Last year, I wrote about NFT security, and now I want to help you choose between two of the top hardware wallet brands: Ledger and Trezor.

Remember, the main job of a hardware wallet is to keep your seed phase (12-24 words) cold (offline). With software wallets (like Rainbow, MetaMask, Trust, Coinbase Wallet, etc), your seed phrase is stored on your phone or computer, which is connected to the internet.

With a hardware wallet, your seed phrase never gets typed into a device with internet access, and it stays exclusively on the hardware wallet, which means that if your device becomes compromised, your coins and NFTs are safe.

So which brand secures your phrase best? The short answer is that Ledger and Trezor both work as advertised, but those who plan to use their phone along with a computer for transactions will prefer the Ledger Nano X.

For me? I prefer Ledger devices because they’re more friendly to users who trade often and I prefer its physical buttons compared to Trezor’s tiny touchscreen.

For this comparison, I'll compare the two most expensive models from each brand (Trezor Model T and Ledger Nano X), but the majority of this post applies to all the models in the respective lineups.

To start this post, let’s address the compatibility, user experience, security, and bonus features of both devices.

Compatibility

Both the Trezor Model T and Ledger Nano X support a wide range of cryptocurrencies. However, Ledger has the edge when it comes to device compatibility because it’s compatible with Mac, PC, and its Bluetooth feature makes it accessible for iOS and Android users.

Trezor, on the other hand, lacks a dedicated phone app or Bluetooth capability. Additionally, the Ledger Nano X includes a battery, which means that it doesn't need to be plugged in to operate with a phone.

Due to the overall poor mobile user experience that crypto apps typically deliver, and for security reasons, making transactions with my phone has never been a priority for me. Even as an owner of the Ledger Nano X, with Bluetooth capability, I don’t keep the Ledger Live app on my phone.

However, I own a ton of NFTs and crypto and like to look at my portfolio with my phone. Fortunately, there’s an easy workaround because either hardware wallet brand allows view-only mode on your phone (Uniswap and Rainbow are two of my favorite viewer apps) by just typing in your public address.

View-only mode isn't a feature exclusive to either of these hardware wallets; any Ethereum address, hot or cold, can be viewed using one of the two wallet apps mentioned above. In fact, inside my Rainbow wallet, I have a list of my friend's wallets that are all in view-only mode, which is great for seeing which NFTs your friends are collecting.

User Experience

Ledger Nano X boasts a smoother user experience, typically being quicker to implement new protocol updates and better for claiming airdrops. On the other hand, Trezor Model T is suitable for those who simply buy and store cryptocurrencies without frequent trading or NFT engagement.

When using these wallets on a desktop, the easiest method is to use the MetaMask browser extension (a hot wallet), then add your hardware wallet address(es) to MetaMask. Each time you transact with your hardware wallet using the Metamask extension, first you'll need to sign the message with the browser pop up, then sign a second time with your hardware wallet. The first signature is just procedural. Your crypto can't move until you've signed with your hardware wallet.

For Ledger devices, enter your eight-digit passcode using the left and right physical buttons on the device. For each digit, press the buttons to scroll through the 0-9 numbers, double-press both the left and right buttons simultaneously to choose a single digit, then move on to the next digit until you're done. After signing with MetaMask, a message to sign your transaction will appear on your Ledger, scroll through the details of the transaction, then double-press to sign the message officially.

Over the years, there have occasionally been issues with Ledger's integration with MetaMask. For example, there was a full month when I couldn't use my Ledger with Chrome no matter what I tried. I had to resort to Firefox. But as of the last six months, the integration between Ledger and Metamask has been smooth with Chrome and Firefox.

Ledger’s physical buttons may have a steeper learning curve compared to Trezor's touchscreen interface. However, once accustomed to Ledger's buttons, the experience is rewarding, as the tiny touchscreen on Trezor can make button presses challenging.

Trezor devices are less user-friendly when making transactions because of the extra steps the "Trezor Bridge" requires. After first signing the transaction with MetaMask, rather than the message going to the Trezor device to be signed, you'll have to wait for a popup window to appear on your desktop, then type in your passcode into the browser window twice. This is after you've typed in your passcode on the Trezor via its touchscreen to unlock it.

These extra steps of typing in your code into the browser, make transacting often very annoying. Not to mention, I'm not a huge fan of Trezor's touchscreen. While I like that you can change the screen orientation to your liking, but often hit the wrong number when typing in my eight-digit passcode because the numbers are so small, even with relatively young and nimble fingers.

Another thing to keep in mind with Trezor devices is that they can sometimes be slow to implement new protocol changes, which can make it hard for doing certain interactions. For example, some people couldn't claim their LooksRare airdrop last year.

Security

In terms of security, Trezor devices are built on a single-chip base, while Ledger employs a double-chip base with a bank-grade secure element (SE) for additional protection against hardware-based attacks. Ledger uses a unique open-source blockchain operating system (BOLOS), but its firmware is closed-source and unavailable for third-party review or testing.

The general-purpose MCU approach used by Trezor is the reason there's no way to verify a given Trezor's authenticity and why key extractions have occurred. However, Trezor uses a special tamper-proof box, which makes it impossible for the device to be taken out without tearing the box. This is great, but there's no way to tell if the device is legit or not without seeing the box. Whereas due to Ledger's hardware, its legitimacy can easily be verified inside the Ledger Live app.

My recommendation is to always buy a hardware wallet directly from the manufacturer and you won’t have an issue with authenticity with either device.

The downside to Ledger for this section is that there was a giant data breach in July 2020, with over a million customers' phone numbers, email, and physical addresses exposed. Unfortunately, all of my information was exposed in this leak, and I had to change my email address because I was receiving 4-5 crypto phishing scams per day.

Data leaks are never cool, but I can't think of a worse set of clients to have information leaked. Anyone with a hardware wallet is likely to have a decent amount of digital asset holdings and now the whole world knows where you live. This situation is unlikely to happen again, but it's inexcusable. Trezor will always have an edge in this respect, well, unless the same thing happens to them.

Bonus Features

The Trezor Model T offers a microSD card slot, which enables you to encrypt the PIN and further protect the device against malicious attacks. The device can also be bound to the microSD card and can't be unlocked without it unless you disable the feature or factory-resets the Trezor Model T. This feature is particularly valuable for those concerned about physical attacks.

Another cool thing that Trezor does is let you perform a simulated recovery to check to see if you've correctly recorded your seed phrase. Just tap a button on the app desktop, and you’ll be asked to enter your seed phrase into your Trezor device.

Other Models

I haven't tested the Trezor One, but it's super dated – almost ten years old. It'll work with bitcoin (BTC), Ether (ETH), and ERC-20 tokens, but it doesn't work with Cardano (ADA), Ripple (XRP), Tezos (XTZ), Monero (XMR), or EOS (EOS).

While I’ve used the Ledger Nano X for years, I’m currently using the Ledger Nano S Plus as my daily driver. It works with all the same coins and has the same security as its big brother. The only major difference? It doesn’t have Bluetooth or a battery. As mentioned above, I don’t manage crypto with my phone, so aside from the slightly better feel in the hand, there’s no benefit to spending an extra $70 for the Nano X unless you want to do transactions on your phone.

I've pre-ordered the new Ledger Stax, which will be released this summer. It’s a completely different take on wallets because it looks like a phone with a huge 3.7” display. At $279, I can’t imagine it’ll make sense for a ton of people, but the nerd in me can’t wait to test it!

Wrap Up

You won’t go wrong with the Trezor Model T or Ledger Nano X.

To sum things up, the Ledger Nano X or Ledger Nano S Plus are ideal for those who prioritize compatibility and user experience. If you make lots of trades, you want a Ledger. And if you want to trade from your phone, the Nano X is the only option on the market because it has Bluetooth.

The Trezor Model T caters to a unique user who values Trezor's stance on open source or those who like the added security that a microSD card dependency brings.

Another good reason to go with Trezor is if you fear that Ledger won't be responsible with your data (email and physical address), which is a reasonable concern given their history. But there's no guarantee the same thing won't happen to Trezor.

People outside of the NFT community often say that NFTs are used exclusively for money laundering or that they’re Ponzi schemes. Rather than addressing these, I'll refer to the first eight posts in my "NFTs for Rookies" series, where I explain the potential for NFTs to be uncensorable, immutable, and interoperable digital property and why those features are beneficial.

That being said, there are a few myths about NFTs that have a kernel of truth to them and are worth exploring in more depth because they’re frequently repeated. These myths include the idea that NFTs are either dead, environmentally harmful, or simply a useless link to a URL.

In this post, we'll discuss why the market being down 96% doesn't tell the full story, then delve into the environmental impact of NFTs and the technological advances that made them sustainable. And finally, we'll go over what you're actually buying when you buy an NFT. Is it really just a link to a URL?

1. NFTs Are Dead

It's no secret that the NFT market has seen a significant decline compared to earlier in the year. In January 2022, NFT sales on OpenSea reached a peak of almost $6 billion, while in November of the same year, sales on the platform totaled just $250 million – a 96% decrease in volume.

But it's important to remember that the crypto market runs in cycles. When the price of an asset goes up quickly, it creates a bunch of excitement and brings in new investors, which leads to even higher prices. People fear that they're missing out on generational wealth and buy assets only with the intention of selling them quickly for a profit. Eventually, some investors begin to take profits on their assets, which causes the price to go down, and it can continue to go down as the non-believers are flushed out of the market. This downward trend continues until some investors–sometimes even the believers–are about ready to give up, which creates a bottom.

Crypto is known for its volatility, but it has consistently reached higher lows over time as adoption increases. For example, in 2013, Bitcoin reached an all-time high of $1,200 before falling to $200. In 2017, the same pattern occurred, with Bitcoin reaching $19,000 before bottoming at $3,000. The same can be seen with NFTs. While the $250 million in sales on OpenSea in November seems small relative to the beginning of the year, let's look at 2018 when the platform had just $50,000 in sales for the same month.

It may be tempting to declare NFTs as a failed experiment, but it'd be premature to do so. Quality NFT projects are still going strong, with the cheapest CryptoPunk or Bored Ape going for more than $75,000. Additionally, new projects are still finding success, with popular podcaster Tim Ferriss recently launching an NFT project that sold out in under an hour, raising over $2 million, while Trump did the same with his collectible project and raised $4 million.

Additionally, the NFT market has seen significant developments in recent months. Reddit has launched collectible avatars for all of its users, introducing four million new people to digital wallets. Facebook and Instagram have also introduced a way to link digital wallets to profiles, and new marketplaces like Blur.io and Uniswap's NFT marketplace aggregator have entered the scene. Even Starbucks is getting in on the action, launching a new loyalty program on the Polygon blockchain.

It's clear that while the NFT market looks bleak from the outside, it’s still alive and well. Quality projects and communities continue to thrive, and new developments in the market show that there is still plenty of interest in NFTs.

2. NFTs Destroy the Environment

Are NFTs bad for the environment? Blockchains that use the "proof of work" consensus mechanism use an insane amount of electricity. It’s estimated that Bitcoin uses more energy per year than countries like Sweden, Netherlands, Finland, Chile, and Denmark. This has led to concerns about the environmental impact of these blockchains.

This environmental impact is a valid concern if you assume that public blockchains aren’t useful to society. But you can also make the argument that the more energy that a blockchain uses, the more powerful and secure the blockchain network is.

However, none of this matters because the Ethereum network switched to a more energy-efficient “proof of stake” mechanism in September, moving away from proof of work. Under proof of work, Ethereum used 30,000x more energy than it does now, meaning it now consumes just 0.0026 terawatt-hours (TWh) per year, which makes it more energy efficient than popular services like Paypal, Netflix, and YouTube.

A stat just for fun: YouTube now uses 94,000x more energy than Ethereum.

Unless you're concerned about the environmental impact of some of your favorite social media apps, the environmental impact of NFTs is no longer a valid criticism. All blockchains that support NFTs are now using energy-efficient blockchains.

Today, if someone still complains that NFTs are destroying our forests, it's likely that they’re working on outdated headlines and haven’t done the proper research. Most NFT skeptics were never genuinely concerned about the environmental impact and they’ll likely come up with a new narrative the next time NFTs become popular to dismiss them. When the new narratives arrive, I’ll be here to write a new post to address them.

3. You don't own anything, only a URL

Some argue that NFTs are just a receipt or that they’re flawed because the metadata of the token can be edited. Both of these things are true, but that’s okay! Let me explain.

When you purchase an NFT, you are not buying the image itself, but rather a token that represents the image. This token requires social consensus to establish its value, just like many other things in our society. For example, when you think about it, it's not really possible for someone to truly own a piece of land, it's just a part of Earth. But we've come to a social consensus that people can build on certain plots and that ownership can be verified through government records. NFTs work similarly, but we rely on code and public blockchains instead of a government database to establish ownership.

In NFTs, we’ve already seen this play out. Early Rare Pepe NFTs have metadata that now points to a broken URL, but because there’s a social agreement on what the token represents and the images still exist somewhere, we can still see who owns the token and the owner has the same rights as they’ve always had to that token.

