How to Turn $500 Into $50,000 With NFTs (The Complete Guide)Cryptocurrency
You’ve seen the thumbnails. You’ve noticed your favorite NFTs skyrocket in price.
Are you tired of everyone else flexing their gains and want to make some money of your own?
Then you’re in luck because this article will tell you what you need to know about NFTs in 2022 and explain how beginners can invest in NFTs to turn $500 to $50,000.
Yes, this is your complete guide to investing in NFTs.
Let’s get started!
What Is an NFT?
Now, before we jump in, let’s define what an NFT is.
The Merriam-Webster dictionary definition is “a unique digital identifier that cannot be copied, substituted, or subdivided, that is recorded in a blockchain, and that is used to certify authenticity and ownership (as of a specific digital asset and specific rights relating to it).”
I’m sure that makes no sense, so let me break down NFT for you into its parts.
NFT stands for “non-fungible token.”
So let’s break each part of that phrase down, starting with “fungible” or “fungibility.”
1. What Is “Fungible”?
Merriam-Webster defines “fungible” as “being something (such as money or a commodity) of such a nature that one part or quantity may be replaced by another equal part or quantity in paying a debt or settling an account”.
So for example, currency is fungible. If I owe you ten thousand dollars, you don’t care which ten thousand dollars it is; you may have a preferred method of payment; but let’s say I were to pay you in cash, you wouldn’t care which bills I gave you unless some were ripped or defaced or something.
And you might prefer me to pay you in larger bills, but whether I pay you your ten thousand dollars with one hundred $100 bills or with ten thousand $1 bills, you’re still going to get $10,000; it still has the same value in terms of what you can purchase with it.
And it’s the same with cryptocurrencies like bitcoin; bitcoin is fungible. If I send you a bitcoin, you wouldn’t care which bitcoin it is; a bitcoin is a bitcoin.
Currency is of such a nature that one item of that currency can be replaced by another item of that currency in paying a debt or settling an account.
2. So What Is “Non-Fungible”?
So, along those lines, if something is non-fungible, that means that it can’t be simply exchanged for another thing; it’s unique.
Let’s say we both collect sports cards. And I say to you, “Hey, let’s exchange sports cards; I’ll give you one of my sports cards, and you give me one of yours.”
Now, that’s probably not going to be a very fair trade; it could be, but odds are low.
This is because sports cards and other collectibles are non-fungible; a 10-graded Michael Jordan rookie card may not be replaced by a Zion Williamson card.
So NFTs are basically unique digital items whose uniqueness and non-fungibility is all recorded on the blockchain.
For example, on OpenSea — which is the largest NFT marketplace right now — when an NFT is purchased or minted, you can click on the transaction and see — just like everybody else in the world — the transaction details on the ethereum blockchain on etherscan.io.
3. What About “Token”?
And finally, NFTs are “tokens”, which simply signifies that it can be traded and exchanged.
NFTs Are About Ownership
So putting it all together, now the Merriam-Webster definition of non-fungible tokens will make sense: “a unique digital identifier that cannot be copied, substituted, or subdivided” — that’s essentially just saying that it’s non-fungible — “that is recorded in a blockchain, and that is used to certify authenticity and ownership (as of a specific digital asset and specific rights relating to it).”
Fundamentally, NFTs are about ownership — the fact that you own a unique digital asset that is an NFT is recorded immutably on a publicly-viewable blockchain.
Ownership and the Blockchain
And the blockchain verifies each token as one-of-one.
For example, you can go on OpenSea right now — OpenSea is the largest NFT secondary marketplace (and I’ll explain what a secondary marketplace is later) — and click on any NFT and see all of its transaction and creation information on the blockchain.
An Example With a BAYC
For example, as I’m writing this, Bored Ape Yacht Club #3151 recently sold for 89.98 ETH. I can click down under “Item Activity” to the sale and click the little arrow at the far right and that will take me to the publicly-viewable transaction details on the ethereum blockchain using the etherscan.io block explorer.
And there is no membership or anything like that you need to view this information; it’s all stored on the blockchain, publicly viewable by anybody.
And if I click “3151” on this page, I’ll be taken to the block explorer page for that specific Bored Ape Yacht Club #3151 where I can see the entire transaction history of this NFT, and if I wanted to, I could drill down onto each individual transaction.
For example, I can see that 22 or 23 months ago, this NFT was minted to the ethereum address siddartha1.eth.
And then, about a month after that, I can see that this NFT was transferred from siddartha1.eth to bitcoinbillionaires.eth, and so on and so forth.
