How do you buy an NFT?

READ THE ENTIRE PLAYBOOK BEFORE ACTUALLY SETTING UP AND BUYING. DON'T SKIP STEPS. DON'T GET SCAMMED. STAY SAFE.

Key Definitions before we start

There are two ways to buy an NFT, the first is to mint an NFT. To mint and NFT means that you are the first person to buy the NFT through the launch of the smart contract. During the minting process, the NFT you are purchasing is randomized and you will be assigned a number in the collection. There is usually a lag period between minting an NFT and the reveal of what your NFT looks like.?

The second way to buy an NFT is on the secondary market where you can buy it off a marketplace, similar to Amazon. There are websites like OPENSEA for Ethereum and MAGIC EDEN for Solana.

Something else to understand is the term GAS FEE. This is the fee for validating your transaction on the network. Think of it as paying other people to validate that you are making the transaction. This is critical in autonomous validation of ownership. You are essentially paying the network to confirm that you are making a transaction.?

Which coins can I use to buy an NFT?

Ethereum is the most well-known and active blockchain for NFTs. Here are the pros and cons:

Pros:

1. It is established and has the first-mover advantage
2. They have the most blue-chip projects with mass brand recognition?
3. It uses OPENSEA, which is the best marketplace at the moment
4. Ethereum 2.0 is coming out and is said to be the technology to take blockchain to mass scalability, as Ethereum is the most recognized smart contract.?

Cons

1. They have really high gas fees, usually between $50-200 at the time of writing this?
2. The reason for this is that Ethereum uses proof of work, which makes validating transactions more demanding (the fees will go down after ETH 2.0).
3. Gas wars with other people. The transaction speed isn't instant, which leads to competing with others on who can make the transaction faster which then can inflate your gas fee to beat the other person to the punch.

Desmond’s personal take: I love Ethereum and I believe that major brands and companies will use this chain because of the security, time and rank.

Solana is the second most popular chain for NFTs because of its unique advantages. Here are the pros and cons:

Pros:?

1. Solana has scalability in terms of fast transactions. Almost instant.
2. It has way lower gas fees. You are paying a fraction of a penny to validate transactions.
3. There is only one true blue-chip and there is a lot of potential.
4. With lower gas fees, it’s a more creative space to develop really cool and complex art that requires a ton of processing power.

Cons

1. The branding is not as powerful.?
2. There are a lot of competing marketplaces and pricing can be contradictory.?

Desmond’s personal take: I think Solana is great, but I personally haven't found the right community in the Solana NFT ecosystem. It really reminds me of a poor man's NFT since there are no high gas fees. It allows a lot of low mindset people to come in with a few hundred bucks to try and get rich. The barrier to entry is low, which, in my opinion, dilutes the filter that sustains a quality community and creators take advantage of that to collect the bag. I am personally going to see how the ecosystem matures before I buy another Solana NFT.

Setup a Wallet?

To set up a wallet as a beginner, I would use Coinbase. I would call this your VAULT WALLET because it is going to be your vault to keep your cryptocurrency wallet. Think of it as a savings account. Here are the instructions on how to set up a wallet.?

1. Setup an account where we each get $10 dollars: https://www.coinbase.com/join/dixon_d4kf?src=ios-link
2. Watch some of the tutorial videos to understand other projects to get a holistic view of the marketplace
3. Transfer money to your Coinbase account
4. Trade Fiat for ETH or SOL?
5. I personally started with at least $500. Feel free to choose at least that amount or higher (not financial advice, just sharing what I did)
6. PROTECT YOUR PASSWORD AND MAKE SURE YOU HAVE TWO-FACTOR AUTHENTICATION SETUP

Next, we are going to set up your NFT WALLET. Think of this as your checking account. We want to mitigate risk as much as possible. This is not financial advice, I personally don't keep that much crypto in this wallet. I use it to buy and hold NFTs. I move crypto between this wallet and my Coinbase wallet. For this, you will want to use METAMASK. Follow the instructions below:

1. Setup your MetaMask account here: https://metamask.io/
2. If you want to setup a Solana wallet use phantom here: https://phantom.app/?
3. PROTECT YOUR PASSWORD AND MAKE SURE YOU HAVE TWO-FACTOR AUTHENTICATION SET UP OR SECRET PHRASE
4. ALSO COPY AND SAVE THIS WALLET ADDRESS BELOW. (YOU ARE GOING TO NEED IT TRANSFER ETH/SOL FROM YOUR VAULT TO YOUR NFT WALLET)

Now you're almost ready to make a purchase. The next thing you are going to do is go to your Coinbase account and do the following?

