The Essence and Purpose of NFT Collections

As interest in the NFT space continues to grow, this disruptive new technology has begun to spark debate around the way we define and value art. Due to their intrinsic scarcity and provable ownership, NFTs now provide a unique means for facilitating value across a wide range of digital assets, including music, video, collectibles, video-game items, and digital artwork.

In light of this, NFTs are claiming an increasingly larger share of the global art market with each passing year, which is remarkable considering how novel technology is.

Some of the most expensive NFT sales, such as collections from Beeple and Pak, are worth considerably more than bonafide masterpieces in the traditional art world. For example, Paks “The Merge” sold for $91.8million, which surpasses the inflation-adjusted valuation for “Nymphéas en Fleur” by Monet, “Laboureur dans un champ” by Van Gogh, and “Au Lapin Agile” by Pablo Picasso.

With such high stakes, more people than ever are eager to get involved in the NFT space, either by investing in prominent NFT collections or by becoming an NFT artist themselves.

But, before you jump in, you need to make sure you have a true understanding of what NFT collections are, what gives them value, which ones to avoid, and how you can get the low-down on NFT collections before they drop.

Why buy or create an NFT collection？

Buy

Buying an NFT that belongs to a collection can be advantageous for many reasons. A key factor is access to its corresponding NFT communities.

Purchasing an NFT from a popular collection such as Bored Ape Yacht Club (BAYC), VeeFriends, or Cool Cats, may provide access to unique owners-only communities.

NFT communities most often exist primarily as online forums for connecting like-minded enthusiasts, granting early access to new launches, and organizing in-person events.

Another beneficial factor is liquidity. Collections released by highly sought-after artists, major brand labels, or new up-and-coming talent can sometimes attract many prospective buyers and trading volume. For NFT holders trying to flip their assets for a profit, higher trading volume often makes it easier to find a new buyer for this digital asset.

NFT collections aren't just confined to digital art. Blockchain-based games, called play-to-earn games, also incorporate NFT collections. These collections often represent game items and characters that players use in the game. Purchasing these types of NFTs may grant players increased abilities and boost their revenue-generating opportunities.

Create

For NFT creators, launching NFTs as part of a collection opens the door to several opportunities.

Beyond creative expression, the blockchain-based nature of NFTs can allow NFT creators to automatically receive creator earnings from secondary market sales of their works. By releasing large collections of NFTs, they stand to potentially earn from multiple secondary market sales, as opposed to relying on single NFTs to sell and resell.

NFT collections also invite a larger number of buyers into a creator's community. Different rarity levels can allow buyers with lower sums of money to access the collection. This factor may help boost interest in any future NFT collection launches, and encourage the creation of new community-driven utilities around popular collections.

Community-inspired merchandise centered around the collection, or holders offering unique promotional discounts on products or services to other collectors, are all examples of these additional utilities.

What is an NFT collection？

Non-fungible tokens (NFTs) have brought new life to collectibles, memorabilia, and art markets since they took the world by storm in 2021.

By tokenizing real-world and intangible items using blockchain technology, NFTs have made it possible to transparently and immutably establish proof of ownership over anything.

According to recent data, tens of millions of people have already purchased these types of digital assets.

Many of these NFTs belong to a broader body of work, known as an NFT collection.

How do NFT collections work？

While each NFT is unique, many of the most popular NFTs are part of a larger body of work known as an NFT collection.

A single NFT collection can consist of many individual NFTs, in the same way Andy Warhol‘s “Campbell’s Soup Cans” series contains 32 different artworks.

Oftentimes, non-fungible token collections follow a particular aesthetic theme and include a wide variety of unique traits. Different combinations of traits allow creators to incorporate varying degrees of rarity throughout their NFT collections.

For example, the famous Profile Picture (PFP) NFT collection, CryptoPunks, consists of 10,000 different pixelated characters. Differentiating these characters are three tiers of traits: Punk type, attribute, and number of attributes.

