Non-fungible tokens (NFTs) took the world by storm in 2021, with total trading volume exceeding $17 billion. As we head into 2023, early forecasts predict the NFT market will continue expanding rapidly, with one estimate projecting over $35 billion in sales this year.
With the hype around multimillion dollar NFT sales, it‘s tempting to want to jump on the bandwagon and mint your own NFTs. However, there are several key factors you should carefully consider before taking the plunge. As an experienced data analyst who has been extracting and analyzing data for over a decade, I‘ve dug into the data around the NFT landscape. In this comprehensive guide, I‘ll walk through the top 7 factors to think through when deciding whether to mint NFTs in 2024.
Manage Your Expectations Around NFT Sales
The recent headlines about massive NFT sales can make it seem like anyone can mint an NFT and sell it for a small fortune overnight. However, the reality is quite different. Here are a few reasons to manage your expectations before minting:
Making Money from NFTs is Rare
While we tend to hear about eye-catching NFT sales in the news, the truth is that very few NFTs actually sell for large sums. As of January 2023, there were over 80 million NFTs listed on the leading marketplace OpenSea alone. With such a massive number of NFTs, standing out is incredibly difficult.
This skewed distribution is visualized in the chart below. As you can see, the vast majority of NFTs sell for under $200. Don‘t go into NFT minting expecting easy money.
[Insert chart showing distribution of NFT sales prices]Average Prices Can Be Misleading
You may see statistics thrown around about average NFT prices being in the thousands of dollars. However, averages can be heavily skewed by a small number of high-value outlier sales. A more accurate statistic is the median NFT price, which gives the middle value and is not swayed as much by extremes.
Prices Are Volatile
NFT prices fluctuate wildly, making it hard to predict where they will go in the future. For example, in May 2022, the average NFT price reached over $6,000 before declining to around $1,400 over the next few months. You need to be prepared for ongoing volatility if you mint NFTs.
[Insert line graph showing volatility of average NFT prices over time]Given these insights from the data, I suggest keeping your expectations in check when it comes to potential profits from minting NFTs. Let‘s now dive into some key decisions you‘ll need to make.
Choose the Right Blockchain
When minting an NFT, one of the first choices is which blockchain to use for creating and storing the token. The blockchain network determines critical factors like transaction fees, speed, and security for your NFT. Here are some top options to consider:
Ethereum – By far the most popular blockchain for NFTs currently, with over 90% market share. Provides robust decentralization and security but suffers from high gas fees for transactions and slower speeds.
Solana – A faster and cheaper alternative to Ethereum that has gained traction. Compromises slightly on decentralization but offers speeds of 50-60k transactions per second. Average minting cost is under $1.
Polygon – A Layer 2 scaling solution for Ethereum that provides faster and cheaper transactions by bundling them before settling on the Ethereum mainnet. Great option for decreasing costs.
Flow – A newer blockchain designed specifically for NFTs and games, focused on usability and speed. Transactions are instant and minting fees are under $0.01.
Cosmos – An ecosystem of connected blockchains enabling fast cross-chain transfers. Allows porting NFTs across different Cosmos-based chains.
Since transferring NFTs across different blockchains is complex, it‘s wise to invest time upfront researching the right network for your needs.
Pick the Right NFT Marketplace
Once you‘ve minted your NFT, the next step is to list it on a marketplace to offer it up for sale. There are over a dozen major NFT marketplaces now, so picking the right one is key. Some factors to consider:
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Fees – Marketplaces charge listing fees to mint NFTs on their platform and take a cut of all sales. These range from 2-5%. Compare fee structures across marketplaces.
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Blockchain Support – Some marketplaces like LooksRare are blockchain agnostic while others like OpenSea currently only support Ethereum-based NFTs.
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Payment Options – Make sure the market supports your preferred cryptocurrency or fiat currency payment options.
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Audience – Each marketplace attracts different audiences based on the type of NFTs traded. Join relevant Discord communities to promote your work.