1. Go to your Coinbase wallet
2. Go to Send or Withdraw
3. Make sure Ethereum or Solana is selected?
4. CONFIRM THAT YOU HAVE THE CORRECT WALLET ADDRESS FOR THE CORRECT TOKEN. IF YOU ARE SENDING ETHEREUM, MAKE SURE YOU HAVE YOUR METAMASK WALLET AND THE ADDRESS AND IF YOU HAVE SOLANA, MAKE SURE YOU HAVE THE PHANTOM WALLET.
5. IMPORTANT NOTE: IF YOU SEND ETH TO A SOLANA ADDRESS, YOUR TRANSACTION WILL BE LOST AND NOT RECOVERABLE, SO MAKE SURE YOU MATCH THE RIGHT TOKEN TO THE RIGHT ADDRESS.?
6. Next, you are going to paste your NFT wallet address into the field for where you want to send.?
7. Next, you are going to enter the amount?
8. Hit send?
9. Check your NFT wallet. It should be 10-15 seconds before you see it.

Types of Projects

Here are some key types of projects. It’s important to understand what you’re into so that you pick projects that align with you. There is nothing worse than being financially involved in something you don't like. For example, if you aren't a gamer and don't like gaming, then you shouldn't be involved in gamer NFTs and you have to have the discipline to not succumb to FOMO (Fear Of Missing Out). There is a ton of hype and FOMO in the NFT world and there are going to be moments that will tempt you. Hopefully, we can help set some boundaries on what type of projects align with you so that you can stay disciplined in your decision-making process. Some projects are a mixture of multiple types.

ART

These projects are broken down in a way that is similar to the art world. People will buy an Artist NFT for two possible reasons:?

1. Design/ Commercial Rights
2. They want to use the art for commercial reasons like cartoons, comic books, video games, or whatever they wish. Think of it like Disney with Mickey Mouse. At least 97 percent of Americans recognize Mickey Mouse, that's more than Santa Claus.??
3. Investment?
4. This approach is usually the most common with the intention being that you are investing in the art appreciation over time due to factors like an artist that blows up or a well-known artist with a scarce collection. This is usually a five-year plus play and you should be well-researched or advice before making a purchase for this reason.

COMMUNITY DAO’S?

These types of projects are community-focused and decisions about the future of the project are voted on by the community. These are projects that leverage group economics to achieve a goal. If you aren't aware of group economics, it's essentially a group of people who leverage the accumulated individual resources like money, expertise, or connections to achieve a goal. Here are some examples of community DAO’s:

1. DAOs that are looking to purchase ASSETS IN REAL LIFE. This can be buying a golf course and everyone in the DAO is an owner based on the number of tokens they own.
2. Example Project #1: Links DAO: https://linksdao.io/
3. Example Project #2: https://opensea.io/collection/dr-ethvils-3d-frankenpunks?tab=activity
4. DAOs that are run for charity and causes. There are DAOs looking to help with mental health issues and are doing NFT’s to raise money to invest directly in mental health initiatives and charities.
5. Example Project: https://psychedelicsanonymous.com/

GAMER?

These types of projects are actually the first type of NFTs that have been around since gaming existed. These types of projects are essentially using NFTs as your avatar, accessory, or anything that can be used within the ecosystem of the project and partners of that project. Think of it as buying your character in the game and maybe that character has certain powers or attributes that make it unique to the game. Here are few types of gamer projects:

1. Role Playing Games (RPG) these games are things like Grand Theft Auto or World of Warcraft. They are games where you are playing a role in an open world where there are missions and open play.?
2. Example Project: https://www.oxyaorigin.com/sold-out.html
3. Play to Earn (P2E) games are games that people play to receive game tokens that are used to buy things in the game or swapped out on platforms like Uniswap or SushiSwap into other tokens like USDT or ETH. If you're interested in becoming a professional gamer, this might be for you. These P2E games are usually live-streamed on Twitch and other platforms and attract sponsors and more gamers.?
4. Example project: https://neotokyo.codes/?