Many NFTs will likely face the same fate as the early Pepe NFTs because 66% of NFTs are stored on common servers that may be at risk of disappearing within the next five years due to the rapid pace of internet evolution. Fortunately, it's possible to create backups of images or even store them on the blockchain. Approximately 25% of current NFT projects have chosen to use decentralized storage solutions like IPFS to store their images. Implementing decentralized services like IPFS or Aawave is relatively simple, and any project that takes itself seriously should consider using these services. However, even in the worst-case scenario, I'm confident that we can socially agree on what each important NFT represents, even if the links in the metadata break.

It's also important to note that the metadata and the URL that the token points to can be edited by the project creator, in many cases. Some view this as a negative, but I see it as a positive. If you think there's a chance that a project will randomly change the link to your NFT to something you don't want, it's not smart to own their NFTs in the first place. Because the token and its provenance (provable history of ownership) associated with the token is the only thing that truly matters, it allows projects to evolve the artwork associated with the token, which opens a ton of opportunities.

As an example, the DeGods project on Solana has offered to update the artwork for those NFT holders who opt in, because the project creators weren't satisfied with the original artwork. Currently, 90% of DeGods owners have chosen to update their NFT artwork, while 10% have kept the OG version. There's also speculation that DeGods may offer a third version of the artwork in the future for those who opt-in. This shows the potential for projects to adapt and evolve their NFTs in response to cultural shifts. Editing the metadata could provide projects with an interesting way to add value for their holders without diluting the original supply.

Wrap Up

While NFT sales have decreased significantly this year, the sales volume is still 5,000 times higher than it was four years ago, and, likely, most people have at least heard of NFTs by now.

Additionally, concerns about the environmental impact of NFTs are no longer valid since Ethereum’s switch to “proof of stake” all NFTs blockchains are environmentally friendly. In fact, NFT blockchains use less energy than many popular social media sites.

Finally, it’s true that NFTs are actually just a token that points to an image, but that’s alright because it relies on social consensus just like everything else in life.

It's tough to say why these myths about NFTs continue to persist. However, it seems that many people who criticize NFTs resort to repeating common myths as a way to oppose something that they don't fully comprehend. Many of the loudest critics have never used a blockchain before. This is unfortunate because there are many valid criticisms of NFTs that deserve to be addressed and discussed as I did in last week's post.

The vast majority of NFTs will likely have little or no monetary value, similar to most paintings, movies, and music—the best of the best gains attention and cultural prominence while everything else becomes irrelevant. However, even though most NFTs may not be valuable monetarily, they could still have value to anyone with a smartphone.

In the future, I envision a world where everyone has a digital wallet and owns NFTs, even if they are not fully aware of the technology behind it. This shift may take a long time to fully materialize, as it will require the development of the necessary infrastructure and the normalization of NFTs within society.

But what if I'm wrong? It’s possible that I’ve been drinking too much of the NFT Kool-Aid.

In this post, I'll discuss five potential reasons why NFTs may not reach their full potential, from least to most likely. I won't include obvious factors like a global recession or World War III in this post, as I don't have anything unique to add.

5. Screen Time Decreases

The amount of time that the average person spends staring at a screen has been increasing rapidly over the last decade. Because of this, I believe that digital status goods will be just as sought after as physical status goods. As people spend more time in digital environments, they’ll want to own things in those environments. I have friends who I only know via the internet and spend tons of time online, which is why NFTs instantly clicked with me.

A continued uptick in screen time and social media seems inevitable, but what if, in the big picture, this is just a fad? We likely won’t regress technologically as a society anytime soon, but what does the next progression look like? Maybe the next technological breakthrough happens in the physical world rather than the digital one. Or it's possible that augmented reality with AR glasses becomes more important than virtual reality and digital worlds become less relevant.

What’s next?

Humans stepping away from social media and screens in favor of something else that leads to the demise of NFTs is unlikely. Mark Zuckerberg is betting his entire career and tens of billions of dollars that we’ve only scratched the surface of digital worlds.

Maybe we won't be looking at screens and interacting with people from around the world forever, but there's likely a long bridge that involves digital worlds before we get to whatever's next.

4. The User Experience Never Improves

The crypto user experience is still messy. Setting up wallets, transferring assets, signing contracts, exchanging tokens, and learning proper security all need to be improved substantially.

Some argue that when new technologies like smartphones or Facebook were introduced, they may have seemed complex at first, but because they were so groundbreaking, people quickly learned how to use them and adopted them into their daily lives. However, it’s unlikely that NFTs will follow the same trajectory.

With Facebook, if you couldn't figure out how to use it, you were only missing out on sharing pictures of your cat. The stakes were low. With NFTs, the stakes are much higher because they represent financial assets. While blockchain technology is revolutionary, the current user experience won’t be adopted by the mainstream unless something changes, such as large corporations or governments deciding to censor transactions and transfers of assets.

What’s next?

The user experience in the world of NFTs is almost guaranteed to improve because there appears to be a strong demand for it and companies are ready to capitalize on the opportunity.

For example, big social media platforms like Facebook, Instagram, and Reddit are developing wallet solutions for everyday users. Dapper Labs has an easy-to-use marketplace and wallet for its collectibles platform, and also offers an option for users to manage their own keys. Casa offers simple 2-of-3 multi-signature wallets for Bitcoin and Ethereum that could potentially be used for NFTs in the future too.

3. Over Financialization of Everything

If you hang out with a "crypto bro'' even just for a few minutes, they'll likely tell you that once we have items like home ownership, car titles, and luxury watches represented as NFTs on the blockchain, people will be able to use them as collateral to borrow money or trade them more easily due to improved liquidity and fewer intermediaries. It’s a common dream among crypto enthusiasts for all assets to be represented on the blockchain and to be easily tradable against other assets.

24/7 liquid markets are a friend to NFTs, but it also creates chaos and extreme volatility that many people cannot stomach. When every asset has a price attached to it, a downturn in value can cause panic among buyers and collectors, and things can quickly spiral out of control. The opposite is also true when prices are rising. It's reasonable to say that not all assets should have prices attached to them, but even in the relatively small world of NFT collectibles, we can see the negative effects of excessive financialization on collectors' happiness.

For example, NBA Top Shot removes many of the challenges associated with traditional sports card collecting, such as grading, counterfeits, shipping, and taking pictures. Buying Top Shot moments takes just a few minutes, and you are guaranteed authenticity each time, but instant liquidity means that every moment can be sold immediately. Over the past 18 months, the marketplace has been a race to the bottom, and many moments have lost more than 95% of their value.

What’s next?

As the ownership of crypto and stocks continues to rise amongst everyday people, we’ll likely naturally adjust and become immune to price volatility. But even if the mainstream audience doesn’t accept a highly financialized and volatile world, there are many non-financial use cases for NFTs, like events, rewards points, clubs, and digital identity, that can still be useful to users without significant financial implications. We don't need to put every asset in the world on the blockchain for NFTs to be considered a success.

2. Government Regulation

Government regulation is the second largest obstacle for NFTs going forward. Many regulations would help advance our space by providing more customer protection, but there are two specific areas of regulation that have the potential to end the usefulness of NFTs.

The first area of concern is a ban or limit on the use of self-custody. Crypto networks can't be shut down directly, but if governments were to limit a fundamental element of crypto, like self-custody, it would effectively end any usefulness that crypto has. If you can't own your private keys, we don't need blockchains.

The second area of concern is crypto assets being deemed illegal securities by the SEC. Aside from bitcoin, which has been ruled a commodity, every other cryptocurrency and NFT has questions. SEC Commissioner Gary Gensler has said directly that many cryptocurrencies appear to be illegal securities, while the Bored Ape Yacht Club is currently being investigated.

Many NFTs are just digital art with no additional utility provided by the creators. However, some profile picture projects operate like businesses because they accept investments during the mint process, and their investors often expect to receive a return on their investment in addition to utility. Will these NFT projects have to shut down if they’re deemed securities? I don't know.

What’s next?

The potential for U.S. regulatory intervention should be monitored even by those who live outside of it because much of the crypto industry's development, investment, miners, and nodes are located here.

What worries me is that governments are often populated by people who see crypto as a threat or don’t understand it. Fortunately, with a combined market capitalization of over $1 trillion, the crypto industry has made a significant impact and is likely to receive the proper recognition. Plus, many US-based crypto businesses have both the financial resources and expertise to effectively lobby Congress.

I’m hopeful that even if utility NFTs and other cryptocurrencies are deemed to be securities, new regulations specific to the crypto industry will be implemented to make it easy for these assets to properly register and be traded by individual investors without the need to become public companies and comply with the usual requirements for securities.

1. Centralization Wins

The biggest threat to NFTs is centralization. While digital assets may have a future, it’s no sure thing that they will take the form of NFTs. It pains me to ask, but what if middlemen are actually a good thing? Middlemen can provide assurances and protection for assets, a better user experience, as well as customer support in case of issues.

If a company can create an environment that users prefer for digital assets over one backed by a blockchain, the better user experience will likely win because users won’t care about decentralization until they encounter problems like being locked out of their account, unable to transfer assets, or facing high selling fees.

Meta and Apple are the biggest centralized threats, but the threat can come from anywhere. Mark Zuckerberg has shown interest in NFTs by integrating them into Instagram and Facebook. However, he may change his mind and build a closed ecosystem or put strict restrictions on the NFTs allowed on the Meta marketplace.

Apple, on the other hand, has already started its war on NFTs by banning the latest Coinbase Wallet app update and requesting a 30% cut of gas fees for each transaction. Does Apple want a cut of every NFT that's ever sold on an iPhone? Will they eventually launch an Apple-branded digital asset marketplace in the future? I have no idea what the future looks like regarding NFTs and Apple, but Apple's usually not in favor of open ecosystems, which is likely bad news for blockchains.

What’s next?

While some form of centralization will be necessary for improved NFT usability, it's important that all digital assets are still stored on a blockchain and that users have the option to exit the centralized platforms if they desire.

Wrap Up

NFTs and blockchains face many threats before reaching mainstream adoption, but the most serious threats are government regulation and centralization. Government regulation is kind of out of our hands. Crypto believers just have to hope that we've made enough of an impact and that enough smart businesses and people are on our side to help regulators better understand.

To mitigate the threat of centralization, it’s crucial to provide crypto-native businesses with the necessary funding and incentives to build on decentralized protocols. This is especially important because end users may not prioritize decentralization.

It’s important for blockchain believers to continue to educate others and advocate for decentralization because if the benefits of NFTs aren’t clearly articulated, all the digital assets of the future may wind up in Zuck’s centralized database, rather than a blockchain. But I’m hopeful that we’re just getting started!

In the crypto and NFT world, there are tons of bad actors, phishing sites, rug pulls, and other scams. This doesn’t mean there are no good actors in crypto or that the whole thing is a scam, just that when there’s money on the line, people will always look for ways to take advantage of others.

Eventually, as crypto grows up, the user interface for NFTs will improve substantially, and we’ll have better standards, norms, and protocols, which should make it harder for bad actors to succeed.

My bet is that the user experience for NFTs will eventually get so good that once NFTs go mainstream, most people won’t even know they own a blockchain asset.

In the meantime, if you want to play around with self-custody digital assets, you take a ton of risk and must remain vigilant to protect your assets. While we wait for the user experience to improve, I’ll give you five tips to protect your NFTs. Keep in mind, I’m not an expert in cryptography or a developer, but I’ve managed thousands of dollars successfully (so far), and I’ve been around this industry for many years.

1. Protect your seed phrase

A secret recovery phase (also known as a seed phrase) is a 12-24 word combination that protects your private key. This phrase can be plugged into hundreds of different wallet providers or apps and your assets will come with you.

The only time your seed phrase is needed is for the initial setup of your wallet. When you're setting up your wallet, always double-check the URL bar or the app store reviews to make sure you're on the correct app or site. There are tons of phishing sites that attempt to look like the real wallet providers.

Your seed phrase is for your eyes only. If someone requests that they need your seed phrase, you’re being scammed.

Where to store seed phrase

I don’t recommend screenshotting your seed phrase or typing it out on a notes/documents app because if your device is poorly password protected, and your device becomes compromised or another person has access to it, your phrase is at risk.

If you insist on storing your phrase digitally, it’s best to opt for a password manager like 1Password or Apple's iCloud. Just make sure you’ve got a strong password for your password manager. Wallet providers like Coinbase Wallet and Rainbow can automatically upload your phrase to iCloud password manager if you let them.

Most secure storage

The most secure way to store a seed phrase is to write it down with a pen and paper and put it away in a safe. It’s not a bad idea to make a second copy to give to a trusted family member who lives in a different location.

The downside of this method? You can potentially forget where your paper’s stored or the ink from the pen could fade away over time.

I can't help you remember where you put your paper, but if you’re worried about the ink fading, you can engrave your seed phrase into a metal plate. Here’s a list of all the companies that provide metal plates with grades of how well they withstand heat and corrosion. (I bought this one: Black Seed Ink.)

2. Buy a hardware wallet

A hardware wallet is a device that stores your seed phrase and plugs into a computer, sort of like a flash drive. I highly recommend using one if you have more than if you have more than $1,000 of crypto assets.