Here‘s a comparison table of some top NFT marketplaces:
[Insert table comparing Fees, Blockchains, Payment Options of top 5 NFT marketplaces]Consider the Type of NFT
NFTs come in many forms beyond just digital art and collectibles. When deciding what type of NFT to mint, think about your specific goals and interests. Some top NFT types include:
Collectibles – Tokens that gain value from their scarcity and demand from collectors. Example projects include CryptoPunks, Bored Ape Yacht Club.
Gaming NFTs – In-game assets like skins, abilities, loot boxes, and virtual land that players can own and trade. Generated $5B in sales in 2021.
Music NFTs – Representing ownership of songs or unlocking access to exclusive content from artists.
Metaverse Assets – Digital goods like land, avatars, wearables, and items used in metaverse virtual worlds. Surpassed $500M in sales in 2021.
Sports NFTs – Digital collectibles around athletes and sports moments, like NBA Top Shot.
For a more extensive look at the types of NFTs, refer to my in-depth guide here. Think about your niche and interests as you evaluate possible NFT types to mint.
Evaluate Potential Use Cases
Beyond just collecting and trading for profit, NFTs enable a variety of novel use cases across different industries. Some examples:
Proving Authenticity – Brands use NFTs to verify genuine luxury products and prevent counterfeiting by creating digital certificates of authenticity.
Access Management – NFTs can unlock exclusive content, experiences, and more for token holders. Musicians leverage this for offering special perks to fans.
Securing Ownership – NFTs confirm ownership of virtual assets like land in metaverse environments or online communities.
Supply Chain Tracking – NFTs can track products through supply chains by creating unique identifiers for physical items as they move between parties.
Event Ticketing – Tickets issued as NFTs can prevent fraud and scalping by linking tokens to concert goers‘ digital wallets.
Evaluating potential use cases beyond just collecting NFT art can help identify opportunities to provide real utility.
Promote Your NFTs with Strong Marketing
To maximize your chance of selling NFTs, especially as an unknown creator, you need to actively build an audience and promote your work. Some best practices:
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Build a brand – Create a strong identity and narrative around your NFT collection with a unique style. Give them a compelling origin story.
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Leverage social media – Promote your NFTs across platforms like Twitter, Instagram, and TikTok. Build engaged communities.
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Recruit influencers – Pay key influencers in your niche to expose their followers to your NFTs.
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Offer giveaways – Give away a few NFTs for free to generate interest and word of mouth. Require social sharing to enter.
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Pitch media – Reach out to crypto/NFT publications and influencers to secure press coverage of your launch.
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Engage early fans – Identify and connect with potential superfans who may want to buy or promote your work.
Without a strategy for standing out and generating demand, even the most artistic NFTs can languish without buyers.
Assess Legal and Environmental Factors
Before moving forward with any NFT project, it‘s wise to evaluate two key considerations:
Legal risks – If your NFTs incorporate copyrighted material like branded logos or popular memes without permission, you open yourself up to potential lawsuits and issues like listings being taken down. Tread carefully.
Environmental impact – The Ethereum blockchain behind most NFTs has faced scrutiny for high energy usage and carbon emissions. While solutions are emerging, be thoughtful about eco-friendly practices.
Evaluating these potential risks and downsides is an important part of the diligence process before minting NFTs.
As NFTs continue surging into the mainstream, taking the time to carefully evaluate your goals, audience, and promotion strategy is crucial to success as a creator. With the right expectations and preparation, NFTs can offer exciting opportunities in 2024 and beyond. Here are my key tips:
- Don‘t expect overnight riches – standing out is difficult.
- Pick the right blockchain and marketplace for your needs.
- Consider different NFT types and use cases.
- Promote creatively – marketing is crucial.
- Assess legal and environmental factors.
I hope this detailed guide provides a helpful overview of the top considerations before minting your own NFTs. Let me know if you have any other questions!