There is no doubt about who owns a particular NFT because it’s all publicly recorded on the blockchain forever — or at least as long as the particular blockchain that the NFT is on survives and as long as the internet survives.
So now that we’ve defined what NFTs are, let’s go over the common types of NFTs that you can invest in today.
Degen Den is the brand-new exclusive NFT community that I founded.
In this community, you get access to:
• A private Discord community of likeminded NFT profiteers
• Whitelist opportunities to hyped NFT projects
• Early intel on what NFT projects I will be covering on my NFT-focused YouTube channel
• And a lot more!
I'll see you inside!
Types of NFTs
Now, let me preface this by saying that these are not the only kinds of NFTs; in fact, I envision a future where there will be NFTs for things like real estate transactions and intellectual property, but that’s not what people are talking about right now at least in 2022 about investing in and making money in NFTs.
So for these purposes, I’m only covering the kinds of NFTs that get all the buzz and that people are making money in right now.
Now, at a high level, when we talk about types of NFTs, try to visualize a spectrum for. On one end of the spectrum are NFTs that simply exist due to their art and don’t have any other usefulness beyond that and at the other side of the spectrum are NFTs that don’t have any art and are just very functional, that is, they have a lot of utility.
So an example of this latter kind of NFT might be an NFT that represents the ownership of some digital asset like perhaps intellectual property like a copyright to a piece of music, while on the other end of the spectrum might be an NFT that is just a photograph of a scene or something like that that is literally just a piece of digital art.
So now I’m going to talk about a few types of NFTs, and I do want to emphasize that any particular NFT could actually have qualities of all these different “types” that I’m describing, so this isn’t some rigid categorization as much as it is a general overview of aspects that NFTs can have.
1. The Status Symbol
As impractical as they are, humans have always wanted to show off their status to other humans.
Historically, things like jewelry, precious gems and metals, and particular items of clothing have served as status symbols from early on in life all the way to the grave.
Whether it was jade in ancient China or Tyrian purple in ancient Rome or flashy diamonds or cars or designer clothes today, or if you’re not into that it may be more about bragging about your investment or real estate or crypto portfolio, it’s in our nature — or at least many people’s nature — to want to display our status to others.
And NFTs take this concept and digitalize it. For example, arguably the highest-status NFT right now is the Bored Ape Yacht Club.
There are only and will only ever be 10,000 Bored Apes. And that might sound like a lot, but consider that within a year there will be 8 billion people living on planet earth.
And consider that some of the current holders of the Bored Ape Yacht Club are celebrities, and association with celebrities — who for the most part are inherently high status — is often seen as a status symbol in and of itself. This is why celebrity endorsements and celebrity-branded shoes and other items of merchandise sell so well.
So by purchasing a Bored Ape, you are communicating that you have the means to have purchased something of such high value and that are you are a part of an exclusive club of 10,000 people or fewer — because some people hold multiple apes — that includes the likes of Eminem, Serena Williams, Steph Curry, Jimmy Fallon, and more.
And you can see that it’s common for these celebrities to use these Bored Apes as, say, their digital profile pictures.
And if you own a Bored Ape, you can do the same, and at least in some circles gain some clout for yourself.
Now, you’re probably asking, “What stops me from just saving the jpeg of somebody else’s Bored Ape and using it as my profile picture?” And that’s a very good question.
And it’s one that is increasingly being answered by online platforms.
For example, Twitter recently rolled out verification for the NFTs that people have as their profile pictures so people can prove that the NFT they have in their profile picture is actually theirs. This is done by simply connecting the wallet that holds your NFT to your Twitter profile to prove — because remember, your NFT ownership is all immutable recorded on the blockchain — that you in fact own the NFT you have as your profile picture.
Now, I know that many of you probably think this is idiotic, and I would say in a sense that is true, the same way that purchasing other status symbols like very expensive jewelry or clothes is idiotic, and no matter how much it doesn’t make practical sense, as long as humans want to display their status to other humans, there will be a demand for status symbols.
And as more people spend more and more time online — whether within or outside of any metaverse, per se — their will be a greater demand for digital status symbols such as Bored Apes.
Now, I’m not saying that Bored Apes are going to be an eternal status symbol; these celebrities pick them up for the ETH equivalent of a few hundred thousand dollars, which is not a lot compared to their astronomical net worths.
If these things stop being “cool” among the elites they could plummet in value; that’s the risk of investing in something like a status symbol, especially a digital status symbol.