The two main hardware wallet manufacturers are Ledger and Trezor. In my experience with both devices, Ledger devices are a bit more user-friendly and more compatible. If you plan to do your crypto interactions with a computer via a USB cable, I recommend the Ledger Nano S Plus. If you want the option to use your phone, I recommend the Ledger Nano X.

Benefits

• Your seed phrase is stored on your hardware wallet, which is never directly connected to the internet. Your seed phrase remains cold. If one of your devices is compromised there’s no way for the attacker to access your crypto.

• It allows you to follow this simple principle: never type your seed phrase. Just enter your phrase into your hardware wallet using the tiny screen interface for initial setup. You literally type it with a keyboard.

• It adds friction to transacting with the blockchain, which increases your security naturally because you have more time to process your actions. When using a hardware wallet with Metamask, you first sign the message on MetaMask, then you need to unlock your hardware wallet with your pin, then sign the transaction with your hardware wallet. It’s three steps, rather than one.

• If you lose your hardware wallet or it breaks, it's not the end of the world as long as you’ve properly stored the seed phrase because you can boot up unlimited hardware wallets using your seed phrase. I keep a new and sealed Ledger device around so that I’m prepared if my hardware wallet stops working.

Drawbacks

• Signing a simple message is cumbersome and takes three steps rather than one. And it’s even more annoying if your hardware wallet is in a different room than your computer.

• You'll need to transfer your assets from your old hot wallet to your new address (that one that’s associated with your hardware wallet), which can cost a lot in gas fees. On the Polygon blockchain, it’s not a huge deal, but if you have a bunch of Ethereum NFTs, it can cost anywhere between $1-$10 per NFT, depending on how busy the network is. I recommended weekend mornings for the cheapest Ethereum gas.

Misconceptions

I bought a Ledger hardware wallet back in 2018, but I was so intimidated that I let it sit in my closet for two years. I didn't understand how it worked and was terrified that I'd accidentally  lose all my bitcoin. The setup is fairly simple and Ledger has great walkthroughs, but let’s go over two things that NFT newcomers often get wrong to clear up basic confusion.

Firstly, it is important to know that NFTs are not stored in a regular or a hardware wallet. A hardware wallet is not a USB drive. Every NFT is stored on the blockchain. A wallet with a private key just gives you control and allows you to manage the assets that you own on the blockchain.

Secondly, you should not reuse an old seed phrase from a previous wallet because that defeats the purpose. Your old phrase has already been on the internet--it’s hot. You must create a new phrase that has never seen the internet or been used before.

3. Know what you’re signing

After you’ve logged into a site with your wallet, to perform an action, you’ll often get a message that requires a wallet signature to go further.

While MetaMask and other wallets have made interface improvements, these messages can be intimidating. And if you sign one malicious contract, your assets are gone.

First, let's go over gas-less signatures.

Gas-less signatures

You might need to sign a message to prove you own a specific asset to gain access to a Discord, a whitelist, or something else token-gated.

For example, in my Discord server, to get access to all of the channels, you’ll need to use an app called Collab.Land and sign a message that proves that you own the Collector Club NFT, which gives you access to our entire server.

Another gasless signature example is to access your OpenSea profile or watchlist, you’ll need to sign a message that proves you’re the owner of your wallet.

As a general rule of thumb, you can’t get scammed if you don’t first pay gas. A simple gasless sign message is safe in any scenario.

Signatures that require gas

Anytime you interact with the blockchain, you’ll need to sign a message, which costs gas because you’re writing to the blockchain.

There are two scenarios where you’d sign a message that are universally safe: sending someone crypto or buying an NFT on a trusted marketplace.

Minting an NFT and claiming an airdrop can be safe, but it’s important to read what the prompt is before signing. If you see the word “mint” on the MetaMask prompt, you should be safe. But if you’re unsure, check its legitimacy by typing in the suspicious site into the Twitter search field to see if it’s being talked about.

Sometimes bad actors create a page that appears to be for a mint, but when you interact with a contract, it’s actually a “set approval for all” command message, rather than a mint, which is the most dangerous thing you can sign. If you sign this message and pay for gas, the bad actor is given permission to do whatever they want with your tokens, like transfer them to their own wallet.

So why does this “set approval for all” message even exist if people can just steal your assets?

“Set approval for all" is used all the time in a non-malicious way, like when you want to list your NFT on a marketplace. Approving your tokens to a marketplace contract will allow the marketplace to take your NFT from you and give it to the buyer after the buyer pays for an NFT. As long as you use a trusted marketplace, there’s nothing to worry about.

Always be sure to check the URL bar to see that you're on the proper site. Memorize the TLD extensions to your favorite marketplaces (Opensea.io, Looksrare.org, Blur.io) or bookmark them to avoid using legit looking phishing sites.

Playing it safe

If you just want to be extra careful, you can use a site called: https://revoke.cash/

Just connect your wallet, and it’ll display your assets, and which contracts (sites) you’ve given permission to use your assets. If you see a site that you don’t trust on your token approvals, pay a small gas fee to remove their permissions.

Most importantly, if you think you’ve been compromised, move your assets to a fresh wallet (with a new seed phrase) immediately because you’re in a race against the scammer.

4. Use multiple wallets

Due to the risks of minting, use a hot wallet for minting, then transfer your assets to your hardware wallet once you’re done. I don't always utilize this strategy myself because I feel confident in what I'm signing and I don’t mint often, but it’s a smart move.

The upside to using this multi-wallet strategy is that none of your assets from your hardware wallet are on the line if you were to accidentally approve your tokens to a malicious contract. Two wallets running simultaneously inside the MetaMask wallet is easy to set up and switching wallets takes seconds.

The downside is that the two-wallet-system will cost extra money. Moving assets from your hot wallet to your hardware (cold) wallet will cost a gas fee and transfers can’t be batched together. You may also run into a problem where you need assets from your hardware wallet in order to mint something. There are multi-wallet solutions in the works, where a hot wallet could sign for a cold asset, after you’ve given it permission to do so cryptographically.

5. Disable DMs on Discord and Twitter

Social engineering is how most people get scammed in the crypto world. Often someone will pretend to be someone that they’re not to trick you. Or sometimes the person you’re talking with has been sim swapped.

The simplest solution is to disable DMs on Discord and Twitter from people that you don’t know to keep impersonators out of your DMs.

If a friend asks you to do something, and it doesn’t feel right in your gut, always message your friend on a different platform to make sure that they haven’t been compromised.

It’s not always the case, but greed is typically the main thing that leads to people losing their assets. The big projects like Bored Apes, Doodles, or Azuki aren’t doing a surprise mint and you’re not going to make money from it. Think through your actions.

Wrap Up

Eventually, we’ll have a more user-friendly experience for NFT users, but in the meantime, if you want to play in the wild west, you need to bring your A-game. I’m hoping that I’ll look back at this post in five years and laugh at how ridiculous these precautions are.

To summarize, take the storage of your seed phrase seriously. And if you have more than $1,000 dollars of crypto assets, consider getting a hardware wallet, like Ledger.

If you want to get fancy combine a MetaMask hot wallet with your cold storage hardware wallet. You can mint with your hot wallet where the stakes are low, then later transfer your good assets to your hardware wallet.

And finally, take a deep breath before big transactions and think through every click and signature. The old adage, "if it's too good to be true, it probably is" has never been more true than in the crypto ecosystem.

Many people ask me: which NFTs should I buy?

Usually, I say to not buy anything because many come into NFTs looking to make a quick buck, but that’s not realistic in the current market. If you’re looking to invest in crypto, my advice is to buy bitcoin and ether weekly and hold them for the next ten years.

But like we’ve talked about throughout this series, NFTs are about more than just money. If you’re looking for NFTs to collect for fun, I have four cool project recommendations in the $50 range.

These projects won’t make you rich, and they might even be worthless in five years, but if you have fun collecting, who cares?

1. Ethereum Name Service (ENS)

Ethereum Name Service (ENS) is one of the most obvious bets in all of crypto. If Ethereum achieves mainstream adoption, ENS will play a huge role in the ecosystem.

ENS is a domain service that works in a similar way to traditional .com domains.

First, let's go over how traditional domains work. YouTube sits on a series of IP addresses. But instead of typing something like 208.65.153.238 into a URL bar to get to YouTube, you just type in youtube.com, and that .com domain brings you to the proper IP address. Traditional domain names act as a mask for the IP.

Crypto has a similar problem with a similar solution because each wallet has a nasty 40-character string that acts as a public address. It's not human-readable and the only way to make sure funds go to the proper place is by carefully copying and pasting it.

ENS sells .eth domains that mask the public address into human-readable names. When someone wants to pay me from Coinbase or MetaMask, they can type in my public ENS domain (camsecore.eth) into the to send field, and it'll automatically direct the payment to my full public address (0xf9CA8b89a32e1260cA2b4d2E189Ee5eF397FFd17).

ENS is more than just a human-readable name for receiving payments. It also acts as your username for web3. Instead of having a bunch of different usernames across all the sites that you use, in a web3 world, you'll log in with your wallet and your default ENS domain will act as your username. All across web3, you'll see me as camsecore.eth.

Holders of an ENS domain can attach a profile picture, website, and email making it easy for people to connect with you. It’s like a universial social network that all web3 apps can plug in to. We're probably at least five years away from lots of sites allowing you to sign in with your wallet, but it's obvious that it's coming.

Price

Just like .com domain names, some short .eth domains are highly coveted and go for more than $100k on the secondary market.

The good news? An unregistered ENS domain (w/ five characters or more) will cost you $5/year plus a small gas fee. Because of the gas fees for renewals, I recommend registering your ENS for five years upfront to save money. If you register it for five years, you can usually get it done for under $50.

The even better news? ENS is so new that there are so many gems still available. You're almost guaranteed to find a .eth domain with your first and last name unless you're John Smith. Think of ENS like the early years of Instagram or Twitter when basic usernames were still available.

It's unlikely that your .eth domain will be valuable in the future, but it's nice to have a readable name for receiving money. And if crypto goes mainstream, a clean username for all your apps will be desirable to many.

How to buy

Go to https://app.ens.domains/ and click "connect" in the top left corner to log in with your web3 wallet.

Next, type in some characters until you find something that's available, and pick the number of years you want to register it for. Click "Request to Register" and sign the transaction with your wallet. This first transaction usually costs a couple of dollars and takes a couple of minutes to confirm on the blockchain. Once the first transaction is confirmed, wait 60 seconds, then submit a second transaction to buy the domain.

2. Dapper Labs Collectibles

Dapper Labs is responsible for three main collectibles sites that run on the Flow blockchain: NBA Top Shot, NFL All Day, and UFC Strike. These platforms are a way for sports fans to buy, collect, trade, and own limited edition 10-second highlight clips of their favorite athletes. Think of it like sports cards, but on steroids.

The beauty of Dapper Labs products is twofold:

• They’re dead simple to use because they hide the technical crypto complexity.

• You don’t need a big budget—many moments are just $2.

Price

Just like ENS, moments in the Dapper ecosystem have tiers:

• Legendary moments have a supply of less than 120. A few Legendary moments have sold for more than $250k.

• Rare moments have a supply of less than 2k. Rare moments typically range between $100-$1k in price.

• Common moments have a supply of less than 60k. Common moments typically range between $2-$100 in price.

There are currently less than 100k collectors on these platforms, which makes the moments with 60k supply cheap to acquire, but with billions of sports fans globally, these large mint counts may look small if digital collectibles gain mass adoption.

Previously, I was treating my collection as an investment because I thought this type of digital collectible would become obvious to more people because it’s a much better experience than traditional cardboard cards. But now it's become obvious that we're many years away from Dapper products being in the same breath as the physical world counterparts like Topps and Panini. I've lost more than $10k on Top Shot. You shouldn't have any expectations for your moments to increase in value.

With that being said, I still have a decent-sized collection on Top Shot and All Day. I love collecting just for the sake of collecting. It's fun to analyze the market of players and collect moments with your friends. My friends and I will often see a cool dunk or long touchdown pass, and text each other that that play needs to be a moment.

How to buy

If you like basketball, my recommendation is to go to nbatopshot.com and buy a pack for $9. In this pack, you’ll get three moments and a chance of one being a rare moment.

Ripping packs is fun, but if you want to choose which players to own, go to the marketplace.

If you know how to buy toilet paper on Amazon, you’ll know how to buy a Top Shot moment. Once you have an account, type in a player’s name into the search bar, tap on the moment, tap on the “select and buy” button and choose the moment you want and pay for it with your Dapper balance, bank account, or credit card.

You can spend just $50 to get more than five of your favorite players.

3. fxhash Artwork

Generative art has been around since the 1960s, but there’s a new twist with a blockchain involved.

Generative artists create shapes, spacing, and color palettes, then they create different probabilities of where and how often the attributes appear in a piece. A generative artist is responsible for the general vibe of the collection because they create the algorithm, but the algorithm has final say on what each peice looks like. Generative arts has a fun element of randomness because neither the artist nor the collector knows what the final minted pieces will look like in a collection.

Art Blocks popularized generative art on the Ethereum blockchain, and it features collections like Fidenza by Tyler Hobbs and Ringers by Dmitri Cherniak.