UTILITY & ACCESS

These types of projects are usually attached to real life assets, access or applications. This can be connected to things you already purchase or participate in. For example, this can be a membership card, coupon book, or ticket to get into conferences. Some other uses might be benefits from future value creation from the project in the form of sharing in the project’s success in the form of airdrops of the project's tokens that can then be swapped on Uniswap or SushiSwap for USDT. Here are few examples:

1. Example Project #1: https://www.kangarooheroes.com/
2. Example Project #2 https://www.slotie.com/#what-are-sloties?
3. Example Project #3 https://cryptochampionsnft.io/?

FLEX or LUXURY?

The intention behind these is simply to flex association or luxury. Most blue chips evolve into this type, usually starting off in another type. There are some projects launching in this category with expensive mint prices. These projects usually price out 95 percent of NFT collectors. The purpose is to leverage the brand power of that NFT collection. If the NFT collection is getting hundreds of thousands of eyeballs a day, the brand generates a ton of authority for the holders of the collection. This plays into paying to play. Community support is important because the association of the NFT project is what gives it tremendous value.?

1. Example project #1: https://opensea.io/collection/boredapeyachtclub?
2. Example Project #2: https://opensea.io/collection/cryptopunks?

COLLECTABLES?

These types of projects are similar to collecting baseball cards or memorabilia. These projects leverage rarity relative to demand. They are usually tied to famous people or events, or maybe memorable moments as well, for example, if a project is the first to do something and then somehow 90 percent of the supply disappears overnight, that can also become a rare collectable. There are usually stories behind the collectables that bring it to life and anchor some type of emotional attachment. Some projects combine the collectable NFT with another type that we mentioned, like DAOs or Utility. Here are some examples of collectable projects:

1. Example Project #1: https://veefriends.com/?
2. Example Project #2: https://gronknft.com/?

MUSIC?

This is an upcoming type of project where you can own the commercial rights to someone else’s music or a license to their music that is in strict supply. This is still evolving and we will write some more about this as this type of project evolves.?

How to Find Projects

There isn't an exact science to finding projects because they come out literally every day, but here is my playbook for finding projects. I use social media to find cool projects.?

1. Twitter, the goal is to have the algorithm recognize that you want to know more about NFTs so that it exposes you to different projects. Here are some accounts to follow to get exposed to learn about the marketplace

https://twitter.com/iamdesmonddixon

https://twitter.com/ZssBecker

https://twitter.com/IcedKnife

https://twitter.com/AlexxSAC

https://twitter.com/garyvee

https://twitter.com/Coinbase_NFT

https://twitter.com/punk6529

https://twitter.com/jack

https://twitter.com/jacksondame?

1. YouTube: I love video personally and watch videos to get leads. I’ll go through my due diligence process later in the playbook.
2. Search: Top NFT projects to mint
3. Search: Upcoming NFT Drops
4. You can check out my YouTube channel as well, I’ll be sharing projects I’m looking at on there as well: https://www.youtube.com/channel/UCqy1SJhvI5zs9wiIxmBfqgw?
5. Discord: Download and set up Discord. PLEASE TURN OFF DMs. This is the #1 place where people get scammed. However, it's an important place for communication and due diligence.?
6. Usually there are alpha channels in the Discord where other holders of the same project are talking about other projects.?

An advanced way to find projects is to follow other people in the same projects you are in because they will share what they are looking at and what projects that they are sharing on their social media.

How to not get scammed

OK, so I am going to give you MY ground rules and mental modeling around not getting SCAMMED. There is a ton of hype and noobs (new people) are usually the people who get taken advantage of and scammed. If you embrace these rules, you should be good. However, this is not financial advice. I am simply giving you my playbook on limiting my risk.