And to that point, Bored Apes aren’t the only status symbol NFT; really any NFT could be a status symbol within a certain community; for example if you hold a very rare gaming NFT — say a playable character — and you play with that rare NFT in the game, that’s instant status right there in that community.
Feel free to comment in the comment section below how idiotic this is, but like them or not, status symbols are a thing, and digital status symbols will become more and more of a thing as people start to live more of their lives online.
Before we move on to the other kinds of NFTs and the rest of this piece, I do want to mention that I have a Patreon membership and private Discord community called The Degen Den where:
- my fellow degens and I chat with each other about NFTs in general as well as about specific projects
- I run whitelist giveaways
- I share an NFT calendar with basically the hottest projects that are about to mint
- I share with the group when I’m going to cover a project on my channel before I cover it
- I provide various NFT tools in there.
If that sounds like something you think you’d be interested in and you want to join the Degen Den community, there’s a link right here that you can use to sign up.
2. Shopping NFTs
So remember how I said that at the opposite end of the spectrum of a pure status symbol NFT or a pure art NFT is the utility NFT.
This kind of NFT may have very basic art or no art at all but rather the value of the NFT is derived from its usefulness.
For example, Shopverse is an NFT created by the website shopping.io. The art is very basic, and no one is probably going to use these as a status symbol online.
But holding this NFT can give you discounts at the website shopping.io where you can make purchases for retail items with cryptocurrency.
And Shopverse is intended to be a shopping mall in the metaverse, and they have all these practical plans.
So I would categorize this as a utility NFT.
And to be fair to Bored Ape that I talked about previously, it’s not like there’s no utility to it; it will likely give access to in-person events or have other utilities; but fundamentally it functions as a status symbol.
And on the other side of that coin, many utility NFTs also have art as well.
3. Gaming NFTs
Another kind of NFT is the gaming NFT, and this could be classified as a utility NFT as well because it has usefulness; it’s not just about the art or the status symbol.
There are currently NFT games being built on the blockchain in which, for example, the characters that players can play with in the game and the items and accessories and weapons for those characters are all NFTs.
And if you’re not a gamer — like I’m not really a gamer — you may not understand how big the potential is here.
Think of popular games like Fortnite or Grand Theft Auto or Roblox. Devoted gamers will spend hundreds if not thousands of dollars in these games to purchase are skins — which basically change the appearance of your playable character looks like — and in-game items such as weapons.
And currently, all of that money spent my gamers goes to the video game company.
But what if these skins and characters and weapons and other items were NFTs that the gamers themselves owned — remember, NFTs are fundamentally about provable ownership — and that could appreciate in value and that when a gamer is done with a game or doesn’t really have a lot of time for the game any more or just needs some money could sell to those gamers who really want that item?
That is gaming NFTs, and there are already some gaming NFTs like Axie Infinity that have become wildly popular over the course of the past year.
And I have personally covered several gaming NFT projects, such as My Pet Hooligan.
4. “Passive Income” NFTs
Another kind of NFT, and probably another kind of utility NFT, is the “passive income” NFT. That said, many NFT projects don’t like to be called “passive income” NFTs because then that could trigger concerns about whether the NFT is a security, which could cause a lot of regulatory red tape for a project.
But the fact of the matter is that many NFTs, simply by their users holding them or staking them — meaning locking them up on the blockchain for a certain period of time — generate tokens for those users that can be traded, typically on a decentralized exchange but sometimes on a centralized exchange.
So for example, one of the first NFT videos I created was a video about the BearX NFT project, of which I hold 10 — and each one of these NFTs generate for me 10 of the ROOTx token per day, which is the token of the BearX ecosystem, so in total my bear NFTs are generating for me 100 ROOTx per day.
The value of ROOTx is very volatile — and I’m not going to mention specific prices here — but people are still buying and selling it on decentralized exchanges, so if I wanted to, I could claim my ROOTx from my bears on the BearX website and through a series of steps eventually convert it to fiat money.
Now I’m going to show you, on-screen, step by step, exactly how to buy an NFT if you have no idea how to buy one.
And the first step to buying NFTs, at least ethereum-based NFTs which are the most popular NFTs, is to get up your Metamask wallet.
How to Set Up Metamask to Buy NFTs
What is MetaMask? MetaMask is basically a cryptocurrency wallet that lives in your Chrome, Firefox, Brave, or Edge internet browser, and the vast majority of ethereum-based NFT transactions involve Metamask.
If you were interested in Solana NFTs, you would probably use the Phantom wallet; if you are into Cardano NFTs, you might use the Yoroi wallet; but because most NFTs are on ethereum, I’m going to show you how to set up MetaMask, which is used for ethereum NFT transactions.
