art and collectables, is experiencing a kind of mania right now.
Reuters reported that NFT sales surged to $2.5 Billion in the first half of 2021. Throughout this year the media has been filled with stories of high profile, high value sales of NFTs, and reports of celebrities, media figures and high profile investors who’ve jumped onto the NFT bandwagon.
Most recently NBA star Steph Curry joined the ranks of celebrities who have invested in NFTs in late August, spending around $180k on a Bored Ape NFT:
In short, the NFT marketplace is extremely hot right now, as it has been for most of 2021.
What’s that you say?
Maybe it’s all just hype? — Possible, but given the money and the people involved I severely doubt it.
Maybe it’s a bubble that’s fit to burst? — Again, possible but not necessarily so. These are unprecedented times.
Maybe those who aren’t already involved with NFT have missed the chance? — To this, I say definitely not.
I want to share a few of the ways you can get involved in the world of NFTs if you haven’t already — and you can do it today.
I’m not advising that you do so of course — like anything with financial impacts and consequences, I don’t recommend you do anything without first doing your own research.
This is a summary of the ways that you could get involved with NFTs if you are sufficiently curious. The guide is as practically focused as I can make it and details some of the specific things you can do, today if you are as curious about NFTs as I was (and still am).
Pre-requisite — Buy some cryptocurrency
If you already hold some cryptocurrency then you can skip this step. If not, read on.
Think of getting involved with NFTs like going on vacation to a foreign country — you wouldn’t land in Germany without a few Euros in your pocket and cryptocurrency is the accepted tender in the world of NFT.
At this point in the process you’re only changing your money to enter the market, not actually spending it. There’s still a risk involved (as the value of cryptocurrency can go down as well as up) but you won’t be able to do much (if anything) in NFT-land without a little cryptocurrency.
In my experience, Ethereum (ETH) is the cryptocurrency most widely associated with NFT. In some instances, Bitcoin (BTC) may also be useful.
If you’ve not already got some crypto and don’t know how, the basic steps to do this as quickly, simply and as safely as possible are as follows:
- Create an account on a cryptocurrency exchange — I recommend (and use) Coinbase. They’re the biggest, publicly listed and with that scale and reknown comes security. You’ll need to do some basic sign-up activities, including submitting ID online via a secure interface. The account can be live and verified within an hour.
- Download a crypto wallet for your smartphone — Again, I recommend using the Coinbase Wallet to begin with. It will reside securely on your smartphone and allow you to send and receive your cryptocurrency securely.
- Add some of your native currency (USD, GBP, Euros or whatever) to your Coinbase account using a debit or credit card.
- Buy some ETH.
- Send that ETH to your Coinbase Wallet.
- You’re ready to rock.
If you need a more in-depth guide to buying cryptocurrency, check out this guide. The same process applies to all cryptocurrencies traded on Coinbase (including ETH).
With some ETH in your wallet you’re now ready to get involved with NFTs.
Buy an NFT because you like the art
NFT evolved as a means of preserving the uniqueness of digital creations that might otherwise be easily duplicable. There have been numerous high-profile examples where people have created and sold NFT for vast sums of money, and that’s perhaps responsible for much of the mania right now.
Creators are rushing to mint and sell NFTs in the hope of making a profit while investors are buying them in the hope that their value will go up.
The first way you can get involved is to simply buy an NFT corresponding to a piece of art that you like, simply because you want to own it and enjoy it. They’re listed for sale on exchanges such as OpenSea, where buyers can interact with sellers.
NBA Top Shot has become one of the top-performing NFT projects this year. For an NBA fan, I would assume there’s kudos and enjoyment to be had from owning an NFT corresponding to a digital video of their favourite NBA star in action. You may consider investing in one such video NFT as a means of owning something that you particularly appreciate, both for the subject matter and as an NFT in its own right.
I recently wrote a piece discussing an NFT experiment launched by British artist Damien Hirst wherein he released a series of 10,000 dot paintings, each accompanied by an NFT. Buyers will have the choice to own either the physical print itself, or an NFT corresponding to one in the series.
I would love to have an original work of art from an artist of such renown but couldn’t stretch to the millions that one of his past creations has demanded. In the case of this project, individual pieces were initially available for a more affordable $2,000 and I’d be glad to have one such piece gracing the wall above my desk.
In short, maybe you’d like to buy and own an NFT simply because you appreciate it as a work of art, whether it ever appreciates in value or not? Your payback is the enjoyment of the art itself — if your investment increases in value, so much the better.
Buy one to trade
Inevitably, a significant amount of the NFT mania right now is driven by those who are speculatively trading NFTs and making huge profits by buying and selling. Check out this example:
While we shouldn’t believe all that we read on Twitter, it’s undeniable that there is vast profit to be made in buying and selling NFTs. One of the best known NFT projects of all time is CryptoPunks — a limited collection of 20 pixel by 20 pixel character portraits. A recent article lists the 10 most lucrative CryptoPunk sales, with an $11 million example topping the list.
The beauty of the current mania is that we’re still in the ‘anything goes’ phase. I’m sure there are strategies for identifying those NFT projects that make good speculative investments and which could be flipped in the short to medium term for significant profits. I’m not yet in the possession of such knowledge and right now I’m reluctant to comment on how to do it or how risky or potentially rewarding it is.
What I do know is that if you’ve got the risk-appetite and some money that you can stand to lose if things go awry, then there seem to be few other speculative markets that offer such disproportionate upside to opportunistic investors.
It’s not my bag though. If it’s yours, proceed with caution.
