Thread by @BassemDy

I spent 300$ on my first NFT and I regret it. A thread 🧵

1/18

I’m not new to the whole cryptocurrencies / blockchain space. In fact, I bought and sold bitcoins throughout its lifecycle. I am new to the NFT space and let’s just say, I’m not impressed.

2/18

I wanted to learn more and I’m not a big fan of reading / watching videos, these sources are great to have a general overview but there’s nothing like jumping into the deep end to develop your own experience (skin in the game). So I did.

3/18

I started by looking for an NFT marketplaces & quickly found opensea.io I browsed around & discovered all sorts of projects. Some were ridiculous, others involved awesome artwork, and some were related to communities beyond opensea (like gaming communities etc)

4/18

I tried to find something affordable within my budget, something that would be a “good investment” so I went to the rankings page sorted by “Floor price” from low to high and browsed the projects that had a high volume, high 24h / 7d activity.

5/18

I quickly discovered the “Kindergarten BabyApes” project: opensea.io/collection/kba…

It seems like a community with a mission to build 2 schools in a country in need, so I felt like (worst case) this will not be a total waste of hard earned money & it’ll be for a good cause

6/18

However, even with this “good cause” in my mind, I could not find any other justification or reason for owning this NFT… No matter hard I tried to justify the purchase, there is no rational reason other than:

“Hold it until demand rises and sell it for more”

7/18

It seems that this whole NFT space is just a gold rush. There is absolutely no value whatsoever in an NFT beyond its “potential” higher price in the future. Otherwise it’s money down the drain. (Google: define ponzi)

8/18

I ignored my instincts & purchased Ethereum through Coinbase, it was a smooth operation (my account was verified already), then I connected my Coinbase wallet to opensea so that I could transact.

Turns out there are 2 ways to acquire an NFT:

9/18

1. You can bid on one and when the bidding duration is over the NFT goes to the highest bidder

2. You can “buy now” at a premium price

What’s worse is that, for you to bid, you cannot use ETH you have to use WETH (Wrapped ETH) 🤦‍♂️and converting has a fee.

10/18

I looked for an NFT with instant buy within my budget & found one. I clicked on the buy button, low & behold, another surprise: “Gas fees”

Turns out that if you want to transact on the ETH blockchain, you need to pay a fee. That’s fine, the miners need to get paid right?

11/18

“130$” GAS FEES!

Wtf?! There’s so much demand right now that in order for you to make a 300$ purchase you need to pay HALF of that in gas fees!!

Absolutely ridiculous… This means that I have to sell this NFT at double the price: TO BREAK EVEN!

12/18

What’s worse is: if you pay a low gas fee (a few $) your transaction will not go through.

I bit my tongue and paid the exorbitant fees and acquired my first NFT.

13/18

My conclusions - The bad:

- Buying NFTs is anything but straight forward. Beware of all the crazy fees you have to pay on every transaction

- NFTs are swapped frequently to generate fake demand. Look at the transaction logs before buying

14/18

- For every “rich” NFT trader wannabe there are hundreds who lost their hard earned money

- For every popular NFT project there are a thousand failed ones

- This space is severely hit by a FOMO and this will fade sooner or later

- NFTs are not a good investment

15/18

The good:

- I really like the transparency of the blockchain, the availability of the transaction log for anyone to inspect

- I love the ability to trace and get near realtime feedback on the status of a transaction

16/18

- NFTs will be a great “proof of authenticity” and ownership tracking if and only if we can find a way to bridge the physical with the virtual

- NFTs are a great way to directly fund artists and creators in general

17/18

My complaints are with “the current implementation” of NFTs including the crazy negative impact of mining & the get rich quick scams.

If this technology is part of the future it has to be built on solid foundations. Anything else will lead to its death before maturing.

Fin.