Introduction To NFT’s
MCR TRADING
What are NFT’s?
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NFT stands for Non-Fungible-Token. The words Non-Fungible means unique, one of a kind, irreplaceable! Token is just a fancy word to say it is one item. NFTs are most commonly traded in the form of a digitally artistic images, but can also include music, the written word, and essentially anything that can take digital form. Once tokenized, any asset can be bought, sold and traded using cryptocurrency.
A non-fungible token is NOT fungible. It is a token that represents a unique asset with characteristics that are particular to it: it cannot be interchanged or replaced by another equivalent token.
NFTs are simply a technological medium that allows any digital item to be stored and circulated virtually on a blockchain. To some extent, NFTs can be compared with computer files in the sense that their type and usage can be extremely varied.
Bored Ape Collection
Examples of NFT Usage
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Let’s take a closer look at how NFTs can be used. Each NFT has a different usage depending on their roadmap and overall vision with the project.
Video games: NFTs can be used in several ways in video games. In first-person shooter (FPS) games, they can take the form of skins for weapons or avatars. For role-playing games (RPGs), these NFTs can take the form of equipment such as weapons or armor as well as some mounts (pets). For card games (trading card games), NFTs can be the cards themselves and also the personalization of their terrain or the back of the cards.
Digital art: Online, everything is infinitely duplicable. With NFTs, it has become possible to quantify the unquantifiable. Digital art, which requires many hours of work, can therefore be valued at higher levels closer to physical art. In addition, you can publicly verify the address of a wallet linked to an artist’s profile. The artist’s signature is therefore included in the NFT mint.
Examples of NFT Usage p2
Collectibles: Digital collectibles can take many forms, yet all exist for the same purpose: to be collected. Initially, a so-called ‘collectibles’ project has no other purpose than to be collected. This doesn’t mean that all collectibles will remain solely collectibles over time. The creators of collectible products often plan for them to be utilized in other areas such as in video games, or to act as a token to gain entry to a club or otherwise reward users.
Virtual land/metaverse: Virtual worlds are becoming more present in our lives. Whether as a means to organize an online art exhibition or play a massive multiplayer video game, NFTs can be used to represent plots of land on which it is possible to construct buildings or organize events.
Utility: There are use cases of NFTs that focus on utility. Tickets for an event, decentralized domain names to facilitate transactions, diplomas… Not all of them have speculative value on a secondary market, but they do have a well-defined utility from the outset.
Wallets
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An NFT wallet is not only for buying, selling, or trading crypto and NFTs, but you’ll also need to have them to store and, support NFT games and keep safe from NFT scams.
The term “wallet” here is a figure of speech, referring to a secure place to store your proof of ownership of a digital currency — rather than a physical wallet for storing cash and credit cards. A crypto wallet is necessary for the storage of all types of crypto assets, including NFTs.
An NFT wallet is defined as a cryptocurrency wallet that supports the blockchain protocol NFTs are built on. However, apart from a physical wallet, you don’t technically store NFT’s or cryptocurrency in your NFT wallet as your NFTs reside on the blockchain.
Project Mint
In short terms, you’re buying the NFT. “Minting” an NFT is the process of writing a digital item to the blockchain. This establishes its immutable record of authenticity and ownership.
You may have heard people ask, “Why can’t I just screenshot an NFT?” Minting is part of the answer. When you mint an NFT, it becomes stored on the blockchain, where its authenticity and ownership is established. And because the blockchain record can’t be edited, minting is the start of that NFT’s immutable history.
Oftentimes, participating in a project’s mint is like buying a pack of Pokémon cards: you don’t know if you’ll end up with something rare. All the NFT will be visibly the same until the reveal is reached.
Think of minting a project as an IPO. This is how a project raises funds to then build their features, utilities etc. At the same time its a barrier to entry for a community
Whitelist
An NFT Whitelist is a list of people who are guaranteed early access to mint NFTs at a certain date and time. Being on such a list helps buyers avoid exorbitant secondary prices and hefty transaction fees for popular NFTs. NFTs launch, or “drop,” on a specific, predetermined day.
Getting on an NFT whitelist isn’t always easy, but there’s a specific playbook that most traders follow that can give you your best chance of succeeding. From identifying the right project to engaging with the creators online, you’ll have to put in some work during every step. It’s not without reason that getting on whitelists is said to be a “grind.”
You may get whitelist through giveaways, or being generally active in the discord and engaging with the community, consistently.
Whitelists can also allow you to mint at a lower price than the general public. They’re used to create hype and engagement.
The easiest way to get Whitelists is by joining Discords and Twitter Giveaways. Whitelists are slowly becoming less popular over time though
Marketplaces
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With digital NFT marketplaces, it is different: your web3 wallet, such as Metamask, holds your assets and connects to the marketplace and your asset is only transferred after a sale.