Within the first tier, there are four Punk types. “Male” is the collection's most common Punk type, while “Alien” is the more rare type. Next, there are 87 different attributes.

These include clothing items such as tiaras, chokers, and welding goggles, as well as physical attributes like rosy cheeks and big beards. Finally, punks can have no attributes at all or as many as seven.

Crypto Punk #5822 is one of the rarest CryptoPunks in the collection. In addition to being one of only 9 Alien types, it also bears the ultra-rare bandana attribute. This combination gives the NFT a uniquely high rarity ranking.

Rarity ranking tools are something many NFT marketplaces offer to help prospective buyers easily identify how rare an NFT is within its associated collection.

Who can make an NFT collection？

One of the most attractive aspects of the NFT world is that anybody can become an NFT artist and make their collection. Unlike the traditional art scene, which generally requires extensive formal training and a significant amount of skill, the barriers to entry are considerably lower when it comes to NFTs.

For starters, since NFTs are created digitally, artists can lean into graphic design and other computer-based skills, which are generally much simpler to master than becoming adept with a paintbrush. Second, many of the most popular NFT collections are rather simplistic, such as the aforementioned Bored Apes Yacht Club, as well as other highly valued collections such as Crypto Punks.

As you can see, Crypto Punks avatars are made up of pixelated characters that would not require a high level of skill to produce or even replicate. However, this illustrates that a large portion of the value in NFT projects is not directly tied to the creative flair of their creators but rather to the artists ability to tap into demand, trends, and how they market their collections.

Of course, that is not to say there arent any highly skilled artists in the NFT space. Take Beeple, for example, who produces magnificent NFT collections that provide thought-provoking social/political commentary through bizarre abstract images that would certainly not look out of place in a modern art gallery.

How to make an NFT collection

Wondering how NFT collections are made？ Well, the good news is that it‘s probably much easier than you imagine. With that said, let’s start off with the first and most difficult step – creating the art that will make up your collection.

Creating your art

To begin with, you need to carefully consider the type of content that you want to produce. Whether you are creating music, memes, avatars, videos, or digital art, try to find a niche that suits your interests and has some level of market demand. After all, if your goal is to make money with NFTs, you will want to appeal to as wide a demographic as possible.

As for the production itself, it‘s up to you what medium you decide is best for your particular type of NFT. If you’re considering going down the digital art route, many artists use software such as Adobe Photoshop and Adobe Illustrator. If youre new to these programs, there will be a fairly steep learning curve, although there are plenty of free resources out there that will help you develop your skills.

You can even use an NFT maker that will assist you in generating unique digital art within a matter of minutes. Some of these tools require no artistic skill whatsoever. For example, you can use Hotpot.ai to create beautiful digital art by inputting a few keywords into the AI interface. After tweaking a few preference settings, the AI will present you with a piece of digital art that you can mint into an NFT and sell on the marketplace – and the best part is that its completely free!

Remember, since you are creating an NFT collection, you will need to produce at least two unique artworks. The number of pieces you include in your collection is entirely up to you. However, try to take a look at similar artists in your field to see what works for them. Both CryptoPunks and the BoredApeYachtClub have 10,000 unique avatars, but that doesnt mean you need to match that volume.

Set up a crypto wallet

Before you mint your artwork into NFTs, you need a wallet to store them on. There are a few different options you can choose from (most are free), and the one you select should depend on the blockchain you want to use (but more on that later). For now, if youre looking for simplicity, set up a Metamask wallet and stick with Ethereum.

Mint your artwork on the blockchain

Next up, its time to mint your artwork onto the blockchain. This process is what will give your art its value due to the inherent scarcity and uniqueness of NFTs. While it is possible to mint your artwork onto the blockchain manually, it is advised to use one of the NFT marketplaces since you will have the option to sell your collection directly on their website.