High-end Art Blocks peices go for more than $100k, making it unattainable for many. Fortunately, there's an alternative platform called fxhash that utilizes the Tezos blockchain, which has an active marketplace and some well-known artists on it.

Price

The cost to mint a generative art piece on fxhash is often less than $10. However, some pieces go for thousands of dollars.

Tezos NFTs aren’t as coveted as Ethereum NFTs because its blockchain isn’t as respected by crypto enthusiasts and it doesn't provide the same ownership guarantees, which is why they’re more affordable.

While I’m not a believer in the Tezos blockchain and think it’s unlikely to be around in ten years, minting on fxhash is cool for three reasons:

• It's close to a risk-free way to learn how to mint using a self-custody wallet. The most you could lose is $20.

• You can support artists and come away with cool-looking art. Who cares if it's not valuable?

• fxhash may act as a gateway drug to discovering the rest of the generative art world.

How to buy

Instead of buying ETH and using a MetaMask wallet (like we learned last week), you'll need to buy XTZ and use a Temple wallet. Once you’ve sent XTZ to your wallet, sign into fxhash.xyz and search the marketplace for a piece that catches your eye.

Once you’ve found a piece, click the “mint interaction” button and follow the prompt in your wallet after it pops up, then wait for the transaction to be confirmed on the Tezos blockchain.

4. Avastars

Most NFTs are tokens that prove ownership of an asset. Usually, a typical profile picture project contract just points to a URL where the image is stored. Theoretically, if something happens to the web server where the contract points, your token might point to nothing. This has happened and will continue to happen over time.

You’ll always have irrevocable property rights to the token, even if your NFT’s image disappears, but it’d be up to social consensus as to what that image points to.

In 2017, J1mmy and other NFT OGs noticed this image storage problem with CryptoKitties. J1mmy became so paranoid that the cats he bought would point to nothing in the future that he eventually created a new standard called NFT42. Avastars were the first project to utilize the new standard by storing all of the artwork and character attributes on-chain. Each SVG layer of the artwork is stored on the Ethereum blockchain, which preserves the entire NFT as long as Ethereum is alive.

On-chain storage is currently utilized by dozens of projects, but it’s still rare due to the additional cost and complexity. Most NFT creators opt for cheaper alternative third-party solutions, like IPFS and Arweave, to ensure the images never disappear.

Price

Like many profile picture projects, there are different traits and rarities, which means that the prices vary. But a basic floor Avastar currently goes for around $60.

Avastars were never able to gain cultural prominence. It’s likely that the Avastars sentiment will never change and they won’t get the proper credit they deserve, but that’s OK!

Three reasons why I recommend these:

• They make great profile pics, especially if you try to spend a little more to find one that resonates with you.

• It’s cool to own a part of blockchain history: first on-chain avatar project.

• I don't think they'll ever be completely worthless because they’re built by well-respected NFT OGs. Crypto nerds like me will always see some value in them.

How to buy

Go to opensea.io and search for Avastars. Find one you like, connect your wallet, click "Buy Now" and sign and pay with your wallet. If you want a more thorough breakdown, read last week’s buying demo.

Wrap Up

We’ve gone over four projects that you can snag for around $50. These projects aren’t going to make you rich, but they’re a great way to get your feet wet and experience what it’s like to buy and collect NFTs. And they’re just fun to collect, which is a major reason why I’m still here.

If I could only pick one of these projects to buy, I’d go with an ENS domain. Who doesn’t want a cool username that you can use around the entire internet?

Today, we’ll learn how to buy an NFT on an open marketplace using a self-custody wallet.

Ethereum, Polygon, Solana, and Tezos are the main smart contract blockchains that have active marketplaces for NFTs. And to buy NFTs on these blockchains, you'll need some of the blockchain's native currency to pay for the NFT and the associated fees. Ethereum, where most of the prominent collections are found, requires ETH.

Unfortunatley, during the peak NFT seasons, it was not uncommon for a single transaction on Ethereum to cost $150. If you’re buying a $50 NFT, a $150 fee doesn’t make sense.

Fortunately, blockchains like Polygon, Solana, and Tezos have fees that are often less than a penny. There aren't as many well-known collections that utilize these blockchains yet, but NFTs are still in the first inning.

For our example, we’ll buy ETH on FTX, set up a crypto wallet using MetaMask, then buy an NFT on the Ethereum blockchain on the OpenSea marketplace.

The good news? Once you learn how to buy an Ethereum NFT, the wallet setup and buying process are almost identical with other blockchains, wallet providers, and marketplaces.

Buying an NFT on OpenSea using Ethereum

1. Get an Account With a Crypto Exchange

First, sign up for an account on a crypto exchange. Coinbase, FTX, Gemini, Crypto.com, and Binance are all reputable companies. It doesn’t matter which you choose, but you’ll need to pass a KYC verification by providing the company with a form of identification.

2. Buy Crypto and Wait a Week

Once verified by your exchange, figure out which currency you need. If you want to buy NFTs on Ethereum via OpenSea, you’ll need ETH. If you want to buy NFTs on Solana via Magic Eden, you’ll need SOL.

For this example, we’ll buy ETH on FTX.

After buying ETH, we need to withdraw it from the FTX, but due to regulations, you can’t withdraw cryptocurrencies from an exchange until seven days after buying.

While we patiently wait, we can work on the next step.

3. Create a Digital Wallet

Now, we need to create a wallet. There are tons of wallet providers and they’re all free to use.

For Ethereum NFTs, the most widely used wallet is MetaMask. It has a phone app and a desktop browser extension. (Lots of crypto and NFTs can be done on a phone, but I highly recommend a desktop for trading NFTs because it gets messy on mobile.)

For this example, we’ll use the MetaMask desktop browser extension. Be sure to download it directly from MetaMask.io (there are lots of fake websites).

Once you’ve downloaded MetaMask, you should be greeted with a screen that looks like this:

Now, click “Create a Wallet.”

Now, create a password. This password isn’t important and can easily be reset if you forget it.

Next up is the most important step. You’ll be presented with a list of 12 words that are your “secret recovery phrase,” sometimes referred to as a “seed phrase.” This recovery phrase protects your private key.

Now, write your recovery phrase on a piece of paper. Store the paper in a safe place on a piece of paper, then make a backup that's kept separate from the original piece of paper. Only in desperate cases, should you copy your phrase in a documents app or screenshot it.

Now, click on the words presented in the order that matches your recovery phrase. Once you type your recovery phrase into your wallet provider, you should never type it again.

For those who didn't see it: NEVER TYPE YOUR SECRECT PHRASE

And under no circumstances, should you ever share this 12-word phrase with anyone. It’s for your eyes only. If someone gets a hold of it, they’ll have full control of your assets.

I’ll cover in-depth NFT security in a future post, but as long as you understand the need to guard your phrase with your life, you’re in a good position.

Now, that you've entered your recovery phrase into MetaMask, you officially have a wallet setup inside your web browser. You can bring your recovery phrase into any compatible wallet provider/app (Coinbase, Rainbow, etc) and you'll have access to all your assets.

4. Transfer Crypto to Your Wallet

After it’s been seven days since your purchase of crypto on an exchange, it’s time to send crypto from your exchange to the wallet associated with your MetaMask.

To send crypto, we need to locate our public wallet address. If you click on the MetaMask extension inside your browser, your wallet address is located near the top of the app. It’ll start with “0x….” and it’ll be followed by a string of 40 numbers and letters. You don’t need to memorize your address and you don’t need to protect it. If you present someone with your address, the only thing that they can do is send you money. It's safe. However, keep in mind, if you share your address with someone, they're able to view what’s in your wallet.

Once you’ve located your public address, copy it to your clipboard.

Open your crypto exchange app to find the crypto you purchased seven days ago. From there, you should find a "withdraw" or a "send" button, depending on the app you use. Then, enter the amount you want to send, copy your public address from your MetaMask into the "to" field, and tap send.

Assuming you’ve passed your identity check and nothing looks fishy to the exchange, the funds should arrive in your wallet within 10 minutes or so.

5. Sign Into an NFT Marketplace With Your Wallet

Now that we've got a funded MetaMask wallet, we're ready to sign into a marketplace. Because we've got ETH, our two best marketplace options are OpenSea and LooksRare.

To buy on OpenSea, we’ll go to opensea.io, and click on the head icon (top right corner), then “Profile”.

Now, choose which wallet provider you’re using, in our case, MetaMask. Finally, click "Accept and Sign" and a window will pop up in your MetaMask asking you to sign a message. After you've signed the message, you officially have an OpenSea account.

You can just as easily sign into the LooksRare or X2Y2 marketplaces in the same way with your MetaMask wallet.

6. Find an NFT & Sign the Transaction

Now, let’s browse the marketplace for an NFT to buy. And we'll click "buy now" and then "complete purchase" once we find something to buy.

A new window should show up on your MetaMask.

You'll see an estimated "gas fee" added to the purchase price. This fee is the cost to use the Ethereum network. Depending on the time of the day and the overall state of the market, the fees will vary heavily. Currently, it costs about $5 to buy an NFT, which is relatively low for the Ethereum network.

MetaMask does a solid job of estimating how much you should pay for gas. If you become an expert, later on, you can edit this depending on what you're trying to accomplish.

If everything looks good, we'll sign the transaction, which tells the network of Ethereum nodes, what you're trying to buy and how much you're willing to pay. Once your transaction is in the pool of pending transactions, you have to wait for a validator to confirm your transaction. We can watch our transaction on Etherscan.

If you submit a transaction as MetaMask presents it, it will typically take between 45 seconds and 5 minutes to confirm. But sometimes transactions can get stuck in the pool and take hours to confirm if the conditions of the network can change rapidly. If this happens, we can resubmit our transaction a second time by adding more gas.

Once a transaction is confirmed on Etherscan, you’re officially the owner of your first NFT. You can view your NFT inside the OpenSea profile viewer and it should show up with any other wallet viewer.

Wrap Up

We just bought an NFT on an open marketplace with a decentralized wallet using ETH on the Ethereum network, after buying crypto on FTX, but we would’ve just as easily bought SOL on Coinbase and used the Solana network.

While we haven't covered advanced security tips yet, you should have at least a basic foundation of how things work.

If all of this sounds intimidating to you, I highly recommend playing around on Nifty Gateway or NBA Top Shot first to get your feet wet.

Buying NFTs with a self-custody wallet won’t be for everyone, but if you want a taste of true ownership, you need to try it!

At this point, you might be wondering what you should buy…so that’s what we’ll cover next week! I’ll give you a few interesting projects that cost less than $50 that are worth looking at.

To kick off our NFTs for Rookies, we explored what NFTs are and why they’re valuable. Now, it’s time to learn where to buy NFTs.

There are dozens of NFT marketplaces, but each can be categorized into one of two types.

The first type is a centralized curation marketplace. These markets require no crypto knowledge and use an interface that should feel familiar to anyone who’s shopped online. The downside is that there’s a limited selection of NFTs and no true ownership guarantees.

The second type is an open marketplace. These markets are where the most popular collections, like Bored Ape Yacht Club, Doodles, and Art Blocks are found. The downside is that there's a steep crypto learning curve and users take on a ton of security responsibility.

Neither marketplace type is good or bad. Which one you use depends on what you want to collect and how serious you plan to take your NFT journey.

To start this post, we’ll go over the advantages and disadvantages of centralized curation marketplaces, then do the same for the open marketplace. We’ll end with what I think the future will look like and which type of marketplace I recommended.

Centralized Curation Marketplaces

Centralized marketplaces require just an email, a password, and a credit or debit card. Buying and selling NFTs will feel as familiar as buying something on Amazon.

These marketplaces include sites like NBA Top Shot, NFL All Day, Nifty Gateway, Autograph, and Candy. My first NFT purchase was through NBA Top Shot, a marketplace for 10-second video highlights.

Centralized marketplaces will onboard millions of new NFTs collectors because, by design, they abstract all the crypto complexity. They're a great way for beginners to get a taste of what it's like to own an NFT.

While they’re easy to use, they come with a few drawbacks:

• These services act as the tastemakers and curators of NFTs. The curation is great because you don't have to worry about scam projects, but you only get access to a small portion of the world’s NFTs.

• If you have an account with five services, you'll need to remember login info for five accounts and view your NFTs in five different spots. For example, if you have NFTs on NBA Top Shot and Nifty Gateway, there’s no way to view or trade them using the same account.

• The ownership is similar to owning a skin in a video game because these services hide the blockchain and wallet aspects from you. In most cases, you don’t have true ownership of your assets. The services could lock you out of your account at any time if you don’t follow their rules.

Open Marketplaces w/ Self-Custody

Hardcore crypto enthusiasts often say, "not your keys, not your coins," which is a reference to transferring your coins from a crypto exchange account (e.g. Coinbase) to your wallet. Taking self-custody of your assets (cryptocurrencies or NFTs) requires a crypto wallet with a private key.

A digital wallet secured by a private key is the best form of true ownership ever invented. It’s so powerful that if you can remember the 12 words from your seed phrase, you can travel the world without a device and carry billions of dollars worth of assets in your mind. Your assets are completely uncensorable, meaning that the right to hold or transfer your assets can’t be taken from you under any circumstance.