NFT marketplaces have developed a lot in the last three years with OpenSea being the earliest example offering an eBay-style format for trading NFTs on their decentralized platforms. These innovations were followed by many other variants including art marketplaces where artists could upload their work to the platform to ‘mint’ or ‘tokenize’ their art and then sell from the same platform.
There is an array of different marketplaces that allow you to buy, sell and trade NFTs. However, these marketplaces differentiate dependent on the blockchain that the NFT is on, eg Etherium or Solana.
Now theres so many more marketplaces such as blur, mintsquare, topaz, magic eden and more!
Blockchains
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NFT Projects can be launched on different blockchains: Ethereum, Cardano, Solana, Algorand, Tezos, Tron, Finance and many more!
Each blockchain has its own benefits, these can be transaction speed, transaction cost, functionality
If you’re looking for a blockchain with low transaction fees and high transaction throughput, then you should consider Flow or Solana.
If you wish to popularize your project, it’s wise to give priority to Ethereum since the most prominent tokens, dApps, and swaps
If sustainability is your primary concern, you should definitely opt for a “green” blockchain. Currently, the most eco-friendly options available are Algorand and WAX
Royalties
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The NFT royalties are automatic payouts to the author made on secondary sales. These are coded into the smart contract on the blockchain.
Each time a secondary sale happens, the smart contract ensures that the terms of the NFT are fulfilled. If a royalty is specified, a cut of the profits goes to the artist who created them.
Royalties have allowed artists and creators to be paid for their work passively. Previously Artists haven't been paid for secondary sales so this is revolutionary for the space
Floor Price
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The floor price of an NFT refers to the lowest-priced NFT that is in that collection. The floor price is one of the most widely used metrics to evaluate a project.
The people who own an NFT within a project set up floor prices – the more popular an NFT project gets, the higher the floor price. A sudden reduction in a project's floor price may suggest that an NFT project is losing traction.
Projects can also perform Floor Sweeps. This is to create a false sense of hype to try and increase the price of an NFT. They do this by using their project funds and buying back the cheapest NFT’s, listing them for higher in the hopes that people will also increase the prices.
You can also trade NFT’s like crypto and stocks. You can wait until you see a sudden increased volume in listings, sales or you can wait until you see a sudden increase in floor price and then buy in!
Gas Fees
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A gas fee is a transaction fee specific to the Ethereum blockchain network. Ethereum’s developer pages call these gas fees “the fuel that allows the Ethereum network to operate, in the same way that a car needs gasoline to run.”
As Ethereum has grown, gas fees have come to refer to other cryptocurrency and blockchain fees, as well as NFT fees. Basically, an NFT gas fee is the money paid to blockchain miners for processing the transaction that is embedded in the blockchain.
NFT gas fees are variable. The price paid for a transaction depends on several metrics:
Network activity: The more transaction requests made, the higher the fee.
Amount of data: The larger the transaction size, the more gas used to execute it.
Miner tip: NFT artists and buyers can pay a “tip” to a miner to have their transaction verified before other transactions waiting in the queue.
During the peak of the NFT craze in late 2021 and early 2022, some artists reported paying hundreds (even thousands) of dollars in gas fees
Wallet Trackers
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Because NFT’s are created on the blockchain. This allows you to track exactly who buys them, creates them and where theyre transferred
Many people use this as a trading strategy. They find big movers or whales in the space and track their wallets. Every time they buy into a new project, they do it to
To track someone’s wallet. All you need is their wallet address and then head over to Etherscan, Type in their address and you’ll be able to see all of their recent transactions
There’s also built in NFT Wallet Tracker apps and tools that you can use such as Nansen, IcyTools and DappRadar
You can receive alerts when a wallet purchases a certain amount of a particular project. This can usually mean that they are expecting the price to pump which would be a buy signal for you to buy into the project too!
Rug Pulls
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A rug pull is a malicious attempt to lure buyers to buy an NFT. Then, once the scammers have made their money, they quickly abandon the project and its consumers with no warning. The most common sign of a rug pull is a lack of both execution and commitment to brand development.
The ultimate goal of a rug pull is to make as much money as possible in the littlest amount of time. Creators will create hype around the project by any means possible.
A big example of an NFT rugpull is Frosties, who stole $1.3 million through their project. They promised merch, raffles and a fund to ensure longevity. However, once they minted, they took down the website and transferred their 335 ETH to various different wallets.
Most rug pull projects will provide a bunch of hyped up fake promises to make their project on the outside look amazing such as promising a AAA game, merch, collabs with huge companies. When in actual fact, they will never deliver on these
How to Detect a Rugpull�
There are various ways to detect a possible rugpull, here they are:
1. Look at the project goals
It’s important to note that just because an NFT project has goals, that doesn’t mean that the team will execute according to the roadmap. A roadmap is simply a list of ideas, only execution of these ideas can lead to any kind of real value or utility for consumers.
2. Make sure the team is doxxed
You need to make sure you know who you’re giving your money to when investing in an NFT project. Web3 Enthusiasts recommend 40 to 60 hours of research.