Step 1: Go to a private location.
And before you set up a MetaMask account, I would highly recommend that you only install MetaMask in a private location such as your home and when you are connected to the internet in a private, secure way — so not from the coffee shop using the coffee shop’s WiFi.
Personally, I never do NFT stuff and I never interact with my MetaMask from a public WiFI connect; the risk is just too great. The last thing you want after you’ve build up your cryptocurrency bags is to lose it because some hacker accesses your MetaMask accounts.
Step 2. Download MetaMask.
Alright, to get started with MetaMask, you go to MetaMask.io, and make sure you’re going to MetaMask.io because there are fake MetaMask websites out there.
Then click “Download Now” on the homepage. MetaMask will then ask you if you want to install it for your supported browser or for mobile on iOS or Android.
Typically, if you’re doing NFT stuff, you want to do it on a computer.
I’ve heard of projects having issues with mobile users when the mobile users attempt to mint, so being on your desktop or laptop is, in my opinion, the way to go, and if that’s the case, you would leave Chrome selected and then click “Install MetaMask for Chrome”. And not that it will still say “Install MetaMask for Chrome” even if you’re in another supported browser like for example, I was using the Brave Browser when doing this, but the site still said “Install MetaMask for Chrome.”
Then after you click “Install MetaMask for Chrome” you click “Add to Brave” or whatever the name of your browser is you’re using.
Then you click “Add extension”.
Then it will install and after it’s installed you click the extension in the upper right and click “Get Started”.
Step 3. Create your wallet.
And if this is your first time using MetaMask, you’ll click “Create a Wallet”.
Then read the screen that follows about how MetaMask gathers users’ usage data and click “I agree” if you agree.
Then create a password. This is a dummy account I’m showing you myself creating, but if you’re actually going to store cryptocurrency and NFTs in this MetaMask wallet, I would highly recommend that you use a very secure password, randomly generated — the longer the better — and that you do not store this password in any electronic medium but that you write it down, pencil and paper, and store it somewhere very safe.
I’m doing a short password here because, again, this is a dummy account.
Then check the box and click “Create.”
Step 4: Secure your Secret Recovery Phrase.
Then, if you’d like, you can watch the short video that MetaMask made about your Secret Recovery Phrase.
I’m not going to show you the video, but I am going to talk about the Secret Recovery Phrase on the next screen.
So to go to the next screen and view your Secret Recovery Phrase you click “Next”. Now, this is the most important screen of the entire setup process because once you click that lock you see on screen, MetaMask will show your MetaMask account’s Secret Recover Phrase.
What will appear when you click that lock are twelve words unique to your account that can be used to install your MetaMask account on another device.
So let’s say your computer that you installed MetaMask on crashes. Have you lost all the crypto and the NFTs in your MetaMask account?
The answer is no. You can simply install MetaMask on another browser on a new computer and as long as you know your Secret Recovery Phrase, your MetaMask account with the wallets it contains will be recovered. However, if you lose your Secret Recovery Phrase, you are screwed; you have lost your crypto; and you have lost your NFTs; end of story. So as you can tell, your Secret Recovery Phrase for a particular wallet is very, very important.
And this Secret Recovery Phrase concept is not just a MetaMask thing; it’s for all crypto wallets.
The downside, of course, is that if someone knows your Secret Recovery Phrase, they can install MetaMask on their computer and have access to your assets. This is why it’s absolutely essential that you do not share your Secret Recovery Phrase with anyone, and like your password, I would recommend that you do not store it in any electronic medium; do not put it in a Word document on your computer; do not put it in a Google Doc in the cloud; do not take a picture of it; write it down on a piece of paper and store it somewhere very, very safe.
Some people go to the extremes of etching it into a fireproof metal plate in case of fire and maybe putting it in a safety deposit box; it might sound crazy to newbies, but when you realize that somebody might have thousands or tens of thousands or hundreds of thousands or millions of cryptocurrency in their crypto wallet, you start to understand these measures.
So I’m now going to click the lock on screen and show you what a Secret Recovery Phrase looks like. Like I mentioned, just for purposes of creating this video I created a dummy MetaMask account, so this MetaMask wallet has nothing in it and will never have anything in it, so that’s why I’m OK with showing you this Secret Recovery Phrase because this is a dummy wallet.
But your twelve words on the screen will be different — they will be entirely different words than the words you see in this video — and if you intend to use your MetaMask wallet to store cryptocurrency and buy NFTs, you need to keep your Secret Recovery Phrase very, very safe. Write down your Secret Recovery Phrase that you see on your computer after you install MetaMask and don’t tell anybody those words.
