Become an NFT Expert
May 19, 2022
Read Time 5 MIN
What Makes an NFT Expert?
A recent post on Twitter asked, “What makes someone an NFT expert?” I often ask myself this question because the space is always changing and it’s almost impossible to keep up. Just like any other field or industry, there are a lot of experts and no shortage of opinions.
If you can answer at least 4 of the questions below, you likely know more than 99% of crypto enthusiasts and holders of NFTs or non-fungible tokens.
- Can you describe a potential use case for NFTs that does not include art?
- Can you detail a scenario where you lost an NFT or almost lost one due to a scam or malicious link?
- Can you define a “rug pull”? Better yet, can you tell the difference between a rug pull and a legit project?
- Can you name a secondary market that you’ve transacted on, other than Opensea.io?
- Can you name three different crypto wallets and where you must go to see a visualization of your NFTs?
No matter how well your evaluation above went, allow me to share some answers so that together you and I can have an equal footing in our knowledge of this technology.
What Are the Use Cases for NFTs?
After attending the Bitcoin conference in Miami in early April 2022, I left with the impression that NFTs are still very niche and the majority of folks still do not understand NFTs. It could be that most of the conference attendees were Bitcoin maximalists (investing in BTC and nothing else), but to those I polled, NFTs represent nothing more than artwork - bad artwork, at that.
This is understandable as most NFTs are pictures. It’s a way to visualize a digital asset that, for the most part, is just a line of code with a token ID (unique identifier) on the blockchain. The art and pictures bring that code to life. My plea to you today is to broaden your understanding of use cases and potential use cases. These are just a few examples that should be easy to relay to others.
NFT Use Cases Beyond Art
- Gaming – NFTs allow for ownership of in-game assets. Players can upgrade, trade, sell and own a real piece of the game.
- Ticket sales (disruptive opportunity) – Ticket fraud cases are rampant for many venues and events, but it’s impossible to have the same NFT with the same token ID owned by more than one wallet.
- DeFi (decentralized finance) through NFTs – Depending on the value of your NFT, you may qualify for a loan with your NFT held as collateral.
- Sounds and music (disruptive opportunity) – NFTs have a created a way for recording artists to monetize their work and keep a majority of their profits. Cutting out the friction and middlemen leads to more profits and creative control.
- Proof of attendance and engagement – POAPs or Proof of Attendance Protocol are digital badges that may be distributed to attendees of various events. These could be concerts, workshops or any in-person or virtual meet up. Project owners may use these to measure engagements. The more POAPS you have, the more of an engaged community member you are likely to be.
Source: POAP created by Brandverse for VanEck.
- Community and brand loyalty - Companies who wish to reward users who engage with their community and brand can send NFTs to these users. VanEck is doing this now with our VanEck Community NFT by rewarding its NFT holders with opportunities to attend various events and experiences. Learn more about the VanEck Community NFT.
Crypto Scams and Malicious Links
This section will be short because I’ve already written an entire blog on how to avoid these. If you are new to the space and are looking for tips on how to be safe, then read our blog on avoiding crypto scams.
While we’re discussing scams, we might as well cover rug pulls.
What is a Crypto Rug Pull?
Binance defines a rug pull this way:
“A rug pull in the crypto industry is when a development team suddenly abandons a project and sells or removes all its liquidity. The name comes from the phrase to pull the rug out from under (someone), meaning to withdraw support unexpectedly.”
Rug Pulls and NFT Projects
There are new projects popping up every day. While the mint cost (cost of the primary purchase of an NFT from the project itself) may be low, the total sales generated may be quite significant. Consider this fictitious example of a project that sells 10,000 NFTs, which include a generic picture of tree, and sells them for $40 per NFT. In this example, they promise that each “Tree NFT” holder will get an actual tree sent to them in real-life! Only instead, they sell out and subsequently walk away from the project with $400,000 in sales. You are left with a picture of a tree and will likely not receive a real-life tree either.
This is an example of a fictitious rug pull, which unfortunately happens all the time in the NFT space. Even worse, these semi-fraudulent NFTs tend to make their way into secondary markets where unknowing NFT enthusiasts can buy the now defunct NFT.
What Are Secondary Crypto Markets?
Secondary markets for NFTs include the likes of Opensea.io, Lookrare.org and Universe.xyz. These sites support the buying, bidding, selling and auctioning of NFTs. For those new to the space, I like to compare sites like Opensea.io to popular collectible trading sites like eBay. They are operating in a very similar way with shipping replaced with delivery by smart contracts. Connecting your wallet allows you to transact seamlessly.
You Are Now on Your Way to Becoming an NFT Expert
You may not feel like an expert, but my hope is that you feel a bit more informed about the broad NFT space. If you want to feel like a real expert, you’ll have to roll-up your sleeves and put some time in. A great starting point is my blog on how to buy an NFT.
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The information herein represents the opinion of the author(s), but not necessarily those of VanEck, and these opinions may change at any time and from time to time. Non-VanEck proprietary information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Not intended to be a forecast of future events, a guarantee of future results or investment advice. Historical performance is not indicative of future results. Current data may differ from data quoted. Any graphs shown herein are for illustrative purposes only.
In consideration of the receipt of non-fungible tokens (“NFTs”) from VanEck, you represent, acknowledge, accept and agree that:
You received the NFTs as a gift from VanEck. You did not pay any consideration, monetary or otherwise, for the NFTs.
The NFTs are not an investment. Rather, the NFTs are digital memorabilia intended solely for entertainment purposes. As entertainment memorabilia given to you as a gift, the NFTs have no value and are not intended by VanEck to ever have any value. Neither VanEck nor anyone else will take or not take any current or future action that is designed in any way to maintain the value of the NFTs, or to cause their value to grow or increase. You must not attempt to obtain an NFT from VanEck if you view it as an investment.
As a condition of receiving the NFTs, you shall hold the NFTs for your own personal benefit, and you shall not act, and are not acting, on behalf of any other person or entity; except that, if you are an affiliate of an entity or person whose relationship or affiliation you have made VanEck aware of prior to your receiving the NFT, and VanEck consents to your receiving an NFT, you may receive an NFT. You shall not sell, assign, alienate, lease, lend, fractionalize, re-gift, convey or transfer in any way the NFTs (or any interest therein) to any other person or entity, even an affiliate. Any sale, transfer, assignment, or other action covered in the preceding sentence shall be void. You must not attempt to obtain an NFT from VanEck if you plan to sell or transfer it.
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