How to Buy/Sell NFTs for profit? for Beginners (March 2022 Update)
Learn all the must have tools and how to setup and sell your own NFT on Opensea.
What is an NFT (non-fungible token)?
A unique asset and cannot be replaced with something else.
For example, Bitcoin is fungible meaning one can trade one bitcoin for another and one have exactly the same thing.
A one-of-a-kind trading card, for example, is non-fungible meaning that if you took the one-of-a-kind trading card and traded it for a different trading card you'd have something different.
NFTs are stored on a blockchain such as Ethereum or Solana. This is critically important as the Ethereum blockchain or any blockchain allows each digital asset to be verified as one of one. In other words, the blockchain allows NFTs to be verified as unique and validate who owns that NFT.
Why do people buy NFTs? Why are NFTs valuable?
The value of an NFT equals
verified ownership
scarcity
utility
ownership history
future value
liquidity premium
The question is why would someone pay a hundred and fifty thousand dollars for a literal jpeg picture of a cartoon monkey?
Couldn't you just right click and save that picture on your computer and then share it and post it on Facebook or wherever you want it to?
While the answer is yes, you can, the key difference is that you do not own the picture of the monkey. Verified ownership is one reason NFTs are such a groundbreaking phenomenon.
Image by artur shihman from Pixabay
To put it in terms that might be easier to understand if you had a painting of the same picture of this monkey you would know that you own it because it's in a picture frame hanging inside your house. You can say hey this is my picture it's in my house I own it but on the internet it's very difficult to show that you own something like the original version of this picture. Like we just said anyone can right-click save and re-share that photo even though they don't own it so verified ownership via the blockchain is one of the main reasons that people buy nfts owning this board ape nft that's worth over 30 ethereum or like we said a hundred and fifty thousand dollars. It's a status symbol of wealth and culture and you can prove that you own it easily via the blockchain but that's not the only reason nfts have value.
Obviously a flex is one small portion of it the next reason that people do buy nfts is because they are scarce there are only ten thousand of these board apes and of those ten thousands this one we are looking at is a verified one of one piece meaning that there is no other jpeg that is verified on the blockchain that is exactly like this one and we know this because each nft has a unique token id that's stored on the blockchain for everyone to see.
The third reason that people buy nfts is because of their utility now there are dozens of ways an nft can provide utility or use cases but some of the most prominent utilities right now are first membership access meaning that an nft of a collection allows you exclusive access to social groups events parties, other nft projects or even free airdrops from the nft project that have their own set of values utility. Secondly, they can be used as game assets and this is arguably the most prominent and biggest future potential of value for an nft for utility right now some nft projects are already setting the path for the future of gaming and that they are releasing nft characters that are playable in their games this is very very likely going to be the future of gaming.
Think about fortnite or cod or any other big video game and buying skins or characters in that game you own those characters or those fortnite skins but you bought them with v bucks or cod points whatever that game's currency is and once you spend that money in game you can never get it back.
Image by WAQAR AHMAD from Pixabay
Now with nfts, you actually own those fortnite skins or those call of duty characters or whatever it is.
If you wanted to trade or sell that rare skin you could do that for real world value. You can only do that because you own the in-game asset as an nft which is verified by the blockchain right now.
If you own that same fortnite skin you could do nothing with it other than keep it on your account and leave it there forever if you don't decide to play anymore.
At some point in the future when the metaverse is mainstream many of today's top gaming nfts are going to be worth obscene amounts of money.
The third utility case is daos and a dao is simply a decentralized autonomous organization. It basically just means an entity with no central leadership. Basically a group of people that make a decision together.
Think of the 10,000 board apes if they had a dao, every board ape in that group would be able to vote for things they want to implement for that project.
With this ability allows for a lot more potential utility. For example some nft projects are creating their own cryptocurrencies in which nfts in that collection earn their cryptocurrency every single day.
Let's look at the cyberkong's nft collection for example where each nft in the collection earns 10 bananas and the bananas are their cryptocurrency per day. Currently each banana is worth around 45 so each day every genesis or original nft in that collection earns about 450 worth of banana crypto coins.
Those nft holders get those sent to their wallet every single day and they can either hold those or sell those for immediate value so if you just held the nft and sold all the coins as soon as you got them you'd make somewhere in the ballpark of a hundred and sixty-five thousand dollars in one year.
Also, people value nfts because of ownership history. Certain artists and owners in the nft space have inherent value. For example a major player in the scene is Beeple. He's one of the biggest artist names in all of the nft scene and has sold some of his pieces for over 50 million dollars.
