10 Lessons from the NFT Space after a Year of Trading
The NFT space is exhilarating, exhausting, inspiring, and largely misunderstood. The sheer amount of collections, personalities, different blockchains, and technical barriers can be a detriment to those looking to enter the space as beginners.
MomentRanks aims to help bring new people into NFTs, and offers clear onboarding guides to bridge the gap to understanding the many NFT communities. Nobody is really an “expert” in this space — it’s simply too new, and constantly changing.
But after a year and a half of NFT trading, there are many lessons I’ve learned through experience that may help newcomers and veterans alike. Take these simple NFT tips to improve your experience in Web3.
1. Find your Home Discord
The most important part of the NFT space is to find a tight community and people that you trust. This will lead to more knowledge and education about upcoming NFTs, and the space as a whole. Not to mention, these people can turn into real-life friends.
They can be found on NFT Twitter, IRL events, and sometimes Telegram. But most often, they’ll be in NFT Discord servers — essentially, never-ending chat rooms organized by different topic channels. This Discord “home” is the place you spend a vast majority of your Discord time in.
But how do you find your people across the overwhelming amount of servers?
Some “alpha groups” are popular and can have paid NFT memberships. Servers like Metaverse HQ and ZenAcademy are communities add lots of value to those who are looking for tips about upcoming NFTs. The people in these communities often bring a wealth of knowledge and experience that can help guide others and contextualize daily NFT happenings.
Joining large NFT project servers (like Ghxsts, Bored Ape Yacht Club, RTFKT, World of Women, VeeFriends, Art Blocks, etc.) and spending time in them can also help you connect with others in the space, and sometimes sub-groups are created from there. Most times, you don’t even have to own the NFT to chat in the server.
Creating authentic connections will help you cut through the noise, but it takes time and dedication to be in those servers (especially during “degen hours”). Don’t forget that value is added both ways, and to try to contribute as much as you take from any Discord.
2. Resist FOMO in the NFT Space
Fear of missing out (FOMO) is the root of nearly all poor trading decisions. It can be an extremely powerful force to see the community buying something which you don’t have or can’t currently afford. This can lead to buying NFTs in a rush, which end up being awful investments.
FOMO can also lead to poor security practices as you hurry to mint something without realizing what you are connecting your wallet to.
Psychologist Barry Schwartz describes FOMO in his book “The Paradox of Choice: Why More Is Less”:
“Learning to choose is hard. Learning to choose well is harder. And learning to choose well in a world of unlimited possibilities is harder still, perhaps too hard.“
Though it can be tough with all the noise and distraction, it is important to make decisions that are best for you and your family — to “run your own race,” if you will. Everyone has their own unique strategy and financial situation. Collect what you want to collect, not what you’re directly or indirectly pressured into collecting.
3. In Real Life (IRL) is a Game-Changer
My first IRL NFT event was a Bored Ape Yacht Club meetup in Los Angeles in July 2021. Here, I met some people that would go on to become some of my good friends.
Attending NFT NYC in November 2021 further changed my life, as I met even more community members and people from the NFT space. That week in NYC was the main catalyst for me leaving my job for Web3.
While meaningful connections can of course be made online, meeting people in real life strengthens them even more. You don’t have to live in a major city — even small cities across the globe have NFT and crypto meetups. You already have something in common with these people, so don’t be nervous to chat with them in real life.
Of course, use common sense and be safe when doing so, and bring a friend if you can to make it that much easier.
4. Use NFT Tools for Analysis
While refreshing OpenSea or LooksRare to see the latest listings and sales is an option, using analysis tools is the most efficient way to snipe and buy NFTs, and contextualize them compared to the rest of the market.
MomentRanks offers a comprehensive tool to view Ethereum NFT rarity, trait floors, market statistics, listings, and purchase links directly from a collection’s page. Sign in on MomentRanks with your Ethereum wallet and Dapper wallet to view values of your NFT portfolio and track changes.
There are also other real-time Ethereum NFT analytics tools that allow you to see live listings, mints, and sales as they happen, including NFT Nerds, Moby, and Icy Tools. Keeping a window with these tools up show what is trending and minting at that very moment, allowing you to capitalize on new minting opportunities faster.
5. Comparison is the Thief of Joy
All of NFT Twitter is filled with people representing their profile pictures, some worth hundreds of thousands of dollars. A “whale” will tweet that they casually spent millions “sweeping the floor” of a blue-chip NFT.
