Getting Started in the World of NFT Collectibles
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Getting Started in the World of NFT Collectibles
@elizabeth-levineElizabeth Levine
Crypto & Blockchain Enthusiast
Now that NFTs are back on the rise, many investors are trying to find a way in, but it can be hard to identify value in the enigmatic world of collectibles.
Between April 12th and August 13th, the total number of sales involving NFTs in the art industry more than doubled. The huge increase in sales represents this year's second period of intense NFT hype. Nowhere is the euphoria surrounding NFTs seen more clearly than in the $400,000 made by 12-year old London-based Benyamin Ahmed for minting a series of pixelated pictures of whales wearing cowboy hats or smoking pipes.
The majority of people purchasing NFTs see them as an investment and, despite the mania surrounding NFTs, this makes sense. Purchasing physical art has long been a great way to store value so it makes sense that the same could be true of digital art.
The blockchain provides proof of ownership and sales history to digital art which adds a layer of authenticity over physical art which can be counterfeited. With that in mind, creating a good NFT collection is something a lot of people are investigating.
What NFTs Are Right for Me?
How does someone choose the correct NFTs to collect? There are thousands of different collections and the success or failure of each one can seem almost random at times. Of course, there are no guarantees when it comes to crypto, specifically NFTs. However, there are a few things that you might want to watch out for when looking into the space.
The first factor to consider is uniqueness. It may seem obvious but if you're creating something to be sold as a piece of art you should try to make a collection where everything is unique. Perhaps the most famous early example of NFT usage is the collection known as CryptoPunks and they are a perfect example of how uniqueness is maintained even across large collections. Each CryptoPunk is a combination of different characteristics generated automatically to ensure that no two punks are identical. The 10,000 of these minted in 2017 were given away for free but can now be sold for a minimum of a quarter of a million dollars each.
The uniqueness of a piece of art gives it its own individual personality and of course, increases its rarity. But there are different levels of uniqueness.
Lucky Maneki is an NFT collection of 14,150 feline characters modeled after Japanese lucky cats. Similar to CryptoPunks, each one is a unique combination of 410 potential “lucky” properties.
These properties include backgrounds, faces, bodies, items, and hidden messages. Each of these properties has its own level of rarity. A combination of some of the rarer properties will result in your Maneki being classed as rare, and having much greater value.
The tiered rareness system used by Lucky Maneki and many others encourages much broader participation. It creates an ecosystem that contains massively valuable NFT items while also holding NFTs more accessible to average investors. Whether or not your collection should have varying degrees of rareness and what status a particular NFT has is certainly something you should be aware of before getting started.
Another factor to consider is how active the community that surrounds the NFT collection is. This can be difficult to define and is influenced by a number of different factors. One way to tell if an NFT has an active community is if the NFTs can be used as part of an active blockchain game.
Axie Infinity is another game to keep your eye on. Players collect NFT “Axies” which are roughly similar to Pokémon. Each Axie can then be battled across a network of different games. Battling an Axie against another player’s monster will increase its experience and its value.
With more than a quarter of a million daily active players all competing to earn money from the ecosystem, Axie is proof that the competitive nature of blockchain gaming enables community involvement. It also ensures that the NFTs, which have in-game use cases, maintain their value.
An online community will also prosper around regular giveaways that encourage users to actively engage in the ecosystem. Open Sea is one of the largest peer-to-peer marketplaces for NFTs. Every month they hold a lottery where holders of the NFT tickets are able to participate in a lottery to win funds collected from sales. These kinds of events encourage greater community involvement and they are seen across many different NFT collections. Lucky Maneki also hosts raffles along with quests and even a community bank, all of which can be accessed just by holding a Maneki in your wallet.
The final factor you might want to look out for when starting an NFT is how ties to other media can contribute to its success. NFTs have become a technology that Hollywood uses to advertise their films. It began in March, when Legendary Entertainment launched NFT collections to promote their film, Godzilla vs Kong.
The NFTs contained images and GIFs of the two Monsters fighting. Since then, many other Hollywood Studios have joined in the craze including Marvel, who is now creating NFTs of popular Marvel characters. NFTs from sets such as these could well prove to be valuable amongst the massive fan bases that these franchises already have.
While these kinds of tie-ins are impossible to those creating their first NFT collection, it's not just massive Hollywood franchises that are tying NFTs to film and TV. TokenSociety gives creators the means to finance their own independent entertainment projects by minting what they call “Snippetz”.
These are short clips of each episode sold to fans of the project as NFTs. Each Snippetz can carry real-world experiences and physical assets. TokenSociety launched this project by funding a TV production called “Men of the House” with Snippetz sales to a private group of collectors. The show will appear on streaming services, cable, and network TV, and revolves around the life-inspired challenges of a father and his three sons.
Entering The Market
NFTs create a lot of buzz and hype and it can be difficult at times to not get caught up by it. Just like with a crypto portfolio holding a few different types of NFTs is the key to a diversified and healthy collection. Investors should look to hold both low-value and high-value NFTs in the same way they might hold both majors and alt-coins.
NFT drops are some of the best ways to get your hands on newly minted NFTs so following NFT project Twitter accounts and getting involved in NFT Discord chats are a great route for investors into the space. As Telegram is to Crypto, Discord is to NFTs.
This is by no means a comprehensive list of what goes into the creation of a successful NFT collection. But hopefully, this list gives you an idea of some of the factors that go into creating something that’s diverse and has long-term potential.
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