Far from an exhaustive comparison, this article relates a once-through experience of getting started with cryptocurrency and NFTs in 2021. There are countless options available to do similar things, this is just an account of what I did.
I actually owned my first whole Bitcoin in 2010. I used some strange wallet software on my desktop PC to hold it until 2013, then sold it all for a 5000% profit. Sadly unlike 2003, when I had $4000 in mad money to blow on investment in growing Costa Rican teak trees, times were tighter in 2010 and I only bought the 1 bitcoin instead of 1000. Yes, they were trading for $4 each back then.
Fast forward to August 2021, NFTs are the new rage and I’m wondering what the user experience is like with 10 years of cryptocurrency development behind us. I start my new venture with Coinbase. They make it reasonably painless to get started. You do have to send them a copy of your photo ID to get started. Once that is done, they will even give you a small, tiny, fraction of bitcoin to get you started. They also have “learn and earn” videos you can watch.
These are followed by short multiple-choice tests that give you more coins on various chains. But the cool thing about off-chain exchanges like Coinbase is that you can exchange the various coins like Compound, Stellar, Fetch, Clover, etc. into other currencies like Ethereum, Bitcoin, Doge and many others for no transaction fee, or possibly a very small margin on the exchange rate; if there is some profit built into their exchange rates it is so small that it is hard to notice.
You can even change the coin you earn for US dollars and transfer it out to your bank account, although so far I have not linked any bank account to Coinbase. All told, between the signup incentive plus earn and learns (which may have taken an hour or so to watch all of them) I ended up with about US$40 worth of cryptocurrency.
Exchange to US dollars for eventual transfer to a bank account incurred a $0.99 fee, but I’d recommend keeping your free crypto as crypto so you can keep playing with it.
Next, I wanted to try my hand at minting an NFT. Armed with $40 in crypto, I thought this should be easy. I signed up for an account at OpenSea and then discovered that I couldn’t just transfer my crypto from Coinbase to OpenSea, I had to put it in a wallet first.
Worth mentioning here: the not-so-cool thing about offchain exchanges like Coinbase is that you don’t actually hold your own crypto, they hold it for you. This is great, as far as you trust the exchange to handle “your” money. So far it’s all money they gave me so that’s not much risk, but holding your own keys makes the crypto yours, it won’t be lost in the event that Coinbase gets hacked, or simply disappears someday. Of course, on-chain transactions are also expensive. I thought sticking with the Coinbase branded wallet app might minimize fees, but I still ended up paying $9.09 to transfer about $40 worth of Ethereum to my Coinbase wallet. So then my wallet held about $31 worth of Etherium and more importantly, was a valid wallet address I could use to access OpenSea.
OpenSea is one of many NFT minting and selling platforms. They allow minting your NFTs on the Ethereum or Polygon blockchain networks, and this is an important distinction. I minted my first NFT without reading too deeply about the choices, and when presented with Ethereum vs Polygon, I clearly recognized Ethereum as a much better known / widely traded coin than Polygon. So, I minted my first NFT, for free, on Ethereum. It looked lonely there by itself, so I minted three more to go with it - all free, that was fun. But then, when I went to auction one of the NFTs, I found out what “gas fees are high right now” actually means: over a couple of days I saw proposed fees anywhere from $186 to $312 in Ether to get my OpenSea NFT account opened on Ethereum. I thought maybe it was because my NFT art was on the large side, near the 40MB “limit,” a couple are actually over, one at 47.6MB, but the system doesn’t seem to mind that. I tried minting a 239 byte small image of a cat, but it was also getting those crazy high account opening fees.
So, I slowed down and read a bit. Turns out that Ethereum is still a proof of work chain, ETH2 based on proof of stake is in the works but it is forecast to take 2 years to complete the transition. Meanwhile, OpenSea has implemented an NFT option on Polygon, a proof of stake chain that doesn’t carry the crazy recording fees like Bitcoin and Ethereum do. You can start selling NFTs registered on Polygon right away for free, less a 2.5% transaction fee charged by OpenSea. Further, the Polygon NFT system allows registering multiple copies of a work while the Ethereum only allows a single copy today, with multi-copies “coming soon.” The art I am selling has always been “limited run prints” so the Polygon model that allows me to sell 50 copies of something fits that much better.
One additional interesting aspect of NFTs that isn’t mentioned many places that talk about them is that as the NFT creator (minter), you can specify a percentage commission for yourself on all later trades of your NFT. This makes crypto punks giving away 10,000 NFTs make much more sense: they didn’t get anything from the initial exchange, but every time they trade hands afterwards they get a cut of the transaction. By the strict rules of NFTs, those four works I minted on Ethereum are done, the NFT has been created, that’s where it exists, and there’s no way to delete it. In reality, I doubt that OpenSea has registered those NFTs on chain yet, but either way I’ll be leaving them there. Maybe if my work takes off on Polygon, it can finance opening the Ethereum account and I can sell those original NFTs then.
So, if you navigate carefully, you can open an account on a DEX (decentralized exchange) - earn some crypto in exchange for your time, use that to fund a wallet, use the wallet to open a DeFi (decentralized finance) application and account on an NFT marketplace and mint a few NFTs of your very own. Anything that can be stored in a digital file, preferably sized 40MB or less, can be minted as an NFT: art, music, trading cards. There’s plenty written about NFTs out there, most of it gushing about how much this or that one sold for recently.
So, my experience of NFTs so far is: I have them, I have posted them a few places. So far nobody seems any more interested in my NFTs than I am in theirs. Total investment? About 4 hours of time online, much of it learning the quirks of how OpenSea and Coinbase Wallet interact, and $0 out of pocket. Maybe NFTs will help move my art sale volume forward from its current one sale per year average. Maybe not. If any ever do sell, I’ll get some crypto in my wallet, which I assume I will have to pay a hefty transaction fee to get back to a DEX like Coinbase, but what’s leftover can be spent from there on a fee-free Coinbase credit card that they say is on the way in the mail. I wonder if I’ll ever trust them enough to link a bank account? Maybe a small, isolated one.
So, after waiting for the spontaneous offers to start rolling in on my, in my opinion, very fairly priced NFTs of my labors of love digital artworks, I figured it out. To get people to buy your NFTs, give them away for next to nothing. That gets you eyeballs on the NFTs without having to build up a Twitter following of 50,000+ subscribers. Now, turning that sub-penny listing around to the $200 price per copy that I have always found to be more than fair in the print world is not happening yet, but I have netted a whopping $4 worth of Polygon based Ethereum so far. Yeah, keeping the day job.
Submit your #gaming-metaverse story today for your chance to win up to $2000.