If you’re reading this post, I’m hoping you’ve also read the first post from “Web3 For The Masses.” If not, I suggest you take a minute and give “Part 1: WTF are these NFTs?” a read. If you now understand what makes NFTs valuable, and have progressed to the point of wanting to invest in NFTs, this post will help get you started.

Now, before buying, remember that most NFTs are not worth very much. Just like any other investment, you should take the time to understand the space, what you’re buying, and how to keep your digital assets safe. I’m not a financial advisor, I’m a random internet jpeg trader on the anonymous web – so do your research, make sure you’re confident in your decisions, and also be aware that this market is very new and thus also very risky. In other words, only invest what you’re comfortable losing.

OK, I’m ready to buy…

Well, let’s make sure. First a few questions to help gauge how and where you should buy:

• Do you own cryptocurrency, such as ETH… and want to spend it?
• Do you have a crypto wallet… and know how to use it?
• Do you know how to keep your wallet safe… really safe?

If the answer to the above is a “Yes,” well then you’re ready for a more “crypto native” platform such as Opensea. If the answer to any of the above is a “no,” then I suggest starting on a more “curated platform,” such as Nifty Gateway. This is especially true for wallet safety – in 2021, $14B worth of NFT assets were stolen from people not practicing proper wallet safety. It’s a real issue, but curated platforms like Nifty Gateway make it easier and safer to buy for the novice – so don’t be scared. More on both of these platforms soon, but first…

Things you should know before buying…

Before you “go somewhere and buy something” it’s important to first understand that there are 2 types of buying – you could buy from the artist/project directly (commonly referred to as “minting”), or you could buy from someone who minted and is now reselling (commonly referred to as “buying in the secondary”). These are very different things, so let’s talk through each. 

Minting: If you are an artist or a dev team looking to create and sell an NFT project, you have to have a “project drop” – a date, time, and location where people can log on and buy your NFT. If you are a collector, you have to be aware of these drops, their date, time, and location. Some drops are done on “curated platforms,” such as Nifty Gateway or MakersPlace, where every night a different artist releases a public drop. These curated platforms are great because the day/time is predictable and the art is curated by the platform so you can trust the NFT project/artist is legitimate and from top artists. However, some drops are done on (literally) random websites that you have to find and know about; “discovery” is half the battle.

Buying Secondary: If you aren’t minting a project, you are buying the project “in the secondary” from someone who previously minted or previously bought in the secondary and is now reselling. You may be buying at a higher price because the person who is reselling the piece is trying to earn a profit themselves. Sometimes minting is better because it’s often cheaper, but the benefit of buying in the secondary is you have more information and data to make a purchase decision, such as demand (volume, resell rate, distribution of collectors) for the artist or particular piece.

Got it, so where should I buy these things…

There are many platforms you’ve likely heard of in the news, such as OpenSea, LooksRare, Foundation, Nifty Gateway, MakersPlace, SuperRare, and others. Coinbase is coming out with their own platform, and many projects (such as Gutter Cat Gang) are launching their own dedicated platforms on a dedicated site just for their collection. These platforms are very similar, just different locations to discover and purchase NFTs.

For the sake of this post, let’s focus on what are arguably the two main platforms, both of which were mentioned earlier: (1) Opensea [opensea.io], and (2) Nifty Gateway [niftygateway.com].

OpenSea: Opensea is the primary trading platform, with over 1-million unique wallets, over 300,000 monthly active wallets, and over $14B in traction volume in 2021. While this is the primary trading platform, it’s important to note that Opensea is fundamentally a peer-to-peer network to resell NFTs. It’s also a very “crypto native” platform, which has some notable impacts.

• When buying on OpenSea you are in control of your NFTs. Buying from OpenSea is a lot like paying for a physical item with cash from your wallet as opposed to paying a credit-card. By that I mean you have to keep the cash in your wallet safe, and you don’t have a third party (like a credit-card company) to help you dispute charges if someone steals your card. I’ll talk about wallet safety in a later post, but this is a huge, huge requirement.
• OpenSea is an open, decentralized network – meaning anyone can list anything. It is your responsibility to know if the “picture of an ape” is a real “bored ape yacht club” NFT or a fake. You have to know to verify the collection is real, and buy only real NFTs vs someone else’s fake.
• Lastly, most NFTs on OpenSea were initially minted somewhere else, and thus the majority of OpenSea is “secondary marketplace” sales. While some artists do release new NFTs on OpenSea, this is a minority of the transactions and listings

It is my personal opinion that buying on OpenSea requires you to have a “more than basic knowledge” of NFTs and crypto. You have to buy using cryptocurrencies (usually ETH), you have to buy using a crypto-wallet (such as MetaMask), and you need to know how to keep your crypto-wallet safe and secure (if you lose your secret-phrase password or get hacked, you could/will lose everything in the account). Additionally, for the novice I feel it can be a bit overwhelming – there are endless choices of NFTs (including many “fake” projects) and there are fees for almost everything you want to do (changing a sale price, canceling a sale, etc can cost literally hundreds of dollars in “gas,” a fee imposed to compute an on-blockchain transaction).

Nifty Gateway: I consider Nifty Gateway to be the best “beginners” platform. The platform’s entire goal is to make NFTs more accessible to everyone, even the crypto-novice. The advantages for a novice NFT collector include: (1) you are able to buy NFTs using $USD, including using a credit-card, (2) your NFT will be held in your account within NiftyGateway’s custodial wallet, making it more safe/secure, and (3) there are no transaction fees to make sales adjustments, such as listing for sale or changing the listing price (again, called “gas”).

