A Quick NFT Onboarding Guide For New Artists and Collectors
Many people are now using NFTs as a more effective way to sell and buy art, particularly digital art, through various virtual and digital platforms. It’s so popular that from the end of 2020 to August 2021, the industry has grown in excess of 300%. So what should artists and collectors know (and do) before beginning their NFT journey? First, we should start with understanding what a blockchain is. A blockchain gathers information into groups, known as blocks, and facilitates the process of recording transactions and tracking assets. Many cryptocurrencies use blockchain for secure and anonymous transactions.
Most NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency, but its blockchain also supports NFTs. NFTs are “non-fungible tokens”. Physical money and cryptocurrencies are “fungible,” meaning they are traded or exchanged for one another. They’re also equal in value. An NFT is “non-fungible” because it has a digital signature that makes it impossible for one NFT to be equal to another. In addition, the creator of the NFT can customize the smart contract within the NFT to execute certain rules. The most common rule embedded in NFTs are royalties, such that the NFT creator receives a royalty payment every time the NFT is sold from one buyer to another.
Below are 6 key steps for on-boarding into NFTs as an artist or collector.
Understand the types of NFTs
NFTs can be used to create and sell a variety of digital assets. The two most common types of assets behind NFTs are digital art and virtual real estate. NFT art is created, or “minted” from digital objects that represent both tangible and intangible items like music, video art, animations, and films. These NFTs are essentially digital collector’s items. So instead of getting a physical item to put on a shelf or hang on the wall, the buyer gets a digital file with exclusive ownership rights. In order to buy virtual real estate you must also purchase an NFT, and then as the owner you can either hold the real estate or build on it.
2. Get a digital wallet
A digital wallet should be the first thing you secure. It is where you will store your NFTs and other digital assets. We highly recommend using a Metamask wallet as the main wallet you use to interact with NFT exchanges. Most exchanges will require you to connect your wallet each time you log in to the platform. You should take some time to read carefully about how Metamask works before you set it up to ensure that you don’t run into issues later down the road. While setting up your Metamask wallet you will get a seed phrase and a private key. Your seed phrase is a list of words that can be used to recover your digital wallet should you forget your password or lose access to your digital wallet. You will need to store 3 THINGS VERY SAFELY!
Your seed phrase
Your private key
Your login password
We highly recommend using 1password for primary storage of your passwords, private keys, and seed phrases. Then store multiple backups in other places such as safes or safety deposit boxes.
2. You need to protect yourself from phishing and theft
In The NFT and crypto industries, artists and collectors have become targets for social engineering scams. A social engineering attack is when a scammer impersonates someone familiar in order to con unsuspecting victims out of money. We won’t get into the details in this article, but we highly recommend you keep your eyes and ears open for potential scammers and never give your seed phrase or private key to anyone including someone claiming to work at the company you use for your wallet. You can read one of our articles here about how to protect yourself from phishing and theft. But in summary we recommend these 4 steps:
Purchase and set up a hardware wallet. Make sure you buy it directly from the company website rather than amazon
Bookmark the pages of crypto & NFT sites you regularly use to make sure you are not clicking a scam link
Avoid holding all of your assets in one place
Use a password manager such as 1password
Never show or share your private keys under any circumstances
When purchasing NFTs always use the link provided by the creator. Do not search online or within a marketplace for the direct link or you may end up buying a fake project.
3. You need to purchase Eth
You will need to purchase some ETH and transfer it to your Metamask wallet in order to pay fees associate with NFTs. Most exchanges charge a percentage of your transaction when you buy crypto and when you buy NFTs. This fee is known as a “gas fee.” Collectors pay gas fees when they buy and sell NFTs. Artists pay gas fees when they mint (aka “create) their NFTs.
When buying Etherium, fees will vary depending on where you buy it. Buying ETH directly through Metamask tends to be on the more expensive side so for regular collectors it can be cheaper to buy ETH on platforms like Coinbase Pro and Binance and then transfer the ETH to your Metamask wallet.
Ultimately, you’ll want to play around with different options and over time you’ll get an understanding of what works best for you.
One thing to note is that NFT marketplaces are beginning to support other currencies besides ETH including MATIC, SOLANA, TEZOS, and DAI. So just keep this in mind, but Etherium is the most commonly required currency for buying and selling NFTs.
4. Pick your marketplaces
Once you have your digital wallet set up and funded, you can research which NFT marketplace you’d like to use. The most popular platforms are OpenSea, Rarible, SuperRare, and Foundation. The verification processes for creators aren’t consistent across platforms as some are more strict than others. Some platforms like SuperRare require artists to go through an application process. Platforms like Foundation require an invite from another artist. Platforms like Rarible and OpenSea are open to anyone. Many artists report applying 4-5 times to SuperRare and getting denied each time. Some artists who do get accepted have to wait months. So as a new artist you may want to stick to platforms that are “open” vs curated so that you can get started quickly.
Foundation is an artist-curated platform that is pretty easy to get onto if you spend some time networking and connecting with other artists. Eventually you’ll find someone with an extra Foundation invite to give.
For collectors, there is no application required for any platform so it’s up to you how you want to proceed. Good and bad art exists on all platforms. If you want a very curated experience and an easy time finding quality art then SuperRare and Foundation are great options, and they both have good email newsletters. Platforms like OpenSea are oversaturated with low quality or uninteresting projects because it is not curated. BUT some of the most popular and successful projects are minted on OpenSea. So if you ignore OpenSea completely you may miss out on opportunities to buy great art or buy into a trending collectible project before it becomes unaffordable.
5. Engage the NFT Community
If you want to catch good projects regardless of where they are located, we recommend that you follow various NFT artists, collectors, and communities on Twitter. That will help you get an idea of which quality projects are being dropped where! It’s also a good way to join NFT communities and stay up to date on what is happening in the space.
Lastly of course, you can sign up for the Umba Daima newsletter where we send out updates on creative projects we’re involved with. We also recommend following Umba Daima on Twitter as well as our other brands. Pay attention to our tweets and start following additional people that you find interesting.
Ultimately, NFTs are an investment and becoming a well seasoned collector or artist takes time. So do your research, understand the risks, and proceed with a healthy dose of caution.