You will have to make plans for when you pass how to securely transmit the Secret Recovery Phrases for your crypto accounts to your heirs, but that’s a discussion for a different day.
Alright, now at this point you should have written down your Secret Recover Phrase, then you can click “Next”.
And on the screen that follows, MetaMask — to make sure that you know your Secret Recovery Phrase — asks you to put the words in your phrase in order.
Then you do that and you click “Confirm”.
Then you can read these additional tips on keeping your Secret Recovery Phrase secure and then click “All Done”.
Congratulations, now you have set up your MetaMask account and are ready to transfer ethereum into it to buy an NFT.
How to Transfer Ethereum to Your MetaMask
Now that you have a MetaMask account, you can use it to buy NFTs, but you will need to get some ethereum into your MetaMask wallet first.
You would do this by purchasing ethereum on some cryptocurrency exchange such as, say, Coinbase or Binance and then telling that exchange to transfer your ethereum to your metamask address.
For example, let’s say you purchased some ethereum in Binance. What you would do is copy your MetaMask ethereum wallet address, then click withdraw, then select ethereum, then input the amount of ETH you want to transfer, and then copy your MetaMask ethereum address in the box underneath Recipient Address.
Then you click, “Preview Withdrawal” and then “Confirm Withdrawal”.
Then there may be some additional security measures; for example with Binance you have to confirm with your Google Authenticator as well as confirm the transaction via email. The exchange you use may be different.
But after the transfer is confirmed on the blockchain, you will have ETH in your metamask wallet, ready to spend on NFTs.
The Basics: What You Need to Know About Investing in NFTs
You need to know a few things before you start investing in NFTs.
1. You need money to start.
You’ve heard the saying it takes money to make money. It applies when investing in NFTs too!
It would be best to have a little bit of money to start your portfolio and get things moving. It can be $500 or $5,000, but you need something to start.
If you’ve never invested in NFTs before, it’s best to start small. Then, once you get a feel for the market and how it works, you can add more money.
The last thing you want to do is take $100,000 and buy a bunch of ETH with it and ape into projects without knowing what you’re doing.
I truly believe that if you can scrounge together $500 worth of ETH on an exchange (maybe even get a signup bonus while you’re at it) and send it to your Metamask, you can get started with NFTs and even 100x that initial investment in the course of a year — more on specific strategies to do that later.
2. Most of the action happens on ethereum.
Now, I don’t want to wax too eloquently about coins and the blockchain, but let me just say that while there are NFTs on other blockchains like Solana and Cardano, ETH is still king and probably will be for a while.
And if you know anything about ethereum, you know that whenever you interact with the ethereum blockchain, you will have to pay gas.
In very simple — probably overly simple terms — gas is the “fuel” of the ethereum network; it is the amount of computational power — expressed in a certain amount of ethereum — that is required to perform a transaction on the ethereum blockchain.
So whenever you mint an NFT — and minting an NFT is basically purchasing an NFT directly from the development team rather than on the secondary market such as on OpenSea — you will have to pay gas.
And I’m going to talk about OpenSea the most in this piece of content because it’s currently the most popular NFT marketplace. It has competitors like LooksRare,
2. Investing in NFTs is risky.
Like most investments, there’s risk involved in investing in NFTs. As an investor, you need to know and accept that the NFT you invest in floors could drop or, even worse, rug pull!
While certain factors make a strong NFT project, you can never be sure that a project will do well and deliver post launch.
We’ve seen some sketchy things in the NFT space, mostly because people’s real identities are often unknown.
4. Always do your own research (“DYOR”).
You should never invest in something based on a hunch or because an influencer says they are.
And there are a couple reasons for this.
First, many influencers are extremely rich, and for them, throwing one or two or three or ten ETH into a project is not a big deal.
Here is Gary Vee’s OpenSea profile.
As you can see, he has over 2,400 NFTs in his collection. For him to ape into a project for 10 ETH — which right now is about $32,000 — that would be, with a conservative estimate, 0.032% of his net worth.
As a percentage of net worth, that’s the equivalent of $3.20 for someone with a net worth of $10,000; the equivalent of $32 for someone with a net worth of $100,000; and $320 for someone with a net worth of $1,000,000.
Wealthy influencers can simply take greater risks with what they ape into — risks that less wealthy people like you and me — cannot.
And therefore, it is silly and often foolishly risky for people of average or below-average means to pattern their investment decisions after those of their favorite influencers.
