How to Determine What NFTs to Buy: A Must-Read Guide
One of the most challenging aspects of buying and selling NFTs is finding the right one to purchase. Choosing the perfect NFT for your collection can be as simple as browsing a marketplace in search of art you enjoy (much like browsing through items on Amazon). This is where many people get their start in the NFT world.
But NFTs offer a lot more than just art. Smart contracts in NFTs (bits of computer code that allow them to be minted and traded without third parties) let owners access unique assets contained within the NFT, manage their transferability, and more. There’s also a massive social aspect to buying an NFT. When you become an NFT owner, you become a part of a project’s community, led by a team that (often) has plans to expand the project for months and years to come.
There are plenty of good reasons to buy NFTs, and each person in the community has their own motivation for doing so. To be clear this is not financial advice — never spend more than you’re willing to lose. But if you’re ready to find the NFT that’s right for you, this guide covers everything you need to know. To make things easy to digest, we’ve broken things down based on the primary reasons people generally have for buying NFTs: To empower artists, for collectibility, to use as an investment, and to join a community.
If you want to buy an NFT to support an artist
One of the best things about the advent of NFTs is that they enable artists to directly profit from their work, removing the need to go through intermediaries like large, cumbersome cultural institutions. This empowerment is one of the main things we celebrate here at nft now. It has opened up a new creative economy for all kinds of artists, including musicians, who have long languished in the shadow of unfair treatment by streaming services like Spotify.
Finding an artist you are already a fan of on the NFT marketplace can be a bit of a challenge as the industry is still in its infancy. While several well-known artists have taken to NFTs, many have yet to. That said, thousands and thousands of artists sell them, giving you a great chance to discover artwork and creatives you might never have otherwise come across.
An excellent place to start looking is Undervalued, our weekly series that lists existing NFT projects and artists that we think are well worth your time and deserve more attention from the NFT community. You can also check out Upcoming Drops, our weekly breakdown of notable projects that are launching in the near future.
Another good way to find artists and projects is by following well-known collectors in the NFT space. RAC, Zeneca_33, 4156, Anonymoux, Jason Bailey, Mike Darlington, DeeZe, Gmoney, Misan Harriman, Illestrater, Mondoir, Lady Phe0nix, NFT Girl, 6259, Pablo Rodriguez-Fraile, Brett Shear, and 33NFT, are just some of the space’s well-respected collectors. For more information on these and other influencers in the NFT community, check out the NFT100, our annual list of some of the most notable tastemakers, builders, innovators, and leaders in the space.
Finally, one of the simplest ways to explore the NFT world is to go to an NFT marketplace like OpenSea, LooksRare, Nifty Gateway, Magic Eden, and others and simply browse through their artists and projects. While quite random, it’s a great way to serendipitously stumble upon projects in the space.
If you want an NFT collectible
NFTs have made it a great time to be someone who likes collectibles, having taken the concept behind things like trading cards and moved it into the digital era.
NBA Top Shot is probably the best example of this. NBA Top Shot is a blockchain-based virtual trading card platform from a collaboration between Dapper Labs, the NBA, and the NBA Players Association. The collectibles, called Moments — which are NFTs of various NBA highlights — are traded on the Top Shot marketplace and vary in their rarity. Top Shot users are some of the most passionate about collecting memorabilia, and many of them bank on the value of their collections growing over time.
Basketball fans can also collect The Association NFTs, the NBA’s version of digital trading cards, compared to the captured highlights of Top Shot. 30,000 NFTs were minted during the recently-ended 2022 NBA playoff run, amounting to 125 editions per player. The NFTs are connected to live data feeds for each team and player and update automatically; even the players’ appearances will change as these stats evolve.
For baseball fans, there’s the MLB ICON Leadoff NFT collectibles project, a partnership between digital collectibles company Candy Digital, Major League Baseball, and MLB Players Inc. Featuring 720 players, the collectibles’ stats will be updated as the season progresses, turning the NFTs into a baseball card that is never quite the same from one moment to the next. Each card comes with various distinctions and rarity levels.
Collectors can also buy Play of the Day NFTs, similar to NBA Top Shot’s Moments. Each day during the regular season, a moment will be picked and made available as an NFT for a limited amount of time the following day.
Tennis fans can check out 3-time Grand Slam champion Stan Wawrinka’s Ballman Project (which he helped build) on OpenSea. Consisting of 6,200 unique 16-bit trading cards, the project has done 205 ETH (almost $250,000 at the time of writing) in trade volume.
Apart from sports-related projects, many of the NFT projects, like PFP projects, can be considered collectibles as well, but we’ll dive into those later.