1. First things first. NEVER CLICK RANDOM LINKS. The only links you should ever click are official links. Where do you find official links?
2. You can find them in Discord’s official link channel
3. You can find them on the official Twitter account
4. Make sure that there is activity on Twitter. To be honest, I don't look at projects with less than 15k Twitter followers.?
5. I then go to the Discord link and access the official link channel to look at the website.?
6. Never Direct Message People. Even if it's your mom, you don't ever directly message her about crypto projects. There are impersonators out there that will reach out to you so that they can get you to click a link. There is a lot of risk in clicking links. They can hack your device or scam you into minting a fake or lookalike project.?
7. Avoid lookalike projects. There are a lot of projects that will play off successful projects. Nine times out of 10, they are rug pulls.
8. A rug pull is when a project gets hyped and they launch the project and the founders disappear.?
9. Check to make sure the project doesn't have fake followers. Look at the engagement of their last 10 tweets and compare that to the number of followers. Use other prominent Twitter accounts for reference. For example, if a project has 20k followers but only 100 people liking a Tweet, they probably used bots and fake followers to boost the Twitter account to do a rug pull.
10. Check the Discord for every project. I usually do this before I even click on the website or official links. Look to see how engaging the community is. Don't get fooled by bots. See if they are having HUMAN-like conversation. Take at least 10 minutes to review the chats. Also, how fast is the Discord moving? Is there one reply every minute? Usually not a good sign. You should see a message almost every 20 seconds or less at all times because a strong global presence in a project is great unless you are looking at a niche project that fits within a geographical location (usually utility projects tied to regional benefits).
11. Are the founders and advisors of the project anonymous or exposed? If the people running the project are hiding their identity, ask yourself why. If the project is controversial or is in the gray area, like securities or something, there is a chance the founders will be anonymous and that's OK. However, I would be extra cautious and will most likely only mint and not buy at inflated prices on the secondary market. Another important thing to do with the founders is look at their social media presence. Ask yourself the same questions for the project, how many followers do they have relative to likes and comments?
12. Go on YouTube and see what other people are saying about the project, maybe they came across something you missed.
13. When in doubt, wait for the next one. If you have a gut feeling that something is off about the project, don't jump in. There are a ton of projects
14. Does the mint strategy align with the vibe? Stand clear of expensive mints of about .15 ETH. Those projects are usually unsustainable and are a cash grab. Unless they are transparent about having the right people in the community and the hype and people involved in the project are also a part of other blue-chip projects.
15. For example, I love to see people from Bored Apes or Mutant Apes as part of the project.?
16. Watch out for the FOMO. If you miss the mint and the price is going crazy, have the discipline to wait for the dip. Also, the founders of the project should be communicating a lot on Twitter and Discord throughout the first 48 hours. If you are hearing crickets from the founders after the mint, that is a huge red flag and you should sit and wait. Projects that under-communicate usually are rug pulls or projects where the founders are likely to lose interest in maintaining the communication and hype.
17. What is this project doing differently? Are they copying another project's road map or do they have a unique road map? Are they copying other people's creative ideas? I personally don't buy NFTs that copy what other people are doing, I like investing in projects that are doing something different because that shows CREATIVE and CRITICAL thinking, which is important in an ever-changing environment. If you really like a project even though they are copying, then get involved. I just personally don't like copycats, I like creative road maps and art.
18. LAST BUT NOT LEAST, DOUBLE-CHECK PRICES ON YOUR METAMASK CONFIRMATION BEFORE BUYING ANY NFT. CHECK TO MAKE SURE THAT THE PRICE MATCHES.?

Trends in the market

Here are some overall trends and patterns I’m seeing in the space:

1. Nine times out of 10, the price falls after the art is reveal. People who don't like their NFT want to get rid of it which will drive the floor price down.
2. Community is everything and how the founders treat the community within the first 48 hours of a project launch usually tells you the direction of the project.?
3. Great moderation and protecting the DISCORD space is a critical sign to watch for. Are the moderators banning people from fudding (Negative comments) and spamming the chat?
4. Projects that focus on rare traits and not rare NFTs are the best for long term success. Do the common NFTs still have desirable characteristics? NFT projects that reward and promote traits do well because everyone feels good about their NFT. If they focus entirely on the NFT’s rarity, the floor price usually goes down because no one wants the common NFTs.?
5. Founders that communicate about the execution of the road map tend to do a lot better in stabilizing the project.
6. There are a lot of copycats. Do your homework before buying.?

How to do due diligence?

Here is my DD process, step-by-step. This is my own process and it’s your responsibility to find the right process for you.?

1. Discover projects on Twitter or Discord. Sometimes YouTube
2. Check the project'’ Twitter profile. See how their engagement is relative to the followers
3. Check their Discord?
4. How is the moderation in the Discord?
5. Are there real conversations?
6. Do I vibe with the people?
7. Discord’s initial max is 250K members so use that to gage?
8. Check the official links channel in the Discord
9. Go to the website and read the road map
10. Look at the team on the website?
11. Review the team’s social media accounts?
12. Go to YouTube and watch videos on what other people are saying
13. Visit Discord daily to see if I vibe with project and community
14. Look at their mint process.??
15. Does this project care more about marketing or do they care more about delivery? What are they focused on in the announcements? Are they giving updates on the road map? Are they engaged in conversations with the community or do they care about securing the bag more by promoting the project?

