How to Choose the Right NFT to Buy
There are many different reasons why people choose NFTs to buy, so it is really a very subjective topic to discuss. Some buy for the art, some buy for profit opportunities, and some buy for the community – but most buy for some combination of all. This article will give some considerations and things to look for as you buy your first NFT.
As always, nothing in this post constitutes financial advice! Please make the right decisions for you and your budget.
A Guide to Minting an NFT
There are two main ways to get an NFT: minting an NFT, or buying it on the secondary marketplace.
When coins in the real world are created, the process is called minting. Similarly, minting an NFT means that a digital file is turned into a collectible asset on the Ethereum blockchain. This item is stored in a decentralized database on the blockchain ledger.
Minting takes place during “drops,” or scheduled times of the day where the NFT project is going on sale. Or sometimes, NFTs do stealth drops, with no announcement before minting goes live. The NFT project’s website allows you to securely connect to it using your MetaMask wallet and pay for one (or multiple) NFTs.
However, you must ensure the minting website is the official NFT website to reduce risk. Many scammers will create malicious websites to get you to connect your wallet to them, which can expose you to possible hacks. Always be sure you fully trust the website before minting.
What’s the Price to Mint an NFT?
Minting an NFT costs whatever the creator has set the price to be in the smart contract. While most range from 0.02 to 0.1 Ethereum, some projects go much higher and some projects offer free mints (plus gas fees).
During the minting process, Ethereum gas fees are additional costs used to pay miners for completing the transaction. The more gas you pay, normally the better chance you have to get the NFT, especially during a competitive drop when gas fees spike — more on gas fees in a future article.
The creator of a project has no control over the gas fees, unfortunately, it’s simply an indication of how busy the network is at any given time.
Why mint an NFT rather than buy on the secondary market?
The reason people enjoy minting their NFTs is that it can sometimes be like a roulette wheel, or a game of chance. Because every NFT is unique — in almost every project — each NFT will have different attributes than the next.
The more you mint, the more chance you have at landing an NFT with rare attributes, which generally command a premium price on the secondary market. The big risk is that nothing is guaranteed, and any NFT you mint could go to $0 on the secondary market at any time. It all depends on the community of holders within a project.
Bottom line: For your first NFT, you may find it less complex to choose one on the secondary market that already has an established community. That way you can take more time to browse collections and do more research.
Marketplace Options to Buy an NFTs
There are many marketplace options to buy NFTs, but the largest platform to buy ethereum NFTs is OpenSea.
OpenSea has grown exponentially in volume this year and now has a $10 billion valuation, although the platform is not without its issues. Most of these issues pertain to safety and security, collection verification, and going down during highly trafficked periods.
On OpenSea, you can buy almost any type of NFT you can think of with Ethereum and your MetaMask wallet. This includes digital art, profile pictures projects, music, videos, collectibles, metaverse land, access tokens, and more. Most creators put a perpetual royalty on their NFTs — usually ranging from 0 to 10 percent of every sale — and OpenSea takes an additional fee of 2.5 percent on every sale.
With MomentRanks, you can search through every NFT project on OpenSea to filter through marketplace listings from OpenSea, rarity, data, trends, and more.
Other Ethereum NFT Marketplaces
Some smaller and more niche marketplaces for Ethereum NFTs are Rarible, SuperRare, and Foundation. Rarible offers a marketplace similar to OpenSea, but has a governance token $RARI that allows artists and collectors to participate in platform decisions.
SuperRare is focused on digital art and photography with a UI similar to an Instagram feed, while Foundation specializes in digital art auctions. Both of these websites specialize in art from artists creating 1-of-1s.
Nifty Gateway is another marketplace for ETH NFTs that works with brands and artists to create limited-edition NFT drops, and you can buy and sell them on their marketplace. Nifty is unique because it allows you to load fiat onto the site to purchase Ethereum NFTs — something that no other marketplace currently allows.
