This past week, I’ve been a fly on the wall in NFT Twitter, trying my best to make sense of the blizzard of activity. There are definitely three things going on right now:
People are getting really, really excited about NFTs: venture capitalists, “normies” (like me), artists (who create NFTs), traders, and even some celebrities and athletes.
People are getting really, really rich from selling and trading NFTs. For example, the CryptoPunks are selling for literally millions of dollars.
There is an unbelievable number of NFT projects being launched and talked about.
If you’re still trying to wrap your head around NFTs, consider video games, which have been profitably selling “skins” (character outfits) and in-game items for many years. Fortnite, a popular online multiplayer game, has sold literally billions of dollars worth of in-game costumes to its players. People are obviously happy to pay for things that make them look cool to others online.
Along the way this week, I got interested enough in the NFT space to accomplish a few things as well. For brevity’s sake, I won’t go into too much detail about how everything below happened.
I found a few people on Crypto Twitter whose opinion I respect. For example, this guy and this guy.
I figured out how to use Metamask, a Chrome extension that acts as an Ethereum wallet.
I transferred some Ethereum to my Metamask wallet and “minted” an NFT from a project called “uwucrew”.
Uwucrew’s project is generative art. I imagine the artists drew one core figure and various hairstyles, clothes, and accessories, and then used code to generate different combinations of those attributes, as you can see below:
The code created 10,000 or so figures like the ones you see above - each one is a different NFT.
I should note that the main criterion I used to invest in this project was its immediacy - it was one of the first launches I had a chance to try to get in on.
However, I also kept some advice I’d read in mind: invest in a project that has a lot of Twitter followers, that does not have an anonymous team, and that some “Crypto Twitter” people follow as well. Also, the project - little anime-looking girls with different hair, accessories, and outfits - seemed cute enough that some people would want to collect them for fun.
The cost for minting the NFT was .06 ETH, which worked out to about $230, plus the additional Ethereum gas fees, which are payments to miners to facilitate the transaction on the Ethereum blockchain.
(The gas is a payment for the computational energy involved in executing a transaction - in a way, it’s analogous to credit card processing fees, except you pay them, not the merchant. For Ethereum, the gas fee incentives the miners to use their computers’ processing power on the transaction. The more congested the network, the higher the gas fees.)
At the exact launch time, I connected my Metamask wallet to the site, bought a token, then used the token to mint an NFT (this was a two-step process). I later learned that the launch sold out in 7 minutes. Then I went to Opensea.io, where I found this:
Opensea.io is the most popular Ethereum NFT marketplace, and my NFT automatically appeared there.
Note: at the bottom of the above screenshot, I have an offer! Unfortunately, that’s less than I paid for it. Believe me, I realize that I might just have set my money on fire for this experiment, and that I’m an absolute newbie, but it’s also possible that it’ll appreciate in value and I’ll make a profit.
My lil' NFT isn't very rare, though - its rarity is average. There are websites, like rarity.tools, that calculate the rarity of your NFT compared to others in its collection. For example, the highest uwucrew NFT sale so far was for 4.88 ETH, which right now is equivalent to about $17,000. That one is rare in part because it's 1 of the only 2 uwucrew NFTs with short black bangs out of ~10,000.
Why, though, are so many people buying NFTs? To try to make money, of course, but eventually I realized another big reason.
Community.
As humans, we all want to belong to something: a club, a cause, a team. NFTs provide that opportunity from the comfort of your computer chair.
Let’s say you own a CryptoPunk. You’re now in an exclusive community with several thousand other people. You feel cool. You can show off your punk by making it your Twitter profile pic. You get access to the upcoming CryptoPunks ecosystem, where there’ll probably be a video game, events, merchandise, etc.
You can tell everyone Jay-Z is in your club!
After a year in which many of our normal social groups either were unavailable or perhaps even disappeared altogether, is it any wonder we’re so feverishly creating online replacements?
What about you? Do you own any NFTs yet? Share your experience in the comments!