Shopping for NFTs: Making a List
Whenever I’m shopping, especially for anything that’s super in-demand, I find it helps to have a strategy in place before stepping foot in the store or adding things to my cart. It’s the same with NFTs. Everything about that purchase is up to the individual — and I won’t lie, I like to do a little soul searching before plunking down any currency on an item…no matter how digital, fungible, niche, trending or tempting.
This is the first of two posts that will detail the purchasing process when it comes to Non-Fungible Tokens. While I won’t be giving you any financial or investing advice, I can share some insights on the where, when and how of the NFT marketplace. But first, I’d like to start with some topics that I consider when I’m thinking about placing a bid or adding to my collection.
Checking It Twice
Here are a handful of questions I explored before buying my first NFT. I revisit this list often.
1. What is the scarcity / rarity of this item and is that important to me?
In the NFT world, scarcity is a key concept. It refers to the availability or exclusivity of the item. It typically goes hand-in-hand with uniqueness, which is often based on the composition of traits displayed in a given token. When someone is looking to trade their NFT, scarcity may play a role in how much a buyer bids — helping to determine its value. Of course, this ranking may not matter to you, and you may base your decision on several other factors.
Rarity guides can serve as a great tool for determining the rarity of an item in a particular collection before you buy, as they help to give information on the traits of various pieces.
2. What’s my relationship to the hype? Is this my hype or someone else’s?
Sometimes there’s an overlap between hype and rarity. But what I really mean is the promotion and the build-up, or the cultural zeitgeist — how do you feel about it? What might your relationship to this item, trend, aesthetic, celebrity or collection as a whole look like weeks, months or more after purchasing? This can have implications based on how long you’re aiming to keep the item and why you’re buying it in the first place. Which leads me to the next point…
3. Why do I want it?
Is this an investment piece? Art that you can’t wait to stare at every morning? Is it an avatar for your profile picture or your ticket to an event? You may not have the answer to this question before buying, and there’s nothing wrong with that. What’s more, you might think you have the answer only to later change your mind. But I put it out there because the question is still worth asking. You never know; reflecting on this topic may help make the buying or selling process a little clearer.
4. What digital rights, if any, come with the ownership of this NFT?
As I mentioned in an earlier newsletter, property rights and trademarks are something that vary from NFT to NFT. I always like to be aware of the rights surrounding the item I’m purchasing; it can help to shape context around what I’m allowed to do with it and how I may want to use it in the future.
There are no right or wrong answers here. Zero judgment — it just comes down to where you derive value and how a bit of thought may help shape your process. Now that we’ve laid the groundwork for NFT motivations and goals, I can’t wait to follow this up with a post on how and where to buy them…it’s going to be a fun one, so stay tuned.