There are also NFT-specific marketplaces if you know that’s what you want to purchase. For example, NBA Top Shot are digital basketball Moments built on the Flow blockchain, and has its own marketplace where you can easily purchase in US Dollars or cryptocurrency (including Ethereum). The same goes for Axie Infinity, which is currently the biggest play-to-earn blockchain game in the world, built on NFTs.
Bottom line: The easiest place to buy your first NFT would probably be OpenSea, followed by NBA Top Shot, where you can use a debit or credit card to buy NFTs, if NBA highlights are something you are interested in collecting.
8 Things to Consider when Buying NFTs
Whether you choose to mint or buy on the secondary market, there are a multitude of criteria for choosing NFTs. Here are just a few that I prioritize in my decisions.
1. Do You Like the NFT?
Sometimes, it can be this simple. For me, if I don’t like the way something looks, I normally won’t buy or mint it — with some exceptions. NFTs are extremely fun, but they’re even more fun if they resonate with you, your personality, and your style.
All of the rest of the tips to follow don’t matter that much if you don’t like it.
You can start with the Explore tab in OpenSea and check out what is out there. You can also use the Project Rankings on MomentRanks to see what NFTs have been trending in the past 24 hours, 7 days, 30 days, or all-time, then explore that collection.
The Rankings page can be extremely helpful to see what types of NFTs people are already buying.
Once you’ve found a project you’re interested in, MomentRanks will give you quick information on the collection right on its front page, including the official links to socials, market cap, mints in the collection, owners, and floor price. For this example, you can see Doodles has a floor price of 3.5 Ethereum — likely a very high price point for your first NFT.
Beyond the project overview page, you can also view historical sales of a project by navigating to “Sales”, and the price action history of a collection — or any particular trait within a collection — on the “Charts” page.
2. Team and Artist Reputation
Maybe an artist, band, or developer you know is releasing NFTs. If you trust them and enjoy their work, it may be a great reason to get involved and buy their project.
If you aren’t familiar with the team or artist, that’s OK too. There is an ongoing debate within the NFT community about transparency and anonymity of NFT project members. Some absolutely will not purchase anything if the team isn’t fully “doxxed” — sharing their real name and identity — on the project website.
Others don’t mind fully anonymous teams or artists. You can argue either way, but make sure to check out the website and learn why this team or artist should be one that you back with your dollars.
A word of warning: sometimes celebrities do NFT drops, collect the money, and walk away, never to be seen in the community again. This may not be the best place to spend your hard-earned Ethereum. Just sayin’ — look for teams that are here to stay.
3. Community Activity
The most overlooked part of any NFT research is the community behind it. In the NFT space, we rely heavily on Twitter and Discord — that’s where our communities live.
Although Discord can be a bit overwhelming for people (ahem, me), it does allow for the greatest real-time communication and interaction within that NFT’s community. It’s also a platform that gamers (web-native communities) are used to, and we have many gamers within the NFT space.
When you find an NFT you’re considering, follow their Twitter and join their Discord. The links should be on the project’s website and MomentRanks page. Discord is free, and normally you can access any project’s Discord without owning the NFT, though there may be special gated channels only for NFT holders
Here’s a list of questions you should ask about the NFT community activity before buying:
- What is going on in the Announcements channel?
- Are there a lot of reactions and excitement around announcements?
- What are people posting?
- Are they gm’ing?
- Are people welcoming to new people?
- Do the founders and moderators interact and answer questions clearly?
- Is the energy positive or negative?
- Most importantly, does this community resonate with you?
All of these are things to look out for in their Discord server before you decide to buy or mint a project.
4. Roadmap and Long-term Expectations
Many NFT projects provide a roadmap of what they will do to add value to the NFT, as minting progresses or sells out, or after they sell out.
