Journeying Into Web3: Buying My First NFT
Hello, it is I, the office familiar, popping up from my burrow once again!
Since my last soliloquy in 2022, we at Mighty Bear Games have transitioned from being Web2 studio veterans into eager adventurers exploring the wide, wandering, wilds of Web3.
It’s definitely been quite the learning curve with many new aspects of Web3 that we’ve needed to become familiar with, like my colleague Nicole’s newly bestowed role of being a Project Manager navigating the Web3 game space or our Finance Manager Sean’s expanded concerns with accounting for Web3.
For myself, while I’m not directly involved in the development of our latest game, Mighty Action Heroes, I still need to be aware of the basics of Web3, such as what’s a wallet, blockchain, cryptocurrency, gas fees, minting, and so forth.
Our Bear bosses decided that the best way to learn is to get involved, so with a small allowance, aka one-time tuition money, and a starter’s guide to creating a Metamask wallet, everyone in the team had to buy at least one NFT to learn how the space of Web3 worked.
This article is my beginner’s guide of how I started my journey into Web3 as a user and some of the starter tools and knowledge to be familiar with when planning your initial steps.
Look At This Stuff, Isn’t It Neat?
First things first, what’s a blockchain? In the simplest of terms, a blockchain is a group of computers working together to process and record data on a public ledger, ensuring the authenticity and security of the data transactions. It’s the potential future of financial transactions, one that is not bound by global location or dependent on third-party intermediaries such as banks. One of blockchain’s main features is the way it records data, which is:
- Immutable: This means that no entity can modify the transaction records.
- Transparent: Anyone can see and verify the transactions on a blockchain via the Internet.
- Decentralized: No single entity can govern the whole network
Next, what’s an NFT? NFT stands for Non-Fungible Token. To break it down, fungible refers to a good or asset that is easy to exchange or trade for something else of the same type and value, eg. a $10 bill can be exchanged for two $5 bills and vice versa; it is mutually substitutable as the value is equal on both sides.
An example of something that is non-fungible would be the rarest, one-of-a-kind Magic: The Gathering card, the Shichifukujin Dragon. Its value comes from literally being the only one of its kind in the world and not having a similar item in equivalent value to it. Assets like diamonds, land, or baseball cards are not fungible because each unit has unique qualities that add or subtract value. The last part, a token, is essentially any asset that is digitally transferable between two people on the blockchain. Put all together, an NFT is a unique, one-of-a-kind digital asset.
Now that we’ve got the concept of the blockchain and an NFT down, let’s get into the first item to set up.
Let’s Get Down to Business
The first thing you’ll need is a wallet. It’s not a traditional wallet that holds fiat currency (Fiat money is a government-issued currency, eg. USD, EUR, etc.). Specifically, a Web3 wallet doesn’t store cryptocurrency in the same way physical wallets hold cash. Instead, they read the public ledger (i.e, the blockchain) to show the balances and items in a user’s wallet addresses, as well as hold the public and private keys that enable the user to make transactions.
A wallet address is made up of a randomly generated set of numbers and letters; this is referred to as the public key, eg. a bank account number, so people know where to transfer cryptocurrency or tokens to and where it comes from. The private key is akin to your wallet address’s password — it is used to verify transactions and ownership of a wallet address and should not be shared with anyone.
One of the key processes that happen during the setup of the wallet is the generation of your wallet’s seed phrase, aka a master recovery password that enables the contents of a wallet to be restored, even if access to the wallet itself is lost, such as forgetting the login password or if any device you use to store crypto is lost or damaged, eg. your laptop. The seed phrase is made up of 12–24 random words and cannot be amended at a later time, therefore it’s vital that you store it offline, i.e. write it down on a piece of paper and keep it somewhere private and only accessible to yourself. Storing it online or in your computer opens the risk of your seed phrase potentially being stolen via malicious means and if another party has your seed phrase, it allows them full access to your wallet and all the digital assets within. Once a wallet is drained of its contents, it cannot be reversed or recovered by any other means.
For our initiation, we went with Metamask for its ease of setting up and its wide range of support for other Ethereum-based tokens which make for a smoother process to manage and interact with different preferred assets on the blockchain.
Authenticate to Get that Bread
With a wallet address established, the next thing we need is cryptocurrency, aka a coin, to be able to make a purchase. There are many different coins available, but for our purposes, we went with Ether (ETH) on the Ethereum network since its price point is accessible and also because it’s one of the most widely used blockchains.
To get ETH, you’ll need to get it from a crypto exchange. An exchange is a place where you use FIAT money to purchase your desired cryptocurrency and also vice versa where you can convert your cryptocurrency back into FIAT currency and withdraw it. For today, we’ll focus solely on how to get cryptocurrency.