3. Check Engagement
The project may have a lot of followers, but these are easily seen to be botted if their engagement is a bad ratio, I.E 50k followers with only 10-50 likes per tweet. On top of this, a lot of projects hire bots in their discord to make the chat look active, so ensure there isn’t any NPC-ish messages!
4. Spend time in the project
Spending time with others in the community who have either invested in the NFT project or who are also considering investing can allow you to gain a good feel as to what everyone else’s thoughts are.
5. Look at the project overall
A Project is bad if you find that many of these common red flags pop up during your research. This is the point of doing the research in the first place. If you feel uneasy about something because you catch a bad vibe, then don’t go through with it.
It’s okay to stumble upon a scam, we all have, but to be aware that something may not be right and still fall for the scam is no one’s fault but our own. With that, if you do happen to find a scam or become the victim of a scam, do your part and make others aware of the scam as well.
The Different Metas
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The NFT hype started almost 2 years ago. Since then there’s been many trends that have come and go. Some of these include derivative projects such as bored ape heroz club, free mints, whitelist hype, celebrity endorsement, access passes, metaverse games. You name it, there's been countless trends
Your job as a trader is to identify these trends and patterns before before anyone else in the market. If you can be the first to hop on a trend, you're always going to have the advantage over everyone else. We’ll go over how to find projects early in the next slide
The later you are to a new trend, the less chance you have of making good money as the trends become saturated and tend to die down and move on very fast. Market research is key if you want to survive NFT Winter
How to Find Projects Early
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There's many ways to find projects before the hype. Here’s some of the best ways you can go about that:
So you can start off by using an NFT Calendar. These will show you the upcoming projects that are releasing that month. For example MintyScore also scores each project based on hype, followers, engagement and growth
Next you need to be making sure that you're following powerful and influential players on Twitter. These guys will give you a lot of alpha. If you stumble upon a project on Twitter and see that 29 people that you're following also follow it, that's a good sign!
The best and easiest way to find good projects before they blow up is by joining Discord Alpha Communities. These groups consist of ‘NFT Alpha Callers’. The callers’ jobs is to find projects and report them to the community.
Join multiple groups and when you see multiple callers talking about the same project, this is an even stronger sign of bullishness
Analytical Tools
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NFT Evening
NFT analytics tools turn out to be NFT enthusiasts’ best friends. This is for the sole reason that the main job of such an NFT enthusiast revolves around understanding how the market performs on a day-to-day basis. This is one of the key players in the decision-making process. With NFT analytics tools in place, one remains updated on auctions, project launches, and market insights.
There’s many different types of analytical tools in the NFT markets: General Data and Analytics, Upcoming NFT Collections, Mint and Wallet Scanners, Floor Trackers, Snipping Tools.
Rarity Sniper
Dune Analytics
Crypto Slam
Nansen
NFT Eye
NFT Go
Dapp Radar
Icy Tools
Soul Bound Tokens
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Soul Bound Tokens are just like NFT’s however once transferred to a wallet, they are ‘bound’ to that wallet. You can’t sell or transfer them. Only the issuer of the token can burn the token
SBT’s will start to be increasingly used for so many different use cases in the future. As you can see in the image there’s endless possibilities.
Ethereum co-founder Buterin first introduced the idea of soulbound tokens, or non-transferable NFTs, into the mainstream crypto discussion back in January 2022. In a blog post at the time, he argued that “while transferable NFTs have their place and can be really valuable… there is also a large and underexplored design space of what non-transferable NFTs could become”.
The introduction of soulbound tokens could help shift the emphasis in crypto away from “hyper-financialization” and toward social/societal development. For example, if individuals can build and showcase digital identity via a collection of SBTs, this may discourage them from doing things like buying certain NFTs as a status symbol.
The Future
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NFTs' ability to create community and provide access perks online and in real life make them the perfect tool. As NFT’s and metaverses develop, so will the complexity of their use, and interoperability between metaverses will be as important as their utility in real life.
The value of NFT collections is built on three pillars: community, culture and utility. When looking for value in NFT collections, it can be a combination of multiple or only one aspect. Some of the best examples out there are the most well-known. Bored Ape Yacht Club is a number one example of activating community; both Generative art (Artblocks) and CryptoPunks have pushed forward NFTs in the cultural sphere, and the utility of gaming NFTs is an excellent indicator of how innovation can occur in the space.
Gen Z is more likely to invest in cryptocurrencies and NFTs than stocks in comparison to millennials, and their investments will fuel markets as digital assets become increasingly mainstream. Like assets, these sectors will grow as younger, digitally native generations mature.
The reality is the NFT market will strengthen and grow when it is easier for more people to adopt. Therefore, we need to make the NFT journey less complicated and more recognizable through ongoing education from providers and mainstream media.
Thanks!
I know that was quite short but I hope that it provided at least a little bit of insight to the NFT world and how it works. Version 2.0 is already in the works, it’ll be much bigger and much better so stay tuned!
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