Another reason is why it’s extremely important for you to do your own research and not rely on somebody else’s is because there are so many scams in the NFT space. Therefore, you need to research and decide if you believe the project will do well and deliver post-mint.
The way I see it, you should be able to explain to someone why you’re investing in the project. If you’ve done your research, you’ll be able to explain why.
If you can’t explain why, you probably shouldn’t invest in the project.
So what makes an NFT project good in the first place? What should you be looking for?
What to Look For In an NFT Project
If you are going to make money investing in NFTs, you need to know what to look for.
Here are five things to look for in an NFT project.
1. Good Art
A project’s art should be trendy and catch your eye.
Remember, NFT art is not fine art; it’s meant to appeal to the masses; so, in this sense, you can probably be a little bit more trusting of your eye about NFT art more so than you could about some esoteric piece of modern art.
And beyond the quality of the art itself, you also want to consider the originality of the project.
Is the artist creating something new or improving an old trend? Or is it a low-effort derivative project?
For example, there are many ape-based projects, most of which are in some sense derivative of and playing off the success of the Bored Ape Yacht Club NFT collection.
Some of these ape-based projects, though in a sense derivative, are still quite good and bring new creativity to the table.
For example, HAPEBEAST — a project I covered on my channel a long time ago — is a project with apes, and I would say that many of the apes even look bored.
But the HAPEBEAST artists in making the apes 3D and attending to other details still pulled off a beautiful project that is creative in its own right.
Contrast that to something like the Fat Ape Club, which currently sits at a floor price of well below 0.1 ETH.
Because it’s fairly low-effort, derivative art that doesn’t really build much if anything on the ape theme other than making them fat.
2. New and Unique Utility
Utility is the usefulness of a project beyond the art itself.
Unless a project is just purely an art play — which carries risk in and of itself — a project should probably provide holders with a unique benefit.
Does the NFT generate tokens for passive income?
Is there in-real-life usefulness to the NFT?
Will the NFT be your pass to get whitelisted for other NFT projects?
Is the NFT useful in a game or some other metaverse aspect? And I think this is one of the biggest utilities for NFTs.
There are games out there where your character in the game and assets you own in the game like weapons or armor or skins or other items are themselves NFTs that can be traded to investors, traders, or just other gamers.
That is huge; as long as that game remains popular, those NFTs will have utility and marketplace value. On the other hand, if the game is not popular or declines in popularity, the value of the NFT could suffer.
Of course, not all NFTs are gaming NFTs; this is just one thing to consider.
These are all questions you should ask yourself before investing in an NFT.
3. Doxxed Team
If you don’t know, if someone is doxxed, that means that their identity is known.
So if a team is doxxed, that means we — the public — know the real identities (and not just the pseudonymous Twitter handles) of the NFT project’s team.
If a team is undoxxed, that’s something of a red flag for me; generally speaking, undoxxed projects are more prone to scams than doxxed projects because — especially in the crypto world — it’s easier to get away with evildoing if you’re anonymous.
I personally do invest in undoxxed projects, but I understand the risks involved in doing so and am always more cautious when investing in projects with anonymous founders.
4. Strong (But Real) Engagement and Community
Community is key to an NFT project’s long-term success, and engagement — an active Discord channel with multiple messages sent in the general chat every minute, a large Twitter following of tens or even hundreds of thousands of followers — is often an indicator of how strong a project’s community is.
But engagement can be deceiving because it’s often forced because engagement is often used by projects to qualify people for their project’s whitelist, which I’ll talk about in a bit.
So as you observe a project’s community in action, keep an eye out not just for a lot of messages flying around the Discord, but also see if people are actually helping each other in the Discord and having interesting conversations rather than just talking constantly about the floor price or sending little spammy messages so they can look “engaged” to the moderators,
I want to see people talking about this project.
Are NFT YouTubers and other influencers talking about this project?
Are people naturally attracted to and interested in the project?
There are many different factors to consider, but for the most part, these are the first five things I’m looking at when I search for NFT projects I want to put some money into.
Now, I assume because you’re consuming a piece of content about turning $500 into $50,000 through NFTs, you’re most interested in flipping projects for maximum profit.
And if this is the case, you really have to keep abreast of the hype of a project because for many projects, they will have a lot of hype building up to their launch and maybe for a day or a few days or a week or a month even after its launch if it was super hyped, but then the hype will die down and so will the floor price for the project.
And if you don’t know, the floor price for a project is the lowest price at which a project is listed at for sale.