With a crypto wallet (like Metamask or Rainbow), you can log into dozens of decentralized marketplaces (like OpeaSea, LookRare, and Magic Eden), and your NFTs travel with you. Most of the popular NFTs collections like Bored Ape Yacht Club, are found on open marketplaces along with hundreds of thousands of others.

True ownership gets crypto nerds excited, but it’s not for everyone because it comes with a few major drawbacks:

• The learning curve is steep. You need to buy crypto (ETH or SOL), then learn how wallets, private keys, public keys, and gas fees work.

• You must remain vigilant at all times (even if you're an expert). Signing a single malicious contract can completely wipe your wallet of all your assets. True full ownership over your assets is great, but in exchange, you're given full responsibility. Can't remember your seed phrase? Your assets are gone. Give someone access to your seed phrase? Your assets are gone. Accidentally send an NFT to the wrong address? Your asset is gone. Blockchains don't have customer support and no one will save you.

• NFTs are priced in their native currencies, not USD. NFT prices are volatile, but prices are even more chaotic when you add in the volatility of ETH's price. For example, my Doodle has been worth between 8-16 ETH over the last six months, which bad enough as it is, but due to the fluctuation in the price of ETH, my Doodle is down closer to 85% in dollar terms.

Which marketplace is best for you?

The short answer is both!

NFTs will likely utilize a hybrid approach that heavily focuses on centralized services for onboarding new collectors with an off-ramp for those who want true ownership.

I appreciate the responsibility for proper security and love the true ownership aspect of digital assets. And most of my favorite NFTs are found on the open marketplaces.

But there’s a good chance new collectors won’t value true ownership or a universal wallet like crypto nerds do. And that’s okay! Many collectors will be happy to buy on centralized services. Even as a crypto purist, I still use NBA Top Shot daily and there’s no denying that it was my gateway drug to discovering the rest of the NFT world.

While it’s possible to discover hidden gems and make money on centralized marketplaces, they should be seen as a way to have fun collecting rather than something that’ll make you rich. Because crypto believers are the ones most fascinated with NFT and think true ownership is fundamental, I’m confident that most of the prominent NFTs collections will remain on open and decentralized marketplaces. But as we’ve discussed in the first two posts, NFTs are about a lot more than just money.

If you're feeling courageous, next week, I'll show you the step-by-step process for buying an NFT on an open marketplace.

It’s highly unlikely that there's a personality more suited to NFTs than mine.

What’s my point?

I wouldn't have stopped reviewing tech products if I didn't passionately care about the future of NFTs. But I haven't done a great job of conveying why I'm so intrigued with them in my NFTs for Rookies guide.

So for this post, I'll answer: why should you care about any of this NFT stuff?

I can't speak for all NFT buyers, but NFTs take three of my most primal instincts and interests that I've had since I was a young kid and combine them into one:

• Internet culture.

• Collector since the age of three.

• The joy of the flip.

Let’s dive deeper into each of the three aspects.

1. Born on the Internet

Whether I was listing stuff on eBay while in middle school, teaching myself HTML to update my MySpace profile page, or spending hours watching strange videos on eBaum's World, I’ve been addicted to the internet for a long time.

The internet has been my only source of income since middle school, but it's also an incredible resource for learning. Not to sound like your crazy uncle who takes everything he sees on the internet as an indisputable fact, but I've learned way more from a combination of YouTube, Twitter, and Reddit than I ever did in school.

The internet is also great for getting exposure to like-minded people who you wouldn't necessarily be able to find in your local community. Many of us have found a place where we fit in on the internet because no matter how niche our interests are, there are almost always thousands of people with identical interests.

Not everyone recognizes the beauty of the internet, but those of us who are ultra-plugged in, know that the internet has its own culture that differs from the physical world. Have you ever seen a really funny meme or witnessed a cool internet moment, but when you explain it to people who live mostly offline, they look at you like you have five heads? You have to provide so much context to the meme, that it's not even funny or relatable to them. At best you get a pity chuckle.

How’s this related to NFTs?

True digital ownership is the next evolution of the internet. Spending ten hours a day on the internet and enjoying its culture may make me a nerd, but there's a certain set of people, who usually skew younger, who find great comfort in the communities they're a part of.

Now with NFTs, we can take the unique and interesting culture that's being created and digitize it in token form and let it be freely tradable. We can collect and own our favorite memes that made us laugh. Or our favorite art pieces that only people online would understand. I'm having a blast trading NFTs with a small set of crypto enthusiasts, but I bet that crypto culture and broader internet culture merge eventually.

Communities are another area where NFTs are ripe for adoption. There are more than 130,000 subreddit communities and more than 300,000 YouTube channels with 100k (or more) subscribers. NFTs can and will be created around these communities and they’ll come in many different forms:

• Basic access pass for a gated community.

• Limited edition exclusive pass for top fans.

• Free NFT with an unlimited supply to prove you’re a part of a community (no monetary implications).

Just look at people's Twitter bios to see tons of political, religious, and brand references. Or in my case, I have #bitcoin in my Twitter bio. Bios are just quick ways to show the communities that you're a part of. I think NFTs will eventually act similarly and be seen as social currency.

Group coordination is interesting too. With the power of crypto and NFTs, it's possible for a group of people who only know each other online to come together to accomplish a common goal. For example, let's say a group of people want to stop vandalization in a city and they've collectively put $1k into a shared wallet. Theoretically, everyone who holds a token from the group gets a vote on how the money is spent to accomplish the goal.

Some of this bottom-up management idealism will never work, but there's a ton of untapped potential with community coordination that'll be experimented with over the next ten years.

2. Collector in my blood

I've had the instinct to collect and organize things since I was three years old. My first love: collecting used bottles. For young Cam, there was nothing better than a cleaned-out apple juice bottle or a Hershey syrup bottle. I always appreciated a design that differed from the norm. I wish I was kidding, but I litteally carried around a bag of used bottles as a kid!

Fortunately, my interests evolved into more traditional collectibles like baseball cards when I got a bit older. Because only 50 cards fit on my card shelf, I was always striving to create the best set of cards for my shelf by ripping packs, buying new cards online, and trading with friends. Baseball cards were never thought of as an investment—they were just fun to organize on my shelf.

I have a theory that the instinct to collect is built into many humans and that most have least one thing that they collect, even if it's not seen as a traditional collectible. (Related: Before jumping down the NFT rabbit hole, I was working on a side project for people to take pictures of their favorite items (or collections) to display to the world. In my case, on my profile, I show off my tech gear as my latest thing to collect.)

How’s this related to NFTs?

People collect things just for pure ownership reasons without any financial motivation. Whether it's my gramp collecting coins, my mom proudly displaying all of her favorite books on her bookcase, or my friend's collection of baseball gloves, most people have a 'thing'.

NFTs are just another item to add to the list. And because they’re such a broad category, eventually there should be something interesting for everyone to collect.

NFT projects like NBA Top Shot and NFL All Day bring me back to my days of organizing my baseball card shelf. Instead of upgrading my shelf, I’m tweaking my Top Shot wallet to be the best it can be. Plus, once a week, I get the opportunity to virtually open a pack of moments with the hopes of landing one of my favorite players. Physical sports cards are an easy parallel to see with NFTs.

But I also own some cool art NFTs that I like the looks of and I'm proud to support the artist's work.

Many outside the crypto and NFT world think we're buying NFTs and crypto for the purpose of exchanging them for dollars. For many of us in the crypto community, this isn't the case. If we trade our NFTs for dollars, it's only to buy more NFTs. I've got at least 10 or so NFTs that I wouldn't sell under any circumstances. I don't care about their value, I just want to own them because I like them.

3. Flipping things

Back in first grade, I made myself a felt pouch with my name on it to store my pencils. It wasn’t long before a few classmates took notice and wanted a pencil pouch. I saw an opportunity because I knew I could sell each classmate a personalized pouch with their name on it for $2 and acquire the materials for half that price.

A few years later, I found eBay and was always looking for things around the house or other places that I could flip for more money.

You might think that I’m just entrepreneurial or that I love money. That’s true to some extent, but there’s more to it than that: the joy of the flip.

It’s fulfilling to see value in something that others don't, then be rewarded for finding that value before others do. It's probably why I love playing fantasy sports or why my dream job as a child was to be the Red Sox General Manager.

How’s this related to NFTs?

Crypto and NFTs are 24/7 markets. They’re the freest of all markets. And there's no better way to test your skills of finding value where no one else sees it than the free market.

Did you believe in an idea before anyone else? Or maybe you have a life experience that gives you a unique insight that no one else has. Whatever your edge is, the market will reward you for it monetarily when you're right. The market is the ultimate scoreboard.

That's not to say flipping NFTs is easy. Most people will likely lose money trying to flip. It’s not something that should be done with money you can’t afford to lose. It takes a lot of time and knowledge to find where you have an edge, but if you get into the weeds, you’ve got a shot. And NFTs can be a great hobby.

Wrap up

NFTs will never be for everyone, especially if you didn't grow up with the internet. One of the main reasons why NFTs could potentially fail is that people might not want all aspects of their lives financialized. But NFTs don't need to be seen as purely financial instruments to be useful or appealing.

It's likely many people who are competitive and enjoy flipping have already found their home in NFTs because crypto is like a magnet to us. But eventually, NFTs will move out of their early adopter phase and they'll become attractive to all hardcore citizens of the internet.

Due to the broadness of the NFT category, it's likely that people who like to collect things in the physical world, even if it's not a traditional collectible, will find their "thing" in the NFT world.

My brain completely broke when I discovered that people were buying pixelated jpegs for hundreds of thousands of dollars. Who in their right mind would spend that money on a digital image when they could just as easily right-click and save the image to their desktop?

Curiosity got the better of me. I tumbled down the NFT rabbit hole. The deeper I dug, the more NFTs—and the value attached to them—started to make sense. Here’s what I learned.

Some NFTs are worth hundreds of thousands of dollars thanks to a combination of:

1. Perceived value

2. Exclusivity

3. Timeliness

4. Scarcity

To collectors, these ingredients make NFTs viable long-term collectibles, investments, social signals, access passes, and more. In this post, I’ll dig into each of those facets and explain why I believe NFTs will not only retain their value but be a lot more popular in years to come.

But first—let’s address the elephant in the room

For transparency’s sake, let’s talk about my journey. Two years ago, I brushed off NFTs as a cash grab. Today, I own hundreds of them.

Before you get your torches and pitchforks, let me just say this: I’m not trying to convince you to follow me down the rabbit hole. There are no affiliate links or sales pitches in this post.

My only goal is to create something educational. There’s so much bad intel out there that it can be hard to know what to trust. When I was doing my research, I was starved for a non-biased source. Maybe you are too.

If you walk away with more knowledge in your back pocket, I call that a win. And if I can remove even a little bit of the stigma around NFTs, that’s more than enough for me.

1. Perceived value

To even begin to understand why some NFTs are worth eye-popping amounts of money (to the right people) and others aren’t worth a dime, we need to talk about actual vs. perceived value.

Actual (or real) value is the calculable cost of a thing without any outside forces acting on it. So, if we’re talking about a piece of art, the actual value would be the cost of the oils and canvas used to make it, plus (arguably) the cost of the artist’s time.

Perceived (or intrinsic) value is the value that society places on a thing. So, if we’re talking about art, it’s the amount of money that an investor is willing to pay for that piece of art.

The difference between actual vs. perceived value is sometimes insane. Leonardo da Vinci didn’t use $850-million-worth of materials to paint the Mona Lisa, but that’s the current valuation.

Speaking of crazy perceived value, let’s talk about something that society has collectively agreed on for thousands of years: gold.

If you add up all the gold in the world, it’s worth more than $11T, but only 8% of gold has a legitimate use case. You may argue that jewelry is a use case for gold, but the only reason we're inclined to make jewelry out of gold instead of other material is because we’re told gold is valuable. And the only reason we think gold is valuable is because society has deemed it to be. It’s kind of a vicious circle, isn’t it? But for some reason, we’ve all collectively bought into the lie, which makes gold the most valuable meme of all time.

Just like famous paintings or gold, most NFTs have very little actual value. The cost to create an NFT can be as little as a penny (I explain more about what NFTs are, if you’re interested).

But the perceived value of some NFTs is astronomical. One of the most valuable NFTs in the world is CryptoPunk #5822. It sold for $23.7 million in January.

With all of that said, it’s important to note that perceived value differs from person to person.

I wouldn’t spend $850 million on the Mona Lisa, even if I had that much to spend. You probably wouldn’t spend $69.3 million on Everydays: The First 5000 Days. But somebody would. And that’s enough.

Of course, no NFT just has perceived value by virtue of existing. That’s something that it gradually earns (or doesn’t) thanks to a combination of the other things I talk about below.

2. Exclusivity

“Okay,” I hear you say, “But there’s only one Mona Lisa. There are probably millions of people who have copy+pasted any given NFT. So what makes this jpeg special?”

To continue with my original analogy, it’s important to establish that making a copy of a piece of art doesn’t diminish the value of the original as long as you can prove which one is the original (I’ll come back to this in a moment). The same is true of NFTs.