Many projects copy-and-paste roadmaps from others, and they have extremely basic milestones like “50% sellout: Create a Discord.” That’s a basic rule of creating a project; not a roadmap feature! “75% sellout: We do a raffle for some Ethereum.” Not sure that’s worth it!
Watch the project’s website and Discord for information about their future plans. Bored Ape Yacht Club is one example of many projects that have released a roadmap and are slowly but surely completing it. This leads to community members being highly engaged in the project and looking forward to what is next.
5. Edition Sizes
Many profile picture NFT projects have edition sizes of 10,000, but some have sizes of 1,000 or even lower. Some photography or digital art collections are 1-of-1s and totally unique, but others sell 500 of the same NFT. NFT collectors like uniqueness and rarity and tend to value those higher than other NFTs.
However, if the collection size is small, so are the number of unique owners. This could possibly lead to a less engaged community or a lower amount of secondary sales. These are all things to take into consideration while choosing an NFT.
One example of an artist using various edition sizes is GxngYxng for his Ghxsts collection. He released 102 1-of-1 unique Ghxsts, but then many other pieces he has are a numbered edition (example: 100) of the same NFT.
Everyone’s budget is different, but for your first NFT, I would not recommend breaking the bank. Buy one at a price point you feel comfortable with and get to understand what digital ownership really is. Hang out in the project’s Discord. Post yours on Twitter and tag them, and follow other NFT community members who share your love for the project.
You can see how the project evolves, track the floor price, and maybe even earn an airdrop one day (a free NFT sent to those who hold a certain NFT).
7. Secondary Market Sales
If you are buying an NFT on secondary, you can see the sales history on MomentRanks. Just search and you can see tons of valuable data to help make your purchase decision. This one below is for Cool Cats NFT.
By viewing the sales and floor history, it gives you an idea of the momentum of the project. Is it slow and steady growth? Is it a roller coaster based on certain announcements? Or is it a sharp decline seemingly out of nowhere?
You can also see unique owners, a relevant statistic to know how the NFTs are distributed throughout the community.
If only a small number of people invest in a huge project, it adds risk, because very few people have control over that project’s market and floor. However, a high number of unique owners suggests a healthy distribution of NFTs and a large community.
These are just a few data points to help you decide what NFT to invest in.
8. IRL Events
This category is a new one, but after seeing the activations at NFT NYC and Miami Art Basel from NFT projects, I believe that projects investing in “in real life” events helps the value of their project. For example, Gutter Cat Gang had a highly-rated and attended three-day warehouse event in Miami, and the floor price reached (and has stayed) at its highest point ever.
When people post on Twitter about experiences and merchandise they get at these events, it helps spread the word about the quality of the community and the brand behind hte project. Check out if the NFT project is getting involved outside of just the metaverse.
Tools to Use for Analyzing NFTs
MomentRanks offers many powerful tools to analyze your NFT collection, and research the NFT collections you’re interested in.
Perhaps one of the best features of this is the Marketplace Explorer, which not only shows the OpenSea NFTs for sale, but also shows project rarity and estimated value based on that rarity. You can filter by traits, sort by rarity, and more. You won’t find that level of detail on OpenSea.
Another tool I use to monitor NFT sales in real time is moby.gg. This tool is especially useful to monitor what people are minting, so I can jump in if I like the look of the project.
Let’s Recap: How to Choose your First NFT
Choosing your first NFT can be daunting, especially with so many options out there. You can buy a cute animal profile picture, a photo from your favorite photographer, a generative art project, metaverse land, a membership-based NFT, and so much more.
Keeping it simple and opting to buy from a secondary marketplace like OpenSea will make the process less daunting. Be sure to check out the community and keep tabs on the project’s roadmap updates, and understand the risks and opportunities for the project. You can use MomentRanks to evaluate your NFT, the project, and discover new ones you might love.
No matter which NFT you choose, congratulations on joining us! Create a Twitter account, hop on Discord, and join the conversation. More beginner NFT series articles to come.