So for example, if you look at the Bored Ape Yacht Club on OpenSea right now, you’ll see that the floor price is 82 ETH. And if we scroll down to the listings, we’ll see that indeed the lowest-priced ape for sale on the open market — ignoring the bids with the pink wrapped ethereum symbol — is 82 ETH.
Now, if you’re a long-term investor who really believes in a project’s team and vision long-term, you probably aren’t so sensitive to short-term fluctuations in hype and in floor price, but because you’re watching a video about turning $500 to $50,000, those are things you should probably be considering.
Now let’s talk about some actual NFT flipping strategies that can turn $500 into $50,000 this year.
NFT Flipping Strategies
There are two major strategies you can use to flip NFTs successfully to turn $500 into $50,000.
One is less risky, requires less money, and delivers higher ROI in general, but it will likely require more of your time.
The other strategy is more risky, requires more money, and delivers lower ROI in general, but it doesn’t take up your time.
I’ll talk about both of these strategies now.
1. Strategy #1: Grind for whitelist on a hyped project.
Most NFT projects offer a whitelist presale that guarantees you a chance to mint an NFT with less gas fees and sometimes a cheaper mint price than those on the public sale.
For hyped projects, getting on the whitelist is invaluable because on hyped projects, here’s how the price usually moves:
- First, on the presale, whitelisted addresses can mint the NFT for a relatively low price ranging from say 0.04 ETH — and yes, there are other blockchains on which you can mint NFTs, but most of the big stuff happens with ethereum — and 0.3 ETH.
- Then, after a few wallets have minted, many of those wallets’ owners will list their NFTs that they minted on a secondary marketplace such as OpenSea at a much higher price than what they minted it for. For hyped NFT projects, it’s not uncommon for initial sales during the first hour or 24 hours on the secondary market to be many multiples of the mint price that those on the whitelist received.
How Much a Whitelist Spot Can Be Worth on a Hyped Project
For example, recently the Lil’ Heroes by Edgar Plans NFT collection launched, and those on the whitelist were lucky enough to be able to mint a maximum of two heroes at a mint price of 0.04 ETH plus gas.
And right now, the floor price on OpenSea is 2.08 ETH.
So think about it.
If you were on the Lil’ Heroes whitelist, you could have minted the maximum of two heroes for 0.08 ETH, which at the time of the drop was about $250.
You may have also paid one to two hundred dollars in gas fees to mint, so let’s say all in to mint your two heroes you had to pay $400 worth of ETH.
Well, today, you could easily sell these heroes for two ETH each or four ETH total, which is the fiat equivalent — even after subtracting gas — of over $12,000 right now.
And guess what? We’re still in the first month of the year, and you’ve already taken your four or five hundred dollars and turned it into $12,000 worth of ETH.
And if you’re completely new to this, yes, you can easily take your ethereum out of Metamask by transferring it to an exchange and then selling your ethereum on that exchange and transferring fiat currency to your bank account.
It may end up costing you a couple hundred in fees and may take about a week to complete that process, but you can still cash out this ETH to United States dollars if you want to.
Grinding for the Whitelist
Now, I must say that grinding for whitelists can take time; each NFT project has their own rules for who gets on the whitelist. Common ways of getting whitelisted for an NFT project generally include a combination of:
- Staying active in the project’s Discord
- Inviting friends to the project’s Discord
- Creating fan art for the project and sharing it on social media (projects LOVE fan art because it shows others how engaged and loyal their community is)
And because those things all take time, they’re commonly referred to as grinding for the whitelist.
And grinding for the whitelist on hyped projects is, in my opinion, the best strategy for people who don’t have much capital to start. It’s an easy way to mint and make money off selling the NFT you minted on the secondary market at a much higher price.
How to Win Whitelist Spots Without Grinding
I know what you’re thinking: Grinding sounds difficult — and there’s no guarantee you will win a whitelist spot for all your work.
But I have good news. It’s up to chance, of course, but you can also win whitelist spots that either the NFT project itself or an NFT influencer gives away in collaboration with the project.
For example, I’m constantly running whitelist giveaways on my Twitter account. You can check out the latest one below.
? @CyberLionzNFT WHITE LIST SPOTS GIVEAWAY!
Giveaway ends in 48 hours! GOOD LUCK! pic.twitter.com/LeBSUfEZD6
— Logan Allec (@loganallec) January 19, 2022
That being said, you won’t make it on the whitelist for every project you’re interested in, so you need to have a plan for the project even if you aren’t whitelisted.
What Happens if You Don’t Get on the Whitelist?
If you don’t get on the Whitelist, but like the project, you’ll have to try mint during the public sale.