There’s only one original Mona Lisa. You can visit the Louvre Museum and take a picture of it. You can buy an identical replica and hang it on your wall. You can even make a copy of your copy, and then make a copy of that copy, and so on, forever. But doing so doesn’t mean that you own the Mona Lisa. And you definitely can’t sell your replica for $850 million.

Similarly, you can save the NFTs that I own to your phone. You can even use my NFTs on social media, if you want. But only I can prove that I’m the owner of an mfer.

Yup. I bought one.

It’s kept in my digital wallet, but I can sell it whenever I feel the urge. And, just like art, even if everyone who reads this post collectively decides to copy+paste my mfer and use it as their pic for every profile on every social media account, the value of my NFT isn’t diminished.

Counterintuitively, you might actually help my mfer increase in value.

A lot of perceived value is based on how famous (or infamous) a thing is. The more my NFT is shared, the more it enters social awareness. The more it enters social awareness, the more desirable it will likely become to collectors.

I explain this more in-depth in my first post, but the TL;DR of what separates an NFT from your run-of-the-mill jpeg is exclusivity. The owner has a proverbial ‘bill of sale’ that enables them to prove that they own it—and that they are the only person who owns it.

3. Timeliness

Everybody wants to be part of making history.

I’ve been collecting baseball cards since I was a kid. And one of the crown jewels for any card-collector is the famous T206 Honus Wagner. This card is worth a crazy $7.25 million.

Sure, the Honus Wagner card is valuable because it’s scarce. But more importantly, it comes with a good story of Wagner being the first athlete to pioneer endorsement deals. As long as professional sports remain culturally relevant, so will this card.

Timeliness isn’t something you can fake. Most NFTs won’t be relevant for more than a few weeks before they softly vanish without making an impact. But a few are going to be important historic milestones.

Some collectors think CryptoPunks (from 2017) will stand the test of time because they’re the first collectible avatar project and represent a milestone in blockchain history.

Other collectors think projects like Autoglyphs, Fidenza and Ringers will remain relevant because they’re some of the first generative art projects on a blockchain.

And some are betting that projects like the Bored Ape Yacht Club have the potential to become the next Disney in terms of intellectual property because the Apes appear in books, comics, a series of movies, and a video game (some of the owners are already using their Ape as branding for new restaurants, beer, and coffee beans).

Whatever your opinion of the Bored Apes, they’re always a talking piece on social media and blogs after celebrities like Snoop Dogg, Tom Brady, Justin Bieber, Jimmy Fallon, Post Malone, and Kevin Hart buy an Ape.

Will the Bored Apes become a media brand as powerful as Disney? Probably not! But some collectors who are attracted to BAYC are making the long term play that the brand will maintain and increase in cultural relevancy over time.

So yes, NFT collectors want the value of their items to increase, but it’s not always for the purpose of exchanging them for dollars. Sometimes it’s just about owning a piece of history.

4. Scarcity

Do you remember Beanie Babies? In the 90s, Ty created those instantly-recognizable little stuffed toys, along with a narrative that Beanie Babies were scarce.

It was an interesting strategy that might have worked… if they hadn’t then flooded the market with millions of toys and consequently destroyed their own scarcity.

I can’t help but wonder… would Beanie Babies have remained more culturally relevant if it was possible to mint them on the public blockchain?

It’s tough to tell, but let’s think about it logically:

1. The public would know exactly how many babies were in the collection, who owns them, and no other babies could be added to the original collection.

2. Ty would be operating under additional scrutiny. If they decided to make a second collection, the public would know about it immediately (and the backlash would be real).

3. Buyers wouldn’t have to worry about the condition of the babies or the possibility of counterfeits, because it would be easy to prove authenticity.

4. Sellers wouldn’t have to worry about taking pictures, getting their collectible officially graded, or shipping to the buyer. There’s a lot of risk in that process!

5. If Beanie Babies were purely digital property (vs. physical objects) you could buy and sell them much more easily and efficiently.

It’s pure speculation, but I think that at least some parts of this process would have helped Beanie Babies gain more staying power. At the very least, adding more transparency to the process would only have been a good thing.

We can already see that at work in NFTs. NBA Top Shot lets you buy, sell, and trade 10-second video highlight “moments” from your favorite NBA players. For a time, it looked like they were just going to churn these out year-after-year and dilute the pool. But after public pressure from collectors, NBA Top Shot radically changed their stance on its future supply.

But even if I’m wrong, and NFTs never become something that’s globally recognized, there’s still some value to be had here. Some of the rarest Beanie Babies still sell for thousands of dollars, which proves that mainstream attention isn’t needed for something to have value.

Many of the current NFT projects are probably destined for these niche communities.

Will my NFT be valuable in the future?

The short answer is… I don’t know. The long answer is… what do you consider valuable?

If you’re asking if it will be worth a lot of money, then for all of the reasons listed above, the answer is a solid maybe. But, like making smart investments in crypto, it does take some research, some industry knowledge, and a little bit of luck.

That said, in my experience, the overwhelming majority of collectors are still collecting because they genuinely like their NFTs and see them as a store of value. That’s why many communities are thriving despite poor market conditions.

A common criticism of NFTs is that they’re like flypaper for greater fools. Investors are lured in and they make overpriced purchases because they hope to flip it for more money (and thus get rich quick). That was certainly true during the peak NFT mania cycles in August of 2021 and then again in January, but it’s less common these days.

What we’re seeing now is that most of the short-term speculators have been washed out. There’s still money to be made, but it’s not quite so easy.

But there is value to NFTs beyond a price tag, if you’re interested in that sort of value. Here are a few of the ways that I gauge the value of my collection:

NFTs give you clout in the crypto world

Let me tell you about a story where I was overcome with excitement over an NFT and then explain why I sold it because it was becoming too valuable.

In crypto, there’s a term called “apeing” which refers to when crypto traders hear of an interesting project and buy into the project without doing any research. After years of being deep in the crypto weeds, seeing “Bored Ape Yacht Club” for the first time made me laugh. There was something about the traits from the artwork that I loved too.

After I saw a few people who I respect changed their Twitter profile picture to an Ape, I realized that I wasn’t the only one who resonated with the collection, so I bought my first Ape for $2k.

I later traded my original Ape for a different one that I vibed with more, then I used it as my Twitter profile picture. I thought it’d be cool to own an interesting story from the early days of crypto. I wasn’t expecting the price to move much up or down, but I was comfortable with the price going to zero.

As the year went on, I ran into a problem: my Ape became way too valuable.

It got to the point where my cartoon picture was such a large portion of my net worth that it made my palms get sweaty and made me feel uncomfortable.

I ended up selling it for $180k to NFL player, Marlon Humphrey, but I didn’t take the decision to sell lightly. I debated it for months. A few weeks before the sale, I was secretly hoping that my Ape would stop increasing in value, so that my rational brain wouldn’t force me to sell.

My Ape became a part of my identity online and I met some like-minded crypto nerds along the way. But most of all, my Ape became a signal that I was early AND right about NFTs.

For people who relish in the feeling of being right or trend-setting, there's nothing better than bragging to your friends that you found a new band or TV show before it goes mainstream. Now, you can prove how early you were to anything. Your tokens are a signal of your taste.

So sure, the money was nice, but there was more to it than that.

NFT profile pictures can be seen as a networking tool to connect with other like-minded people. NFTs are in their early days, so owning them only appeals to a small group of “crypto bros,” but my bet is that this trend trickles out to other internet communities. We’re already beginning to see this play out with Reddit’s digital collectible avatars.

NFTs are social signals

This is related to the above point, but I’ve been thinking about it a lot lately.

Each year, I would stay up until 3 AM to pre-order the newest iPhone. It’s hard to justify why, considering my old iPhone worked just fine and there were other phones on the market that would work just as well. But man, I had to have that new iPhone.

And I’m not the only weird one. My wife is obsessed with her Yeti water bottle collection. Some of my family members adore their Bombas socks. Then there are other people who must have a $20k+ Hermès Birkin bag or a $100k+ Rolex watch.

Why do we buy items when there are viable alternatives available for less?

We want to own things that show others who we are and what we stand for. Some signal to others through their religion, sports teams, political parties (or hundreds of other things), but there’s a solid percentage of people who do this through their favorite brands.

In economics, this phenomenon is called “conspicuous consumption” and most people engage in it in some small way, even if it’s just at the grocery store.

NFTs are just the digital version of this phenomenon. It’s a way for me to signal to like-minded people that I’m part of the in-crowd.

The interesting flip side to that is when an NFT skeptic sees someone with an Ape profile picture on Twitter, it’s probably a clear signal of who to avoid. But even the people who mock our profile pics are engaging in social signaling, just to a very different crowd.

If you understand social signaling, but it’s still unclear why someone would choose an expensive digital item over a physical one, let’s consider our screen time. Kids are spending an average of 7.5 hours staring at a screen per day. And 31% of adults are online “almost constantly.”

I’m convinced people will want to own digital status goods instead of physical status goods as people progressively spend more of their lives in the digital space. I’m obsessed with the internet and spend an enormous chunk of my day on it, so owning cool NFTs is preferable to a fancy car. The more you value internet culture and the communities you’re in, the more NFTs will make sense and be desirable to you.

Gamers, who tend to spend lots of time on screens, are no stranger to wanting to own highly sought-after digital items. Last year, gamers spent billions on in-game skins, which usually serve no purpose aside from signaling to other players who you are.

Some NFTs come with exclusive perks

There’s that word again, “exclusive.”

Many NFTs work as a pass that grants you access to gated content, software, Discord channels, or future NFT mints. And some NFTs even give you access to real-life events.

On NBA Top Shot, owning certain NFT moments from your favorite team qualifies you for free tickets to your team's games. For the 2022 playoffs, Top Shot gave away ten tickets to each playoff game. I own the complete set of Celtics players, which put me in the running for free tickets for 11 potential games, but unfortunately, I struck out each time.

Many of the prominent collectible profile picture (pfp) projects put on real-life conferences and events too.

The Bored Ape Yacht Club just hosted their second annual ApeFest at NFT NYC. ApeFest was a four-day festival that featured free food, drinks and performances from Amy Schumer, Snoop Dogg, Eminem and others.

The cheapest way to get access to ApeFest is by owning a Mutant Ape (currently valued at $20k). I’m not suggesting this event is worth $20k, but it’s not uncommon for VIP passes to popular music festivals to cost $1k, and your Ape gives you annual access, instead of one-time access. ApeFest just has to remain relevant to a relatively small group of NFT nerds, for this perk to have substantial value.

An interesting part about NFT membership passes is that once you decide you no longer want to be part of the club, you get paid to leave the club by reselling your pass on the secondary market.

NFT access passes will have secondary market value as long as the perks of the pass remain. But even without the perks, if the market views the event as something important it may have value as well, in the same way that certain tickets from historical Super Bowl games remain valuable.

A world where all concerts and sporting events come in an NFT form makes a ton of sense. Imagine not having to worry about online ticket exchanges or scalpers. Can’t make an event? Just sell your secure ticket/NFT to someone else and the deal is done.

As for bragging rights, I have a huge stash of crumpled-up paper tickets for every baseball game that I've ever been to. I’d love to be able to organize and display all of my tickets in my digital wallet, like a virtual collage of some of my favorite memories.

You support the art you want to see

This is a bit of a reductive argument that isn’t going to change anyone’s mind, but if you already like NFTs, then supporting NFTs can be its own reward.

I love investing in small creators and watching them gain popularity. It’s sort of like joining a small YouTube community and watching it grow to a hundred thousand subscribers. I get to point to that creator and say, “Yeah, I was there. I helped make that happen.”

Of course, this dynamic exists with physical creations but because an NFT is digitally native and the ownership is public, it’s easier for someone’s creation to get attention on social media in NFT form.

Early collectors essentially work as the creators' active marketing team for free because they are naturally incentivized to spread the word. And creators will always have a direct link to their supporters too, which means they can drop future work into the owners’ wallets with just a few clicks if they’re inclined. The token creates a direct relationship where the incentives for both parties align perfectly.

Collectors also work as passive marketing. For example, if you click on my profile picture on Twitter (Instagram and Facebook are working on NFT integration too), it’ll bring you to my public wallet that features all my NFTs. Eventually, if everyone’s collection is one click away on social media, certain creations should get more attention and become more desirable based on which people own things.

The internet and social media have already created more tastemakers by democratizing who has influence. The fact that you’re reading this post from a random guy in New Hampshire proves this. Now, if you add a better way to monetize via NFTs to the growing amount of people with influence, it may allow more creators to be seen. In my two years of collecting NFTs, I’ve seen well-respected collectors bring hundreds of unknown digital artists to the forefront.

Because NFTs are so new, we haven’t seen all the ways that NFTs can help creative people.

One of my favorite examples of empowering creators happened two months ago. There’s a digital pixel artist who goes by the pseudonym @jmw327 on Twitter and has more than 100k followers. Despite having loyal fans, jmw327 claimed they were making less than $10k per year. Desperate for more income, they auctioned their first NFT. After 24 hours of bidding, it sold for $40k. They quadrupled their yearly earnings with just one piece of work!

I’m not suggesting all paintings, songs, photos and videos originate as an NFT anytime soon. But this NFT model should be an interesting experiment in monetization for certain individuals because it may help to increase attention and popularity.