If you want to invest in NFTs
If you’re hoping to get in on the ground floor with the next multimillion-dollar NFT project, it’s going to require a lot of research and legwork. To begin with, if you’re trying to buy an NFT as an investment, it’s important to remember that there has been an extreme rise in NFT scams and fraud. Even some of the most well-known individuals and organizations have been caught promoting NFT scams or behaving unethically. So it’s essential to learn how to research projects properly before you start.
There are five main things to keep in mind when determining if an NFT project is legitimate or not.
Firstly, check who’s behind the project. Are they well-known in the space? How long have they been active in the community? When were their NFT marketplace accounts created? Vetting (to the degree that you can) artists and project developers is a key point of focus here.
Secondly, check their social media following and look for excessive numbers, which is a good indicator of fake followers. Spend a few days clicking around the project’s Discord. Get a feel for the community and, most importantly, the developers. Are they answering people’s questions? Do they have information about official links, roadmaps, and sneak peeks? A good rule of thumb is that a project is only as good as its community, so if you’re getting some strange vibes about that community, it’s probably best to trust your instincts and take your money elsewhere.
Smaller projects that have the potential to grow and become something significant are your friend. You can use tools like Icy Tools and Rarity Tools to check out projects that are minting now and in the near future to decide if you want to get in on the ground floor or not. Be sure to take a look at our article on tools for tracking NFTs for a more comprehensive list.
Thirdly, investigate the mint price. NFTs are usually priced in ETH, and the legitimate ones will most likely be priced fairly. Even Bored Ape Yacht Club, the most successful NFT project of all time, originally minted at 0.08 ETH.
The fourth thing to note is the project’s roadmap, which consists of the goals project developers hope they will achieve once the primary sale is over. If what the developers have planned seems too grandiose to be true, it might be. Also, remember that a fair amount of legitimate projects these days are shucking the idea of a roadmap. The successful Goblintown NFT project famously strode onto the scene with the tagline, “No roadmap. No utility. No Discord. CC0.”
Lastly, check how the community is (or isn’t) being managed. Again, the Discord is crucial. If moderators and project leaders are having unsavory interactions with the community or if there is an air of harassment or disinterest, it may not be the kind of project you want to get involved in.
Remember, NFT markets are highly speculative. Like crypto markets, they are subject to change, sometimes drastic change. Yes, people have come out of NFT trading with huge profits, but they’ve lost big, too. Never construe anything you read online (including this guide) for financial or legal advice. Never invest more into a project than you can afford to lose. The value of an NFT or an NFT project is only worth what people are willing to pay for them, and there is no guarantee that that value will increase (or decrease) at any point in time.
Most often, the NFTs that end up selling for millions come from PFP NFT projects. PFP NFT projects are NFTs made to be used as profile pictures on social media. They’re the perfect size and shape for profile display and have grown in popularity immensely in the last few years. In fact, the most popular PFP projects made those who purchased the items millionaires.
Finding good PFP projects starts with following respected and established collectors in the space, which you can find on our NFT100 list. You can also check out our guide on how to find the right PFP project for you, which lists projects by price and gives a sense of the ethos of the community behind the project and what they stand for.
If you want to join a community
Speaking of community, joining one in the NFT world is one of the best parts of getting into NFTs.
When done right, developers and artists build up a welcoming, diverse, and evolving community around their projects. And, because you’ve collected one or more of a project’s NFTs, you are now a part of an exclusive group, which always has its appeal.
While no one thing will be true of the countless NFT communities out there, it’s generally the case that most community interactions occur in a project’s Discord. A healthy and thriving community will be at least somewhat consistently active in the Discord and feature members helping answer questions about the project and onboarding newcomers in the space to the NFT ecosystem.
In the Discord, a project’s team will generally provide information about upcoming drops, give occasional sneak peeks into the future stages of the project, provide a space for people to share suggestions, hold AMAs with the team, and warn members about scams. Some projects will even organize IRL events and get-togethers to further foster cohesion. And if you’re lucky, the project developers and moderators will also have a sense of humor.
If community is your focus, find a project whose art you like first. One of the best things about a community is the ability to share in your love of a project’s art. Then, take your time exploring the Discord. Even if it looks good at the outset, there are things you can only really understand after being a part of that community for days at a time. Don’t be afraid to ask questions and put yourself out there — how the team and other members respond will tell you a lot about what kind of a community it is and whether or not you want to be a part of it.
Everyone has a different reason for wanting to get into NFTs. For some, it’s simple curiosity, which is as good a place to start as any. Whatever you’re looking for, make sure you do your research. If you can navigate the space with a healthy awareness of the risks, you’re more likely to end up having a great time. Web3 is a great place to be, after all.
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