The more you doom-scroll into this and the more you see it, you wonder: why don’t I have that? Why them, and not me? For many, this feeling can be crushing.
Comparing your own portfolio to others is easy, especially with the transparency of the blockchain. We have all been there. But remember that for all those NFT wins, those traders have tons of losses as well. They just don’t share the losses as much publicly.
Remind yourself of what you do have, which in many cases can be a lot more than others have. You can practice being grateful and supportive of others, and be aware of the difference between sharing and boasting on social media.
The saying “we’re early” is a meme at this point, but it’s also kinda true.
6. Have an NFT Tax Plan
This is not financial advice, but it’s crucial to have a tax plan. Yes; crypto and NFTs are taxed in most places, and when the bill comes, it can be shocking. This is especially true for those who aren’t used to complex tax situations.
Decide what is best for your unique situation: a crypto accountant, crypto tax software, or do-it-yourself. The crypto tax laws in each country are constantly evolving and the whole thing can definitely be a headache.
One method to save for tax time is with every NFT sale, put a large chunk of the proceeds into a “tax wallet.” This way, you are automatically saving for short-term capital gains tax payments (for US collectors), and not tempting yourself to re-invest all the funds back into other NFTs.
Taxes getting you down? Holding NFTs for a year or longer can make a big difference on capital gains rates in the United States. You can also research other states or countries to live in that are more crypto and/or tax-friendly.
7. Invest as if it Could Go to Zero
The goal for many in NFTs is to make money — that’s not a big surprise. But the amount of people who are over-extended, over-leveraged, and over-invested is probably very high.
No matter what anyone says is a “great buy,” you have to stick within your comfort level and your own budget. Having 100 percent of your net worth in a highly volatile space like NFTs is a wildly risky choice. Don’t make an impulsive decision that will devastate you financially.
MomentRanks writer and YouTube personality Justin Perri has said that he likes to think of NFT investment money as recreational money, which would otherwise be spent on activities or experiences. This means that if the value goes up, it’s a bonus, but if it goes down, the money is already counted as gone in his head.
8. NFT Wallet Security Matters
Early on in my NFT trading days, I was careless with wallet security. I didn’t keep my seed phrases in safe places, I didn’t own a hardware wallet, and connected to sketchy Web3 sites with reckless abandon. Since then, I have learned from the NFT community about the importance of wallet setup and security.
We have all seen people devastated by phishing scams, and their high-value NFTs drained from their wallets. Beware of Discord DMs and suspicious links, even from people you think you can trust. Set up a hardware wallet for your high-value NFTs and crypto, and keep your seed phrase(s) locked up in a safe place. It’s not worth the risk to keep it all in a hot wallet.
9. Consider Working in the NFT Space
The amount of Web3 job opportunities has completely exploded in the past year. Even Web2 and traditional companies are getting in on the fun. No matter what discipline you’re in, there is likely an open opportunity for you. web3.career is a great place to start.
One of the best ways to get more involved in the industry is to work in it. You can sign on at an NFT company or a project part-time or full-time. Most let you work remotely from anywhere.
The NFT space is still establishing official “roles” since it is so new. But the best news is that you can always create your own. If you don’t want to work for a company, start your own, and create content or services that the space is looking for.
10. If You Aren’t Having Fun, Take a Step Back
NFTs are supposed to be fun. That’s why we’re here! But let’s face it, sometimes the stress and breakneck pace of information can be overwhelming. Negativity on Twitter is contagious and can infiltrate the rest of your life, and can affect your attitude to the people around you.
There have been increasing discussions around crypto and mental health as the NFT space becomes more mainstream. Bear markets can put everyone in a frantic, nervous place. Staring at the Ethereum charts on your computer until 3 a.m. does not do anyone any good.
This has happened to me and many of us in the space, and it’s important to be aware of it and how it affects you. Take a break. Log off. Uninstall Twitter and Discord from your phone. Go outside. Spend time with your loved ones. NFTs will still be here for you when you get back (let’s hope!).
TL;DR — Lessons from the NFT Space
NFTs can add value by bringing you new connections, new friends, and maybe even a new career. They can inspire artists to create new revenue streams, and reward them with continuous royalties.
However, the saying “everything in moderation” also applies to NFTs, believe it or not. As much fun and as addicting as NFTs can be, it’s crucial to take the time to bring balance to your life. These 10 practical tips should assist in collectors staying around for the long haul, through the bear market and beyond.