A large part of the reason that those artwork pieces have so much value is simply because people's name is attached to it. It's similar to a Picasso painting or a Van Gogh. In a similar way, certain nft founders, collectors and artists have a lot of clout and inherent value that they bring to the projects.
The most popular platform is Opensea and the most popular blockchain at the moment is ethereum.
Before we can even go and purchase anything we need to set up a digital wallet. Most of the major platforms are using Metamask. It is available as a chrome extension or on mobile on ios or android.
If you are doing most purchases or mints or buying new nfts it's probably best to have the chrome extension and do it on desktop as the mobile apps on a lot of websites right now connecting with mobile metamask is not the best experience. You can also install it on firefox if you use that.
Once you setup, you will have a QR code so that if anyone wants to send you payments you can just send them a screenshot and they can scan your qr code and send you payments directly to your wallet or you can just copy your unique wallet address.
How to buy an nft?
On Opensea, click buy now and then you'll have to connect your metamask wallet to opensea. Once you click metamask it'll open up a window. Make sure you have that wallet address you just selected.
If you set up multiple wallets they'll all show up here Then click connect and it's going to connect opensea to our metamask.
You can add funds by going on your exchange that you bought the ethereum on and send to your metamask wallet. You simply copy that unique wallet address and send it from your exchange to your metamask wallet.
How to sell an nft (ideally for a profit)?
Create a project review checklist.
1) Is the art unique, the quality and the style.
This is kind of subjective but you'll know if the art does not look like it took more than 10 minutes to make each individual piece.
2) The founders, who are they, are they anonymous or are they revealing who they are, do they have a good track record of success with other projects.
Just look at things like 888 genesis or cryptos that are backed by notable people in the scene those projects although the art and just the tweet aren't anything special the founders are the reason those projects are doing so well.
3) Community - this is an obvious one and probably talked about way too much on nft youtube videos but it's important to look at the project's twitter engagement. Make sure that there's actual people following this project.
4) Marketing - is the team good at marketing their project or is it getting seen by literally no one at which point no one will buy into it and you'll be stuck holding a useless piece of nft garbage.
5) Road map or the white paper - does the project have a clear vision does it have milestones and does it have a realistic road map?
6) Utility - this can be broken down into dao or tokenomics and all different ways you can provide utility to a project. It could be a launch pad. The number one question to ask for a project's utility is what is the value that's being provided day one after the project mints and then what does it provide value-wise in three to six months. If you can't quickly identify reasons the project has value it's probably not a good bet
7) Scarcity/rarity - it's important to note that not all projects are created equal some have a hundred items in the collection, a thousand and some have ten thousand and that number difference makes a huge difference when flipping projects. For example, the fungi genesis which was mostly minted for around four eth are now up to fourteen but you can only see that there's about 20 listed and that's because there's only 100 of them so the floor price for these should stay a lot higher because there's a lot less people that own them and even though this is a brand new project you can see that this floor is doing incredibly well compared to the mint price as opposed to something like mutinate yacht club where it is a reputable brand it's a blue chip that came off of board apes so it has value but because there's almost 20,000 of these the floor has declined over time and it's around the price that it was minted for.
How to find great deals on floor-priced nfts?
1) Mint early and mint often. Minting while avoiding major gas wars and major gas fees especially on aetherium is easily the best way to have low risk and potentially very high reward on any project.
If you can't mince a project because you're not there or the gas fees are too high immediately go and look at the project on the secondary market like opensea or solenart.
Some people want to sell that product right away and sometimes you can actually get a really good deal almost near mint price on the secondary market while avoiding all those major gas and transaction fees.
2) Follow big and successful nft collectors on crypto twitter. To follow people that own crypto punks, board ape yacht club early on, that own cool cats early on, they own cyber cons, this is the smart money that understands this scene better than anyone because they were buying it before anyone else was actually interested in it so if you follow their moves a lot of times you'll have very good success rate.
Must-have tools to find great projects, identify when to buy, track and figure out when is the best time to sell for a profit.
1) rarity.tools is a tool to narrow down and find great deals much quicker than you're going to be able to do that on opensea or solenoid or any other major platform. It is basically a site that ranks rarities of different nft projects. If you go to collections you can search any project that you want to see.
If you go over to dogepound for example you'll see the page for the collection, you can search the id of whatever your actual thing is.
You'll be able to sort all the doges in the collection by ones that only have gold earrings and then if you click buy now to toggle on ones that are only for sale you can see all the ones that are for sale with a gold earring right now.
It's sorted by rarity as default so the most rare doge is the number 38 overall doge that has a gold earring but if we want to sort by lowest to highest you can then see the floor price of that trade.