Wrap Up

In a post from 2010, Chris Dixon writes "the next big thing will start out looking like a toy." This trend plays out frequently as technology advances. For example, 15 years ago, almost everyone dismissed early smartphones and wondered why anyone would want a small pocket computer. Now, most people can’t imagine a world without a smartphone.

Time will tell if NFTs are the next big thing or just a toy.

At the very least, I can say that NFTs have captured the imagination of the crypto natives (a small part of the internet) and will remain popular in the crypto community.

My money is on NFTs being a long-term store of value. I think that as our time on screens increases, digitally native assets that gain cultural relevance will become as coveted as their real-world counterparts.

There’s a famous quote that says “Art acts as a collective memory of society.” NFTs are no different. For the first time in the history of the internet, we have a way for culture to be digitized, made scarce, and traded.

Figuring out which NFTs will remain relevant is anyone’s guess, but that’s part of the fun.

A non-fungible token (NFT) is a unique and tradable digital token that verifies ownership of an asset. Token ownership can represent assets like digital art, images, videos, music, gaming items, event tickets, and thousands of other items.

The owner of an NFT has a proverbial ‘bill of sale’ that enables them to prove that they own it—and that they are the only person who owns it.

You might be thinking: digital assets aren’t new.

And you're right!

The first .com domain names were registered in 1985. Tickets to events are digital. Gamers spend billions on in-game skins for virtual avatars. Even Twitter and Instagram usernames are digital assets.

So what’s the difference between these digital assets that we’ve known for decades and NFTs?

The short answer is that NFTs operate more like real-world assets. You can freely trade them, sell them, and even insure them. You can't do that with an in-game character skin in Fortnite--those transactions are all one-way.

The long answer is what I’ll cover in this post. To get there, I’ll explain the basics of what a blockchain is, then get into how a blockchain’s interoperability, immutability, composability, and censorship resistance take digital assets to the next level.

That may sound like a giant word salad now, but it’ll make more sense if you keep reading.

What is a blockchain?

A blockchain is a widely distributed database that keeps data secure and safe amongst a huge network of computers. Blockchains have many applications, but the primary use case is to keep an irrefutable record of how much cryptocurrency each person who uses the network has.

To paint a clearer picture, imagine the blockchain is an enormous public Excel sheet filled with numbers in each cell. In this example, thousands of computers have an identical copy of the sheet stored on their hard drive. The sheet can be viewed publicly for free, but anyone who wants to write in a new cell has to pay a fee to do so. There are two rules for writing a new cell: 1. Each computer with a copy of the sheet must update its sheet to match the others. 2. It’s virtually impossible to change a cell after the initial entry.

Because blockchains deal with imporant data, like money, the data must stay secure forever, and all actors on the network must play fairly. There are two main consensus mechanisms: “proof-of-work” and "proof of stake" help to validate and protect the networks. I won't explain how nodes, miners, and validators work with these mechanisms specifically, but just know that an attack on Bitcoin or Ethereum (the most popular blockchains) would cost more than $30B. And as these networks grow larger, the cost to attack them scales up.

So which blockchains support NFTs?

All blockchains support cryptocurrencies (fungible tokens). For example, bitcoin is a cryptocurrency that's enabled by Bitcoin’s blockchain.

But NFTs require a different type of blockchain that supports smart contracts. Some smart contract blockchains include: Ethereum, Solana, Flow, Polygon, Tezos, and Avalanche. But as of now, Ethereum is the clear leader.

Because of a blockchain’s guarantees, owning an NFT gives you irrevocable property rights to your token, and grants you the freedom to hold or transfer indefinitely.

Many blockchain skeptics argue that a centralized database with good security can protect digital assets just as well as a blockchain. While that may be true in some cases, let’s go over the things that a blockchain brings to the table aside from strong security.

1. Standardization & Interoperability

To view a webpage on your device, a web browser utilizes at least four standardized protocols (TCP/IP, HTTP, & HTML/CSS).

Because these protocols are universal, a website will render in the same way on dozens of different web browsers and devices. For example, ebay.com will look similar on Firefox and Chrome.

SMTP is another protocol used for email. Whether you use Gmail or Yahoo for your email interface, you’ll use the SMTP protocol to send an email.

Before the invention of Bitcoin, in 2009, a protocol for transferring digital currencies peer-to-peer didn't exist. Four years later, Ethereum took the blockchain concept and expanded its use case to programmable smart contracts. But it wasn't until 2018 that the ERC-721 token standard was born on Ethereum, which became the accepted protocol for non-fungible tokens.

When you own an ERC-721 token, it’s viewable and transferable with any compatible digital wallet provider. And the token is sellable on any marketplace that can read ERC-721 tokens.

How is this different from previous versions of digital ownership?

Let's say you have Red Sox tickets from Stubhub and you want to transfer them to a friend. Your friend will have to download the Stubhub app on their phone and provide you with their username. If your friend uses SeatGeek as their preferred ticketing app, they're out of luck because these two apps aren't interoperable.

Or let’s say you want to sell your tickets on the Stubhub marketplace. It’s free to list your tickets, but when the tickets sell, you owe 15% of the sale price to Stubhub. Stubhub provides a service, so you could argue that they deserve a cut, but because sellers can’t list tickets on other marketplaces, they hold the sellers hostage. Some may see the high marketplace fees as a way to reduce ticket scalping and price markup, while others see this as interfering with the free market.

If your tickets were in NFT form, you’d be free to list them on any ERC-721 compatible marketplace (OpenSea, LooksRare, etc). Because the NFT marketplaces compete on fees, they’re forced by the market to provide a superior service or reduce fees.

In the NFT world, the marketplace fees are 2.5% or lower. As more marketplaces come online, these fees will trend even lower.

Having one accepted standard for digital assets means that token holders have their choice of wallet providers and marketplaces. There's no lock-in or penalty when you want to switch providers, which creates a great environment for users because wallet providers and marketplaces must compete to please users or they'll lose them.

2. Provable Scarcity & Immutability

Most people agree that scarcity of digital assets is important. For example, Fenway Park has 38k seats, so selling 40k tickets for a single game wouldn't make sense.

The Red Sox closed ticketing database seems to work well because they'd face a lot of angry fans if they sold the same seat twice. We have to trust that the companies issuing digital assets are always acting in good faith and this system seems to work fine for event tickets.

So why does scarcity of digital assets need to be provable? Can't we just trust the company that issues the asset to protect our interests?

NFTs are early in the adoption cycle because they’re a brand new asset class, but here are early NFT iterations where provable scarcity is important:

Digital art and photography. Previously, anyone could right-click and save digital art or photography to their computer. To get around this, artists need to jump through hoops like watermarking the art so that they can try to (hopefully) at least get credit if someone does that. NFTs solve the problem of ownership. Now, we can have an original owner and it opens new opportunities for creators.

Digital collectibles & in-game items. Previously, a company may promise to issue a limited edition asset, but it was just a promise. Things can change. Especially when additional profits are on the table. Now, once scarcity is stated on a blockchain, it can’t be changed.

Assuming society collectively decides that certain items from this new asset class have value, it’s important that everyone can recognize that the assets are scarce and who owns them, not just via one company’s database.

3. Composability

Blockchains work as building blocks for third parties. Due to a blockchain’s public and open nature, it’s easy for third-parties to build services around NFT assets.

For example, because NBA Top Shot uses a blockchain rather than a database, analytic sites like LiveToken, Collective, Own the Moment, and Evaluate built businesses on top of Top Shot’s data. And they didn’t even have to get Top Shot’s permission to do this!

Not only are these companies able to build sustainable businesses off of Top Shot’s data, they simultaneously improve the experience for Top Shot users, which helps Top Shot’s business. Everyone wins.

Before blockchains, the only way to build a project off another company’s data is by applying to use their public API. But this is a risky proposition because companies can change their API or strip your access without notice. For example, in 2018, Twitter turned off its API which hurt a bunch of businesses, like Tweetbot, Twitterrific, Talon, and Tweetings, that relied on this data.

Blockchains provide incentives for new businesses to be built, which is great for providing NFTs owners with more applications and utility.

Another interesting aspect is that app makers or communities can tap in directly to certain communities. For example, if a coffee shop wants to give everyone who owns certain tokens 15% off their coffee, this is easily doable. The potential for partnerships and collaborations are endless when assets are on a public blockchain.

4. True Ownership & Censorship Resistant

Most crypto-natives argue that a blockchain’s most important feature is its censorship resistance, meaning that the right to hold or transfer your assets can’t be taken from you under any circumstance.

Many claim that censorship resistance is essential for protection against tyrannical governments, but for the sake of this post, let’s say governments don’t care about your NFTs. How else is this censorship resistance important?

Let’s say you spend $100 on the skin for Fortnite, but a few weeks later, you receive an email that you’ve been banned for violating the company’s code of conduct. What happens to your skin?

You don’t have much ground to stand on if you broke the rules that you agreed to. But what if the violation was a misinterpretation of the rules? Or maybe your account was wrongly flagged by their automated system.

Either way, you’ll likely at least temporarily lose access to your assets while you appeal your account’s status. In a blockchain-less world, a single keystroke inside a database from one company employee or automated system can be the difference between owning an asset and not.

It’s unlikely Fortnite or any gaming company would recklessly ban players and their assets because it’d hurt their brand, upset customers, and the company would lose money from previously paying customers.

But the fact there’s a .0001% possibility of losing your assets, brings up the question: what do you own when buying these gaming assets? You’re essentially renting assets from a single company’s database.

Other digital assets come with restrictions too. For example, if you own a coveted username on Twitter or Instagram, it’s against the terms of service to transfer or sell them to someone else.

Owning an asset-backed by a blockchain means you have irrevocable property rights to that token. The only way someone can take a crypto asset from you is if you give an attacker your seed phrase (a string of 12-24 words) or sign a malicious contract (we’ll cover NFT security and crypto’s confusing UX in a future post).

Whether you live in Uganda or the United States, you have digital property that’s not only recognized by everyone, but it cannot be seized by anyone on the internet.

And the wildest part? You can freely cross borders and store billions of dollars of digital assets in your mind (without a device), if you can memorize your 12-word seed phrase.

Wrap up

NFTs offer several benefits over non-blockchain digital assets without many sacrifices. A previous drawback to blockchains was that they didn’t scale well and were too cost-prohibitive to make sense for all applications, but this is no longer the case.

Developers in the Ethereum ecosystem are working on layer-two solutions that will radically decrease costs. And Ethereum side-chain options, like Polygon, already work well with near-zero transaction fees.

The bottom line? Because blockchains are becoming more efficient and cost-effective, companies will likely face criticism if their digital assets are on a closed-off database rather than a blockchain in the future. Blockchains will become table stakes.

If you found this post interesting and want to know why some people are valuing certain NFTs at crazy levels, check out the next post in this series.

I’m a Top Shot investor and a collector, but recently, I’ve felt more like a gambler. The combination of operating with a short-term mindset and constant FOMO is the perfect recipe to get crushed by the market.

It’s time to recalibrate.

The following Top Shot tips are reminders for myself, but there should be value for everyone. I’ll start with tips that apply to general investing, then roll into Top Shot specifics.

#1 – Spend Only What You Can Afford to Lose

Each time the Top Shot market pulls back, I’m tempted to invest more because of my conviction in Top Shot. Even worse? I went out of my way to make sure my Top Shot account got to the 1% percentile according to the Evaluate and MomentRanks valuation tools.

Don’t spend money you can’t afford to lose. It’s universal advice, but even more important with digital collectibles. I don’t want to miss out on more market growth, but it’s irrational to spend more.

Crypto-related projects have the potential for huge returns because there’s a ton of risk. Digital collectibles and currencies are new stores of value without a substantial track record. Volatility is inevitable.

NBA Top Shot seems like a better version of paper cards. Bitcoin seems like a better version of gold. I’ve invested under the premise that both digital assets continue to grow. But if I’m wrong? I’ll still be able to eat. I’m playing with money that I can afford to lose.

#2 – Buy Moments You’ll Keep For a Year

Last week, I bought lots of Series 2 #15,000 moments intending to hold the moments for just a few days. My thinking? New users would come onto the platform over All-Star weekend and there wouldn’t be enough supply for everyone. I had no long-term faith in these moments and just wanted a quick flip, but it blew up in my face.

New rule: I won’t buy a moment unless I’m comfortable holding it for at least a year. Buying to flip probably won’t work as intended. Buy moments that you like. Don’t chase profits.

If you own a moment you like, then the market tanks, you’ve got a nice moment in your collection. You might’ve overpaid, but you can live with it.

The other problem with frequent selling? The 5% Dapper transaction fee. Just to break even, the moment needs to increase in value by 5%. A 5% increase was easy when the market was growing by 100% per week, but that was never sustainable growth.

#3 – Take Money Off The Table

I believe that Top Shot will be a gigantic platform because it’ll take chunks of the market away from physical cards, fantasy, betting, and even video games (2K MyTeam).

But there’s a chance Top Shot disappears after the initial hype because it’s just a startup.

Potential issues:

• New competitors. (Top Shot is MySpace?)