By its very nature, the decentralized economy is designed to allow users to remain anonymous and keep their personal information private from any central authority. However, as a regulated organization, crypto exchanges need to protect against fraud, corruption, money laundering, and financial terrorism; the goal being to prevent illicit funds from entering the legitimate financial system. So the first thing that the exchange will conduct is a process called Knowing-Your-Customer (KYC). This is a verification process of the identity of the individual buying the cryptocurrency which will require submission of your personal details and personal identification documentation to ensure that the customer buying the cryptocurrency is a legitimate person and also to assess their risk for potential illegal activity. The time needed to complete the KYC process varies, but expect minimally for it to take at least a day or two.
Once you’re approved, you can purchase your preferred coin to get started on the next exciting part; buying and owning your first NFT! But before we get to that exciting moment, you’ll need to transfer the ETH from the exchange to your wallet address.
Take note that anytime you perform a transaction, be it transferring cryptocurrency or buying a token / NFT, etc. a small transaction fee is needed as payment for the blockchain to process your request — this is known as a gas fee. There are a handful of reasons that can cause the gas fee to fluctuate; an example would be the time of day — is it the peak period on the blockchain and processing a lot of requests then? Or is it off-peak and receiving fewer transactions then? Higher demand causes the gas fee to go up and inversely, lower demand will bring down the cost of the gas fee for a request submitted then.
She Sells Seashells
Now that you’ve got a coin in hand, you’re probably trying to figure out where to look for NFTs to purchase.
There are many different NFT marketplaces that cater to different audiences such as Blur.io and Axie Infinity, but a good place to start as a beginner is OpenSea. They offer huge, extensive categories of NFTs all organized within a straightforward layout that is easy to navigate, with the home page introducing you to the marketplace and some notable pieces; it’s a quick minute before you’re familiarised with how to browse all the NFTs that OpenSea* offers — *Note: This isn’t a formal endorsement of OpenSea, it’s just the marketplace that I used iwhen buying my first NFT!
Personally, I was a bit overwhelmed by the sheer number of projects in the marketplace and ended up getting NFTs that I bought purely for aesthetics. It was still nevertheless quite exciting to participate in the activities of the marketplace, whether it was browsing through the vast collections of NFT art, monitoring the price of NFTs and trying to get it at a bargain, or listing an NFT and eagerly hoping that someone would buy it from you — the anticipation was invigorating and stomach-churning at the same time.
Driven by this new novelty, I got caught up in the buzz of projects, and like a fly at the edge of a pitcher plant, I eventually succumbed and fell in.
I got scammed.
Thankfully, it was for a small sum, about US$8, but the sting of falling for a scam still makes me wince. In my case, it was a fake project that claimed it was revealing its hidden art and utilities on a soon-to-be-approaching date. Well, that date came and went and there was no change to the collection. Eventually, I started sniffing out the project details and links before finally concluding that I was indeed bamboozled. This leads me to the most important section of this article: safeguarding your wallet’s security.
In any setting, there will always be bad actors looking to take advantage of someone’s complacency and make off with their assets, more so in the decentralized ecosystem of Web3. As the onus and consequence is on us to be mindful of our wallet interactions, some methods of additional security and vigilance include:
- Using an extension such as Wallet Guard which helps identify scams and wallet drainers before they interact with your wallet. While it’s not bulletproof, having an intermediary layer between your wallet and a transaction authorization request gives you the extra opportunity to examine the details before deciding whether to proceed.
- Using a hardware wallet. This is a small, physical device that stores your wallet’s private keys offline in ‘cold’ storage and allows you to sign transactions within the device itself, as compared to a ‘hot’ wallet that is online and always connected to the internet.
- Researching the project that you’re keen on. Genuine projects usually have social links that allow you to reach out to the project’s creators and community to verify and judge the legitimacy of the project. Projects that genuinely intend to build will also consistently remind their community to take the time to verify you are interacting with official accounts before taking any actions; scammers will play on your feelings of FOMO (Fear of Missing Out) to get you to quickly buy into their malicious connection so they can make a swift escape with your assets.
Thus, the most important practices to remember and take to heart are:
- NEVER share your seed phrase and private keys with anyone
- Always be vigilant and do your own research
I Can Show You the World; Shining, Shimmering, Splendid
Web3 is a vast landscape of the future with a multitude of possibilities and applications for it. I personally prefer to use it more for its utility rather than as an investment tool. For example, I appreciate owning an NFT and being able to use it in games as an extension of my unique owned piece being visible and interactive. For others, they may find the potential for using Web3 as a financial tool an appealing and innovative approach to nurture their investments and that’s great!* (*As with any financial tool, there will always be risks and changes in the market to be aware of. You’ll see this acronym often in the space and it’s wise to take heed of it: Not Financial Advice, Do Your Own Research — NFA, DYOR).
Before I depart, if I may humbly suggest, an option for consideration for your first NFT could be a piece from our Big Bear Syndicate collection which you can use in our awesome game in-development, Mighty Action Heroes!
And with that, I hope my experience has helped to lift some of the shroud of Web3’s complex nature and make it less intimidating to take the first step of beginning your journey into Web3! 🙂