Luck plays a massive role in minting during the public sale, especially if it’s a hyped-up project.
You have to realize that for some of these drops, over 50,000 people are trying to mint 10,000 NFTs. On top of that, people who gain access to mint often purchase more than one.
Take Invisible Friends for example, how many of their followers do you think try to mint?
I always try to mint during the public sale, and I have one of the fastest left clicks in the Metaverse. However, even with that, I’m still only able to mint less than 25% of the drops I participate in.
This is why you want to grind for Whitelist. So you can buy at the mint price and avoid gas wars.
There’s less risk when you purchase at the mint price because everyone paid the same price.
Nobody who bought an NFT for 0.08 ETH during the mint will sell it for less than what they paid for.
They will list it on the secondary market for at least 0.10 or 0.15 ETH, so they make a profit even after paying gas.
For beginners who are new to investing in NFTs and want to take on minimal risk, this is a great strategy to make 10 – 30% gains without spending much time in the market.
If you can buy at the mint price, you have an excellent opportunity to make a profit if the project sells out.
Strategy #2: Flip on the secondary market.
Most people fail to realize that there is still money to be made on the secondary market.
The Secondary Market Cycle
When I’m unable to mint during the pre-sale or public sale, I check out the secondary market to see what I could purchase one for.
For example, if 50,000 people tried to mint 10,000 NFTs, and at least 40,000 missed out. That’s a ton of people who still want to be involved in the project.
They’re going to be more people who want in for a chance to reveal a 1 of 1. Who wouldn’t? A 1 of 1 can be life-changing money for some people.
Everyone wants to reveal the 1 of 1 and make massive gains. But, unfortunately, people are more scared to sell the 1 of 1 pre-reveal than reveal the least rare NFT in the collection.
This is why floor prices rise as the project gets closer to reveal. Everyone who has the NFT thinks that theirs is rare and doesn’t want to sell.
Everyone who doesn’t hold the NFT but wants in sees the floor price rise, and they don’t want to miss the train, so they pay the higher prices.
The problem is, once the NFT project reveals and everyone sees that the NFT they hold is not a 1 of 1, the cycle breaks.
Most holders will sell the NFT right away, dropping the floor, encouraging more to sell.
I explained this entire process because we want to be in and out before the cycle breaks.
How to Flip NFTs on the Secondary Market
You buy immediately after mint as close to the mint price as possible, and then you sell into the reveal.
If the project is revealed in three days, I’ll typically hold it until the last day before it’s revealed.
For example, if I miss out on the 0.08 ETH public mint, I’ll buy on the secondary market for 0.10 to 0.13 ETH right after.
Then I’ll let the hype build as the reveal gets closer and sell before for 0.25 to 0.35 ETH.
That’s 3 to 4x gains from one trade, and we only spent a few days in the market.
Yes, you might miss out on a few moonshot projects, but consistent gains are much more critical, at least for me.
That being said, there is another strategy you can use if you want to hold a project.
Consider Removing Your Cost Basis and Letting the Rest Ride
You’ll need to buy multiple NFTs if you want to try this strategy. The goal here is to purchase multiple, sell a few for the amount you initially invested, and let the others ride.
Once you remove your cost basis and still hold a few NFTs, you’re essentially playing with house money.
For example, let’s say I was able to mint a project and bought 4 for a total price of 0.32 ETH (4 x 0.08 ETH). I intend to hold the project because I believe in it, but as the reveal gets closer, the floor hits 0.35 ETH.
I’d remove my cost basis by selling one of the NFTs for 0.35 ETH and hold the other three to see what happens long term.
That trade would give me a profit of 0.02ETH (0.35 – 0.32 ETH), and I’ll still have skin in the game post-reveal.
If you want, you can even wait until the reveal and only sell the ones you don’t like.
Protecting your capital is critical and removing your cost basis is an easy way to do it. You don’t need to 10x every trade you make.
Start small and make your process to find consistent gains.
Investing in NFTs is risky. You are very likely to lose money and invest in a project that plummets.
But they are also a way to make a passive income while learning about stuff you’re passionate about.
I’ve found success investing in NFTs, and with the right mindset, you can too.
Feel free to disagree. Let me know your thoughts in the comments, and follow me on Twitter.
Degen Den is the brand-new exclusive NFT community that I founded.
In this community, you get access to:
• A private Discord community of likeminded NFT profiteers
• Whitelist opportunities to hyped NFT projects
• Early intel on what NFT projects I will be covering on my NFT-focused YouTube channel
• And a lot more!
I'll see you inside!
Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.