• Top Shot makes poor supply decisions.

• There’s a better AR or VR version of moments and Top Shot doesn’t innovate.

• NBA viewership continues to decline. Moments won’t have value if the NBA loses its relevance.

• The Top Shot market is growing too quickly and needs a huge correction.

We’re in the middle of a huge cycle where all crypto projects are experiencing high growth. Is Top Shot just riding the crypto wave? I’m confident that Top Shot will navigate potential roadblocks, but there are no certainties.

All of this to say: don’t be afraid to take money off the table if you’ve made huge profits,

Two weeks ago, my initial investment was up over 500%. I considered selling a few moments, but I hated the idea because of my long-term conviction. Plus, how can I tell friends that Top Shot will be bigger than physical cards while selling moments simultaneously?

That was a stupid way to think.

You can have concerns about Top Shot’s risks while maintaining a positive long-term outlook. Taking money off the table if you’re heavily invested is smart risk management. Everything may disappear, so mitigate the risk.

Not only will your risk be lowered with less skin in the game, but you’ll also see the market more rationally. I’ve felt much better since taking half of my original investment off the table.

#4 – Think At Least A Month Out

Almost a million moments hit the marketplace last weekend, and close to a million more moments will be pumped into the economy in the next few days (Cool Cats Drop 3 and Pre-Order Base pack).

When new users want their favorite players and can’t get packs, they have no choice but to pay high prices for Common Series 2 moments. But with an increased supply, new collectors should be able to get their favorite players at a reasonable price.

Will the price of the Series 2 Common moments bounce back after plummeting more than 50%? Maybe. But remember, Top Shot has said that base packs should always be available. When base packs become available on-demand, the moments in the pack won’t return a profit. We’ll eventually have a marketplace with $2 base moments, which will be healthy for the Top Shot economy.

If break-even base packs are the end-game, at what supply level does it happen? If non-star players with #35,000 moments sell in the $50 range, the solution will be to increase the mint size to #50,000 or pump out #35,000 moments at a higher velocity.

Series 2 isn’t a done deal. Top Shot can increase the supply of Series 2 base packs until the packs stop selling out. If a player has 20 Series 2 Common moments, will #35,000 moments hold long-term value? I doubt it.

Top Shot won’t ruin the supply for the Rare or Legendary moments, but if Common moments are meant to be accessible to everyone, what’s stopping them from minting millions more?

Top Shot can’t mint more Series 1 moments, which removes the guesswork. But there still too many unknowns in Series 2 to invest confidently.

Another thing to keep in mind: Top Shot changed the edition sizes for Series 2:

Common: 10,000+

Rare: 500 – 4,999

Legendary: 50 – 499

A Standard tier is coming, which should fit into the 5,000-9,999 range. A Standard tier will make the Series 2 Common moments look worse than they do currently.

#5 – Use Market Caps to Your Advantage

A moment’s market cap is the price it’d cost to buy the entire supply of the moment.

Multiply a moment’s supply, by the lowest ask price to get an estimated market cap for each moment.

Example: $1,200 lowest ask x 1,500 supply = $1,800,000 market cap

It’s easy math, but there are great tools, like Evaluate.market, that calculate each moment’s market cap for you.

Market cap is simple, but it’s misunderstood by lots of newcomers. Two $40 moments aren’t equal when one moment has a supply of 1,500, while the other has a 2,500 supply.

How can you use a moment’s market cap to your advantage?

It’s a good way to find irregularities in the market.

Example #1

When a player has the same moment in multiple tiers, the market caps across tiers should be similar or skew in favor of the more rare moments.

Almost universally, Series 1 Common moments have a 50% or higher market cap than the Metallic Gold counterpart. This is a strange disconnect and possible inefficiency.

Let’s look at Luka Dončić’s first moment:

Common: $6,250 x 1,431 supply = $8,943,750

Metallic Gold: $18,777 x 299 supply = $5,614,323

Holo MMXX: $88,000 x 50 supply = $4,444,400

Cosmic: $150,000 x 49 supply = $7,350,000

Either Common moments are overpriced or the more rare moments underpriced.

Why does this happen?

Common moments are the most accessible moments and provide more liquidity. But once the market matures with more true collectors coming on board, Metallic Gold, Cosmic, and Holo moments should rise to the level of the Common moments. If I had to bet? Metallic Gold moments will surpass Common in long-term value.

Example #2

A player’s first moment will get a special badge, and unless the highlight is lame, it should be the player’s most valuable moment.

Let’s look at Luka Dončić again:

1st Common Moment: $6,250 x 1,431 supply = $8,943,750

2nd Common Moment: $2,629 x 3,524 supply = $9,264,596

Both moments have a similar market cap, meaning Luka’s “first moment” appears to be undervalued.

Example #3

The price of a moment will increase when it’s part of a challenge, but a moment’s true value (price after challenge finish date) can be guesstimated by comparing to other Series 2 moments with a similar circulating supply.

Once you know the true value of each moment in the challenge, play around with the percentage of collectors who will complete the challenge (Example: 76% completed Cool Cats 1, 80% completed Cool Cats 2, 71% completed The Gift) to find the rough mint number of the reward.

Then, use the reward’s estimated mint amount to gauge its appropriate price. Add together the true values for each moment in the challenge, and add it to the estimated price of the reward moment to see if the challenge is worth going for.

When NBA Top Shot dropped the Holo Icon pack for $999, more than 25,000 collectors waited in the queue with just 2,673 packs available. Then, more than 50,000 collectors showed up to the latest Cool Cats pack drop.

No matter the price or the number of packs dropped, Top Shot sells out instantly.

What’s everyone buying?

Each pack contains cards called “Moments.” The moments are 10-16 second video highlights that show a player dunking, shooting, or passing.

For those who can’t get their hands on a pack, individual moments can be bought on the NBA Top Shot marketplace, which has seen more than $90M in sales in the last 30 days.

What makes a moment special?

Top Shot moments are the same video clips found for free on YouTube. But each moment has verifiable scarcity. This type of digital collectible is known as a non-fungible token (NFT). In Top Shot’s case, each moment has a unique serial number that can’t be replicated or messed with, and there can only be one owner for each serial number.

Most NFTs will likely die. It’s a new and unknown market. But NBA Top Shot has the best chance of going mainstream because it preserves many of the familiar aspects of sports card collecting while incorporating a more efficient and liquid market, better supply, digital clout, and collection aspect.

I’ll lay out the reasons why Top Shot is superior to physical cards, and why it appeals to a wider audience than traditional card collectors.

Top Shot’s Advantage

#1 – Liquidity

The value of your collection of moments is viewable at any time, and if you price your moment appropriately, it sells within minutes.

Compare this to physical cards:

To sell a physical card, you need to pick a marketplace, take pictures, place a proper value on your card, then list it. With multiple marketplaces and no easy access to a card’s sales history, it’s difficult to properly value physical cards.

On Top Shot, past sales and current moments prices are viewable at any time. It’s easy for a seller to determine a moment’s value and easy for buyers to find what they want.

With physical cards, once the buyer and seller agree on a price, the card needs to be shipped, which comes with added costs and headaches.

On Top Shot, the funds arrive in the seller’s account instantly. And after a few minutes, the moment appears in the buyer’s collection. There’s no shipping, wait period or chance of something going wrong.

The Top Shot marketplace is a huge improvement for buyers and sellers compared to the traditional card marketplaces, like eBay.

Because of Top Shot’s liquidity, owning a moment is more similar to owning a stock than a physical card, which may interest people who don’t want to deal with the headache of owning a physical card.

#2 – Verifiable Scarcity

Topps or Panini won’t print more cards than a card’s serial number indicates, but you can’t rule it out either.

And the majority of cards found in a physical pack aren’t numbered. Theoretically, there’s an unlimited supply.

Top Shot is built on the Flow blockchain. It’s easy to see how many moments were minted, who owns them, and which moments are still in a pack. There’s no secrecy. Everything is transparent.

Each moment pulled from a pack displays its supply limits. If the supply is still circulating, there’s a CC label on the moment. The moments with a circulating supply will eventually turn into a limited edition (LE) moment after the count is final.

Top Shot’s verifiable scarcity keeps things interesting and fair for the casual collector.

#3 – Grading

Most professional card collectors won’t buy cards that haven’t been graded by a professional authentication company like PSA, BGS, or SCG. But these grading companies aren’t perfect and can be fooled.

Digital collectibles can’t be bent or altered, and there’s no grading process. Each moment remains in perfect condition. You know exactly what you’re getting with each moment.

The casual collector who won’t spend a premium for a PSA-graded card is more likely to deal with fakes, forgeries, re-prints, and even unethical grading companies when making a purchase.

Top Shot’s transparency and digital nature are great for professional collectors, but it’s even better for the casual collector because it levels the playing field.

#4 – Extra Utility

Digital collectibles are harder to misplace. If you remember your account’s password, you know where your moments are.

Physical cards are just an image. It’s been a great system for years, but if I can choose between a freeze-frame of a dunk or a 12-second highlight clip of a dunk, I’ll take the video version every time. Why? I can watch how the player got set up for the dunk, the dunk, then his reaction to the dunk.

A moment doesn’t necessarily have to include a great player to have value. If there’s a moment of Rob Williams with a game-winning block for my Celts, I want to own that moment.

Two other aspects where physical cards can’t compete:

Top Shot challenges. Collect all the cards from a challenge by the deadline and get rewarded with a rare moment. With physical cards, you can collect all the cards from a series, but it’s not as fun or rewarding.

Digital clout. If you want to show off your cards, you need to take a picture and send it to a friend. With Top Shot? Just send your friends a link to your always updating profile. It’s way easier to brag now.

Why It’s Top Shot’s Time

Digital assets aren’t new.

Domain names were the first fully digital asset. A pronounceable four-letter domain can sell for millions. There’s value in having a short and memorable domain for your business, but you can run a successful business with a $8 domain too. We value short domains not because they’re necessary, but because they’re cool.

Digital assets have been huge in the gaming world for years too.

In 2005, someone bought a virtual moon in Entropia Universe for $500k.

In Counter-Strike, gamers buy skins for their guns.

In Madden and FIFA, there are Ultimate Team cards.

Many in-game digital purchases don’t give you an edge in performing better. They’re bought for digital clout or collecting purposes.

In the physical card space, some collectors buy cards without physically seeing them often or ever. Buying a fractional part of a card or piece of memorabilia isn’t new either.

If you can’t touch the items how do they have value?

These items have value because others believe they have value. A store of value is a belief system. Gold has been the number one store of value for thousands of years. Why? Because everyone believes Gold has value.

How about Bitcoin?

It’s worth more than a trillion US dollars, just 12 years after Satoshi mined the first coin. Bitcoin’s existence and success are proof that a digital store of value can work. Previous digital assets have laid the groundwork for new assets. There’s a clear path for sports cards to go fully digital.

Top Shot will be the first mainstream digital collectible because it retains the same players and collecting familiarity from traditional sports cards while providing a better version of scarcity, an improved marketplace, and a leveling of the playing field.

Who else gets involved?

How about die-hard sports fans who have been dreaming of a “player stock market”? Find young and undervalued players, watch them play better, and sell years down the line for a profit. Top Shot seems like it has all the elements to be the NBA player stock market. A fantasy basketball dynasty league, taken to the next level.

There’s potential for more traditional investors to get involved too.

NBA Top Shot’s got something for everyone. New audiences who have never considered physical cards, will want the digital version. And other professional sports will follow Top Shot’s lead.

Why I’m In

I grew up collecting baseball cards. In my early teens, I tracked down my favorite players on eBay to find new cards for the shelf in the bedroom.

My only requirements were that the card must be shiny (usually a refractor), and had to be one of my favorite players. I never thought of it as an investment. It was just fun. I loved to rearrange my cards, then trade with friends to upgrade the players on my shelf.

I signed up for Top Shot’s beta in July because it looked like an interesting combination of my interests: sports and crypto. But I didn’t think I’d be collecting virtual cards.

I enjoyed opening my first pack (“With the Strip” for $26), but I didn’t understand the platform. The buying and selling marketplace either didn’t exist yet or I didn’t notice it.

I pulled five random moments from my pack and kept them in my collection, but there wasn’t much I could do with them. Collecting isn’t fun or interesting when you’re the only one doing it.

I reluctantly stayed on Top Shot’s mailing list to stay in the loop, but I ignored all the drop emails.

In December, I realized Top Shot had a marketplace to buy and sell moments. I loved the idea. I didn’t want to spend more for another pack of “fake cards,” so I sold my #885/1431 Luka Dončić for $12.

A month later, I checked the value of my previously owned Luka and saw it was worth $1,200. (As of writing this, the last sale was $3,749.)

Holy shit. Everything clicked. These items are scarce, and there’s a marketplace with demand for them.

Top Shot is the perfect mix of all my interests. I’ve been hooked for the last five weeks, and I’m having a blast! It’s completely taken over my brain.

Digital assets might not make sense to everyone the first time, but eventually Top Shot will click for a lot of people.

Update 3/11: I wrote a follow up post about Top Shot Strategy.

Other reading:

Mark Cuban’s take on NFTs

NFT Bible

NFTs for creators