Nifty Gateway offers daily drops, where you can mint and buy directly from the artist. They also offer a dedicated “secondary marketplace” that you can buy almost every popular NFT, even those available on Opensea. Additionally, if you ever want to move your NFT out of your Nifty Gateway account into your own, preferred wallet (such as MetaMask), you can easily do that for free (Nifty Gateway will even pay the gas transaction fee for the transfer).

Because of this, my personal advice to start your NFT investment journey is to use Nifty Gateway. Get used to the space with more mildly priced items, understand the artists/projects, and educate yourself before completely going all in on your own in a peer-to-peer network like OpenSea. Additionally, because Nifty Gateway offers daily drops, this is also a great way to participate in “minting” directly from an artist, which is often (although not always) the best opportunity to earn a profit with lower investment risk.

Initial buying & mitigating risk… 

As mentioned previously, if you are new to NFTs and want to start to invest, I strongly suggest starting on Nifty Gateway. You can set up an account with an email, link a credit-card, set up two-factor-authentication with your cell phone, and you’re ready to buy.

Again, there are 2 options to buy:

• Buy from the artist during a daily "drop [niftygateway.com]" (essentially an initial release during a set day and time)
  • Note: This is usually your best choice to earn profit b/c you're buying direct from the artist vs from someone who initially bought and now wants to resell for a profit
• Buy from the secondary "marketplace [niftygateway.com]" from someone who bought the initial release.
  • Note: Since you're buying from someone who is trying to make money, usually (although not always) this is more expensive.

At the very beginning, I suggest trying to buy during a "drop," which happens daily – or buy art you like in the secondary knowing there might be lower/upside, and/or knowing it might take longer to sell for a profit. There are 3 main types of drops, in addition to traditional auctions that work like regular 'highest bid wins' auctions (which I don’t recommend if you’re just starting out, that is unless you really like the art for the sake of art). For drops, to give you an idea of the expected value of an artist’s work you can easily Google the artist's name and look up past NFT sales – because all NFT sales have transparent transaction details, stored on the blockchain. More often than not, the artist has done other drops on Nifty Gateway or released artwork on another platform (such as MakersPlace, Foundation, SuperRare, etc) where you can see historical price/demand and gauge expected value.

To illustrate the types of drops, let's use the following Nifty Gateway drop from back on Oct 7th: https://niftygateway.com/collections/itwasalladream 

Drawing -- this is essentially a raffle where there's a set number of art pieces for sale, and you try to "win the chance to buy." If you don't win, you don't pay anything. If you win, you pay the listed price. And because of this, this is your highest chance to earn money (because supply < demand), but also your lowest chance to win (again, because supply < demand).

• Example: For this [niftygateway.com] drawing on October 7th, 345 people tried to win 1 of 30 editions (a set, finite amount of limited copies). If you had entered to win, but didn’t win, you wouldn’t be charged anything. If you entered and you won, your credit-card or crypto wallet would be charged $999. However, now [niftygateway.com] (at time of publish) this piece is selling for roughly 3x the mint price in the secondary marketplace – and price is set by current owners of the artwork.
• It’s important to note that drawings aren’t always a quick profit, but it does make sense this piece is selling for this rate as the artist, Brendan North, has historically sold single editions (the only copy) for $40k on other platforms (example [superrare.com]). 

Pack -- this is the same thing as a raffle, but you don't know which piece you'll win. Similar to drawings, you only pay if you win, but if you win, the NFT you win is randomly chosen from “the pack” of available NFTs.

• Example [niftygateway.com] -- For this pack, there were 3 different NFTs with 10 editions (copies) each -- so 30 total NFTs available. 670 people tried to win. Those that won didn't get to choose which of the 3 NFTs they received, it was randomly assigned.
• This is your next tier for trying to make money, because similar to drawings Supply < Demand (although since you don’t know the NFT you get if you win, this is more of a gamble).

Open Editions -- this is the most common type of drop. Essentially the artist says "everyone can buy for x-minutes (usually 5-10)." This way, the Supply = Demand during that 5-10 minutes. You're essentially betting demand for that piece will go up over time – that after the 5-10 minute drop window demand will be greater than the quantity minted during the drop window. Now, historically and statistically the price goes up more than it goes down because NFTs are new and more money is entering the market, but this is not always the case and likely won’t be the case long-term (again because everyone could have bought during that 5-10min period).

• As an example, look at Oct 7ths open editions] -- there were 5,827 "gold" NFTs sold during the 7-7:10 drop window (sale duration) for $69. If you want to buy that piece today, you have to buy from the marketplace [niftygateway.com]. The secondary marketplace price, where you buy from previous buyers, is all supply/demand driven. This is why open editions are more risky -- you're guaranteed to be able to buy the art piece, but afterwards the price is more likely to fluctuate since everyone had a chance to buy originally for the lower price during the drop.

Generally the more editions there are the more competition there is to sell. Everyone has the same or similar piece, so you're competing directly with them to sell (which if desire to sell > desire to buy, races prices down). Because of this, the ultimate goal is to buy a "sleeper" -- an artist/drop that not a lot of people bought initially, and after the drop demand increases. That's the gamble. Although you can offset that gamble by looking up what else the artist has sold each day so you can gauge pricing.

Final Words on buying NFTs…

While headlines of insane valuations might make it seem otherwise, not all NFTs increase in value and even fewer will retain value over time. Take the time to learn the space, identify your favorite artists and artists native to this medium, and always only spend what you’re willing to “lose.” However, the great thing about investing in NFTs is you can never “lose,” you can only end up with a NFT that isn’t worth as much as you paid for it. For this reason, I also strongly suggest investing in NFTs you actually like, as opposed to ones you think others might like. After all, NFTs aren’t (just) a resale market – there are incredibly talented artists making amazing art that just happen to be created within a digital medium. Make sure you enjoy the space, the art, and the larger community aspect of NFTs.