Create (mint) your own NFT
Following Beeple’s sale of an NFT for $69 million earlier this year, I first became interested in NFTs and decided to figure out how to mint my own. I shared my ‘how to’ guide here on Medium and it’s gone on to become one of my most popular stories in recent months — a sign of the times perhaps?
The process of creating an NFT (known as ‘minting’) is essentially about creating its unique record on a blockchain. Various NFT projects exist on different blockchains but the purpose of the process is the same — to create the NFT (the Non Fungible Token) that corresponds to the original creation. In the aforementioned Damien Hirst project (for example) there will be a single NFT for each of the paintings in the series numbered 1 through 10,000.
Speculative creators are now exploring ways to leverage NFTs for profit or simply for notoreity. Either way, the possibilities seem endless if Twitter is anything to go by:
Source: Twitter
The process of minting is fairly simple and straightforward — akin to listing an item for sale on eBay. You need something to sell, an account on a selling platform and some integration between your accounts to ensure that the payment for the item is received upon sale, and the item itself is sent to the buyer.
My guide to minting NFTs will take you through the full process, beginning to end based on the NFT I minted on OpenSea (the largest public NFT exchange). All you need to provide is the artwork or creation that the NFT will correspond to — be that a digital image, an audio file, a video, an animation, a piece of text or whatever else.
The good news is that you can seamlessly integrate OpenSea with your Coinbase wallet (if you’ve followed my process above for buying and holding your ETH). Once minted your NFT will reside in your Coinbase wallet until such a time it sells, when your wallet will receive your sale revenue in ETH and the NFT will transfer from your wallet to that of your buyer. The entire process is handled seamlessly and the transaction recorded immutably on the blockchain.
Even better news is that unlike eBay selling, there’s no packaging up your item and trudging down to the post office with it. Also unlike eBay, if you set your NFT up appropriately you can opt to receive a royalty or commission as creator from future sales if your NFT is sold on again in future.
The slight downside right now is that the costs associated with minting an NFT (known as ‘gas fees’ on Ethereum) are higher than usual. This reflects the increased demand for resources and the manic activity around NFTs right now.
The gas fees are part of the process unfortunately, but blockchain developers are working on solutions to bring this cost down for the longer term. Be prepared for it costing the equivalent in ETH of $50-$150+ to mint your NFT on OpenSea (for example). There are ways to lower this cost which are also covered within my guide.
You can also check out my NFTs on OpenSea if you need proof of me having followed my own advice (or want to make your first NFT investment a TZH Creations NFT!)
Get creative
With the marketplace maturing rapidly and many people keen to get involved as a buyer or collector, it’s a great time for creators to get involved and capitalize on the froth in the market.
But like the boom that occurred as Amazon made it possible for writers to self-publish and market eBooks to the world with ease just a few years back, the lowered barriers to entry mean the market could be prospectively flooded with junk.
The simple way to stand out in a crowd is for your creation to be of as high quality as possible. Make something worth selling, that you’re proud of.
It could seem like a fine line to tread, aspiring to create high quality artwork but which is marketable and saleable as an NFT. Part of the heritage of NFT includes projects like the aforementioned CryptoPunks which set a pretty low bar for complexity or unique artistic merit. Yet those have sold for millions of dollars at a time.
Such debates over the relative artistic merit of projects and creations has been had throughout time. Paintings by Mark Rothko and Jackson Pollock are revered by some, and mocked by others. The same is probably true for NFTs — you either ‘get’ the artistic merit of a CryptoPunk or you don’t.
The simple answer then is to get creative and not worry too much about what others think. It’s not just about churning out JPEG files either:
- If you’re an artist who already has a collection of works to sell, consider how you might mint a series of NFTs to sell that collection.
- Consider how you might use NFTs to tokenise and sell your future potential and to commoditise your career.
- Might an NFT be a suitable means of offering a real world good such as a print, a sculpture or even a house for sale? Such projects are already being undertaken.
It’s not just about quickly knocking something together in Photoshop and then minting it on OpenSea (although that works too!)
Get social
To illustrate the pace of change, there’s one other newly emerging means of minting your first NFT too — one that I’ve yet to explore fully but that seems worth mentioning for completeness.
BitClout is one of the biggest new uses of Web 3.0 technology, where social networking is made possible using blockchain technology. Various high profile writers on Medium are now appearing on BitClout and I’m in the early stages of exploring the platform too.
While the platform looks (deliberately) primitive, it offers functionality to quickly and easily take a social media post and to mint it as an NFT for sale, as illustrated by the dropdown menu in the screenshot below of one my recent BitClout posts:
BitClout uses its own native cryptocurrency ($Clout) which is earned by posting and adding value on the platform (as recognised by your fellow users who can ‘trade’ in your own token). $Clout can also be purchased on the platform using Bitcoin.
An opportunity exists to quickly and easily create, buy and sell NFT on BitClout. This may yet be a revolutionary way in which the NFT market is opened up to more people and becomes seamlessly integrated in our lives via social networking.
Get involved
In spite of the vast sums of money being spent on NFTs right now, the market is well and truly in its infancy.
As a strand of blockchain, it’s fascinating for the potential it offers to revolutionize the way creators bring their work to the world and make money from it. Through its intersect with the world of art, NFT will bring great numbers of people into the blockchain ecosystem that was previously dominated by technologists and crypto investors. That too is a really good thing.
It’s dizzying trying to keep up with things in the NFT space, but also massively exciting too — that new platforms and use-cases are constantly emerging which is another big positive in my view. It signals that there’s still lots of potential that’s as yet unexplored.
If you were skeptical over the potential of NFT, or fearful at having missed the boat then I hope you’ve been convinced to get involved.
Explore, investigate and seek to understand. Maybe there’s something in the NFT mania that you can benefit from too?
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