7 min read

Understanding NFTs

This is a conversation with my friend who has been active in the NFT space for more than a year and I interview him to understand NFTs.
Understanding NFTs
Photo by Andrey Metelev / Unsplash

Hello everyone👋, last week I got on a call with my friend who has been active in the NFT space for more than a year. He has been finding good projects to invest money into and turn that into profits.

I am not saying I understand every bit of the concepts there are about NFT, which is why I have asked my friend to shed some light on how he got started and what was his learnings hopefully you and I learn something from this conversation.

First things first, a warning

These conversations might be a bit intermediate and if you feel you didn't understand I recommend reading about them online. Since this conversation was to understand the research and how to find good NFT projects and then decide whether to hold or sell.
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Anything mentioned here in this article is not financial advice. It is for learning purposes.
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In order to understand what I am talking about or where to find all the resources that are mentioned in the talk I recommend you continue reading and in the end, I provide all the resources that I have found on NFTs as a single downloadable pdf for you to access and learn at the end of this post.

You can listen to the entire conversation we had about NFTs in audio format here:

let us understand what an NFT means.

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What is NFT
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/1:32

Okay to decode this let us understand individual letters first. The letter 'NF' Stands for 'Non-Fungible' which means not changeable, or not replaceable.

'T' stands for a token, which is a cryptographic asset on a blockchain with unique identification codes and metadata that distinguish them from each other.

So, combined they form an NFT, A non-fungible token is a non-interchangeable unit of data stored on a blockchain, a form of digital ledger, that can be sold and traded. Types of NFT data units may be associated with digital files such as photos, videos, and audio. (Source: Wikipedia).


Now, You must have understood what an NFT is (to an extent) and you understood the ability to monetize digital assets you create.

This is all good and dandy but,

how do you know that the files can't be just saved on the local computer and they get to use it?

Well, that is a good question and there is an ongoing debate that in the future you will need to buy and how the asset to use it and also the save-to device will be replaced but for now, I am afraid that is a possibility and there is no regulation that I know of that can stop people from downloading.

However, the uniqueness is not the image it is the token provided for the image. To my understanding, it is something like this -

Let us say you purchased a toy, the toy is of the creator but you purchased a toy and he provided you the bill with a unique number. Now, the NFT is the bill number of the toy you purchased. If say someone makes another copy of the specific toy you still have the receipt. You will be able to verify with the creator that yes your Toy is unique indeed.

I know this example is kinda small but you get the gist.

Now, Where do we find NFTs to buy or sell?

There are a lot of places to buy and sell NFTs but the most common one for Ethereum is the Opensea and Foundation app.

To understand, here is a transcription and captions from the Interview.

Me: Why do you stick to Ethereum and not other cryptocurrencies on NFT marketplaces?

Friend: Because the chances of Ethereum projects being a scam are low and I had my share of experiences where I lost a lot of money in the Solana NFT projects. It is a personal choice to stick to Ethereum, but feel free to navigate your way.  

Me: What do you mean by Whitelist?

Friend: Whitelist is a way to get early access to purchase the NFTs at a lower amount. It is then up to you to either hold it or sell it in the marketplace. There is no particular rule saying you must not sell, so most people get a whitelist, sell it and make money.

Me: What do you have to do for getting a whitelist in a project?

Friend: To get the whitelist, you need to be active on the project's Discord server. You need to keep providing inputs by either making fan-arts, helping others or just generally showing enthusiasm about the project and they will be getting back to you and your role will change.

The founders of the project will have a conversation and add you to the whitelist.

Me: How much time do you spend on discord to get a whitelist?

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Discord contribution
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/1:16

I have been continuously engaged on the Artificial Intelligence club project's Discord server for 4 days. It took 4 days of active engagement from my end i.e. talking with founders, engaging in the general chat with people, and making and appreciating fan art of the project to be whitelisted.

So, it is a lot of work.

Me: How do you find good projects?

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What to look for in research
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/1:13

You need to verify if the team is doxxed i.e. the founders and team involved must be revealing their identity of sorts to be a good project(not a good project, but a start.)

Next thing is to look for the roadmap and it must be showing all the steps in detail.

Finally, you need to see the engagement of people on social media around the project.

Me: How do you not fall into scams and what is the safe way to secure the NFTs?

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Hardwallet
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/0:59

To avoid scams,  the best thing to do is

  1. Doing your research
  2. Not investing all your money.
  3. Verifying if it is a good project.
  4. Lastly, Not clicking any link to get hold of the NFT(Trust the official links for the most part.)

In the wallet safety part, the wallet chrome extension give is a soft wallet that can be accessed using a password and if you forget your password you use a seed phrase which is like the backbone of your account. If anyone got hold of it, they can take away your money.

The seed phrase is the actual key to your account. To secure the assets(NFTS) and your cryptocurrencies in your wallet, Try purchasing a hard wallet, which looks like a Pendrive and you can approve the transactions from there only. So, it is kinda like an MFA that asks for OTP to sign in but for wallets, you manually approve if you need that transaction to happen.

The hard wallets can be found here

  1. Ledger Nano S Hardware Wallet
  2. Ledger Nano X Hardware Wallet
  3. Check out all the other products from here

I asked if he can summarize the entire thing into 3-5 points for people to understand,

  1. Be active in discord.
  2. Try to get a whitelist as it is always good to be early in the project to either hold or sell on your own accord.
  3. Never click anonymous links and try to find the official links which will always be available on the Discord channel.

Finally, what do you think of the future of NFTs?

Friend: I think it is very early and there is a lot of scope for NFTs as a utility. It gave way to a lot of artists to survive and it will be impacting major sectors soon but for now, it is art, music, and games.    


That was the conversation with my friend and if you have any questions you can reach out to him directly on

  1. Instagram
  2. Twitter

I know the NFT space can sound exciting and looks like a profit market, but in reality, it is very volatile and you will have to be extremely confident in the project.

As for my friend, he got started with the money he saved and that should be the case with all of the people who are interested in starting.

So, here are my takeaways from the conversation

  1. Invest with what you can afford to lose. Do not put all your eggs in one basket.
  2. Do your research.
  3. To get a whitelist, you need to be active on Discord
  4. There is a lot more chance of getting scammed.
  5. If possible buy a hard wallet to store the NFTs
  6. It is extremely hard to get into the whitelist.
  7. If you want to have the chance of either making money from NFTs or being so early in the project, Whitelist is the key.

This is something I have always wanted to know, so I got in touch with my friend and had some things clarified. There are a lot of improvements and discoveries to be made in this space and being open and anonymous is beneficial but makes it even harder to detect scams.

That was it. Thank you for reading. I hope you learned something about NFT here and if you want to get started, please do your research.

You can get the resources to learn more about NFTs where I shared 20 article links that I have found online while learning.


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