The board ape club for example if you wanted to only spend a maximum of 50 ethereum and then it will sort all the collection by apes that are only under 50 ethereum.
Sometimes you will find that there is a really good rarity rank score for one of the ones that's near the floor and that's when you know you have a pretty good deal this site does a bunch more stuff if you want a specific trait and you know exactly what it is and you want to try to target that you can narrow them all the way down by searching for it.
2) rarity ranks - similar to rarity tools on their website, you can see the different collections that they have but the best thing is actually their chrome extension.
When you go over to opensea and search for the dogepound for example it will automatically show the ranks right below on opensea.
If you're new to nfts this rank will not show on opensea. Regularly you'll be able to see the dog id but you won't be able to tell its rank right away.
If we click floor price it's around two ethereum right now we can easily instead of having to go to rarity tools and do what we just did we can just do it right on opensea now so it makes opensea a lot easier to use as far as searching for good deals and it's all done with a chrome extension.
3) dune analytics - for analytic tracking of nfts. For things like crypto and stocks and other things, obviously you like to look at charts to see you know highs lows support areas, technical analysis do all kinds of different stuff on the charts to determine the price action of a particular crypto but for nfts that's still relatively new but dune analytics does a fantastic job of being able to track the important data that you want to see for nfts.
For board ape club, it's one of the biggest ones you can sort up here, by interval of day, time, hour whatever you want to do but the most important thing on this site is looking at the floor prices of each project.
You can see the average forward price each day of the board ape club. This is important when you look at a project and say, this project may be two months old and its floor price is up really high right now, we'll see where the price has been in the past has it held sturdy. You can see board ape club has been holding a 40 ethereum floor give or take on the day since middle of August so several months now it's been holding this 40 ethereum price floor. That's a sign of a good stable project that has a strong community behind it.
The collectors in the space really believe in the project and it's not getting these massive pumps and dumps we don't want to see any of that on projects we're buying in because it's very hard to predict where that price floor might be in the future.
You can see all different kinds of data, the top sales, who owns the most of them the floor prices over time, the volume. Then you can favorite all these different products that you like to look at with a clean looking dashboard.
You can see the amount of doges that the top holder owns so you can see how decentralized the project is. You can see the current floor, the average amount each person owns and the price floor action.
It's difficult to see this on a platform like opensea. It's almost impossible to find this analytic anywhere else and see it easily
How to find nft sales?
Find an nft calendar and there are a bunch of different sites. Rarity tools has an upcoming nft section where you can go and see all the nft projects they have listed. Keep in mind some of these are sponsored, some of these are paid. They charge people to put their projects on the site so just know that some of these projects are actually paying for this kind of advertising and rarity tools isn't always picking the best projects they're picking people that pay them sometimes so keep that in mind.
Others are next drop, nft calendar and nft go.
NFTGo is still in beta but probably has the cleanest looking site. It's got the project name, the price, date and all of their links. It's quick and easy to see all the different places you can go all the different projects that are available and how much longer until they're actually launching.
You can sort by day it's all in one spot easy to analyze very quickly and check out.
How to setup and sell your own nft?
The simplest and easiest if you only have a handful of different media pieces in your collection is to head over to opensea and then once you've logged into your account, click create opensea will prompt you with a signature request which you have to sign and then you will be able to create a new item on the platform.
Your nft can be anything, it can be a jpeg a png, it can be audio, visual 3d models, it can even be a game it can be pretty much whatever media you want to put on the platform.
You name the item, airdrop external link. This can link to any website you want to help the user learn more about the nft itself.
For the description section, put a detailed description describing what your overall project is about, why it's unique, why it's valuable.
The next part is setting up your collection, this is going to be the collection that your item that you're creating right now this single nft is part of. You can add properties levels stats, unlockable content all kinds of different stuff.
For the doge pound example, the properties that the doge pound has is background, eyes fur mouth hair hats all different kinds of traits.
The next important section is the supply. How many nfts are in existence. Right now there is only the option to do one nft which is exactly what non-fungible token means it's a one-of-one so the supply will have to be one for now.
Then choose which blockchain it's on. Is it opensea only and works with ethereum and by proxy it has polygon which is a faster gas free experience.
Ethereum is where most entities live right now and that's it. You are literally done already you can click, create and you will have your first ever nft created.
Obviously it needs some work because we haven't made a collection set up yet so it's currently on untitled collection. You have the ability to edit the nft or sell it on the marketplace right now for whatever price you want.
There are limitations with this method. It's only one at a time and you can't do any generative type content on here. It's basically whatever you have as a media file you can upload and make it an nft immediately.
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