Understand your entry and exit strategy?

Before we talk about entry and exit, let's talk about the types of mints. Here are the type of mints. Most times, there is a combination of two or three mints in a strategy

Whitelist Mint

This mint is usually set up to reward the people who are the most actively engaged in the Discord. This mint strategy is also used to partner with other projects by giving their community a certain amount of listings. This is usually a marketing strategy to expose another project's Discord to your Discord, which then creates more hype and demand. Think of a whitelist as an invitation to be the first people to mint a project before everyone else. You are essentially cutting the line and get it at a better price and with lower gas fees because they usually do a 24-hour window for whitelist folks.

You will never buy your way onto the whitelist. You can usually earn your way through activities or challenges released by the team.

Pre-Sale List Mint

This mint comes after whitelist and is usually the whitelist’s little brother. Sometimes projects combine a whitelist and a pre-sale list. Sometimes they break them up at different prices for different strategies.

Fair Public Mint?

This is the simplest mint. It's usually between .07 to .25 eth and its first come, first serve. Whoever can hit the mint button first wins. These sell out in 10 minutes or less for popular projects.

Raffle Public Mint

This type of project is usually reserved for in-demand projects. They simply allow everyone not on the white or pre-sale list to register their wallet for a chance to win a public mint spot. If you are one of the winners of the raffle, you can mint at launch. If not, then you will have to buy after mint.

Dutch Auction Public Mint?

This is a mint where there is a minimum price and everyone can bid on the mint and the price goes down during a certain time interval.

ENTRY POINT

My Rules for an entry point.?

1. Don't invest money you're not willing to lose. These are not liquid assets, so expect that the money invested will be hard to get out. There are 1,000 at a time trying to sell, so time is not on your side if you need to move in or out of these assets. Also, all assets can go to 0, so be mindful.
2. People whose intention is to flip NFTs get hurt the most. Be careful trying to flip. Have a plan and be ready to take Ls if you decide to be a flipper.
3. Buy at mint if possible. To manage my risk, I will try to get on the pre-sale list. If not, I’ll look for a fair mint at 0.08 eth. I really don't like the 0.25 mint because of the secondary market and the demand driving the price with healthy trading volume. However, if I really like the utility of the project, I will try to mint
4. If I can, I try to buy two or three NFTs at a time at the mint. This is my personal preference because if the project goes up to life-changing money, I have the option to sell one NFT and keep one so that I can stay involved
5. Be aware of the incentives of owning multiple NFT’s in the same project.
6. If I miss the mint or if it’s a raffle or Dutch Auction, I wait until I see the price action and wait for either of the two scenarios:
7. The price falls close to mint price within.33 ETH and it’s on a 40 percent pullback from its peak. This is usually when it spikes close to or at 1 ETH and falls to .5 ETH before REVEAL.
8. The other situation is when it's stuck near or above 1 ETH and I will wait for reveal because the people who don't like their NFTs cash out and will drive the price down and then there will be a rise to the buyer’s levels. The buyer’s level is the level where people on the sideline who didn't want to get in wait to buy at, what they value their entry point. You will see the buyer’s level based on the amount of activity. There are tools like icy.tools that can be used to track where people are buying.
9. If you miss your chance to buy, it's OK, we’re early and there is always another project. DO NOT FOMO into a project.

EXIT STRATEGY

The type of NFT you buy is going to determine your exit strategy. Here are my exit strategies, feel free to use them.

1. I mint a project to get a vibe for how the team delivers. If I don't like the communication or the community because they are obsessed with a floor price, I get out. Usually, the people obsessed with floor price are the ones who drive the floor price down because of their money-focused mindset.
2. I mint a project with a cool utility. I will stay in the project until I reach a point of not wanting the utility anymore. This is a rare case but possible case.?
3. I HOLD most NFT projects for life. I don't buy an NFT project that I'm not willing to lose my entire investment on.?
4. Since I own two or more of each project I invest in, I set it up where I can be flexible if the project is a super success and if someone offers me life changing money to buy my NFT. I can sell one while still being a part of the community.

FREE VIDEO MINI COURSE: https://cxorepublic.notion.site/How-do-you-buy-an-NFT-e84fd81d72674f83b628484563a36a2c

REFERENCES:

1. https://connect.regencycenters.com/blog/how-mickey-mouse-became-a-3-billion-household-name-for-children-and-adults-alike
2. https://cryptobullsclub.com/neo-tokyo-identities-nft-collection/