On top of this, many of the leading NFT exchanges offer a lazy minting service, which means that you do not need to pay any fees to mint your artwork as an NFT. In this process, the NFT is made available off-chain and only gets minted once it has been sold to a buyer. In some cases, the NFT gas fee is passed on to the buyer too, which means the artist does not foot any of the cost for minting. Some of the most popular websites that offer this functionality include:

OpenSea

OpenSea is the largest and most popular NFT marketplace, offering a vast range of digital assets, including art, music, domain names, and virtual real estate. Users can easily buy, sell, and discover unique NFTs, benefiting from the platform's user-friendly interface and extensive collection. OpenSea supports multiple blockchain networks, providing flexibility and accessibility for both creators and collectors.

Mintable

Mintable is an NFT marketplace known for its simplicity and ease of use, allowing anyone to create, buy, and sell NFTs without needing technical expertise. The platform offers two main minting options: gasless minting and traditional minting, having it accessible for creators with different needs. Mintable also features a wide variety of digital assets, including art, music, and collectibles, catering to a diverse audience.

Rarible

Rarible is a decentralized NFT marketplace that emphasizes community governance and user engagement. It allows creators to mint, buy, and sell NFTs while participating in the platform's decision-having process through its native governance token, RARI. Rarible supports a wide range of digital assets, including art, music, and virtual goods, and encourages user interaction and collaboration.

SuperRare

SuperRare is a high-end NFT marketplace focused on curated, limited-edition digital art. The platform features exclusive artworks from top artists, providing a premium experience for collectors and investors. SuperRare ensures the authenticity and provenance of each piece by leveraging blockchain technology, having it a trusted destination for acquiring rare and valuable digital art.

Set the price of each individual item

Now that you have created your NFT collection, you need to decide on the price you will initially offer them on the market. Generally speaking, the more pieces that you have in your collection, the less valuable each individual item should be. However, that is not always the case. To use the BoredApeYachtClub as an example once again, each Bored Ape was offered for a flat price of $190 during launch in April 2021.

If you are struggling to find a suitable launching price, then carry out some research on similar artists and see what they are charging. That way, you can assess the quality of your work compared to theirs (as well as your audience and the marketability of your brand) before setting a realistic price.

What makes an NFT collection valuable

The very nature of NFT technology is what makes each collection valuable. Because they are non-fungible, each token cannot be replicated, and the blockchain serves as irrefutable evidence of ownership. Thanks to these traits, digital assets have provable scarcity for the first time in history, which is one of the key reasons they have surged onto the art scene in recent years.

With that said, you may be wondering what makes one NFT collection more valuable than another？ Lets take a look at some of the major factors that influence the floor price of individual collections.

Artist reputation

First and foremost, the artist‘s reputation will be the most important factor in determining the worth of any given NFT collection. If an unknown artist creates an NFT collection with no audience, social media following, or previous history, it is very unlikely that they will be able to command a high market price for their works. Of course, it’s not impossible, just extremely unlikely.

We see examples of this all the time, with celebrities and well-known artists cashing in on their brand by releasing an NFT collection in their name. Even Sir Tim Berners-Lee got in on the act after he sold an NFT of the source code to the World Wide Web for $5.4 million in 2021.

Ownership History

The success of an NFT collection is heavily influenced by the individuals who purchase items from the collection. If celebrities and notable individuals jump on board and share their purchases with their followers, the value of the collection is likely to rise as awareness of the project grows and more people want to join in. For example, many prominent celebrities have bought Bored Apes, including people like Gwyneth Paltrow, Paris Hilton, Eminem, Shaquille ONeal, Post Malone, Snoop Dogg, Mark Cuban, and Steph Curry. This is one of the biggest drivers for the collection going viral and exponentially increasing its value.

Utility

Utility is one of the more popular buzzwords in the wider crypto sphere. In general, the term refers to the usefulness of a digital asset (usually a cryptocurrency token) and the value that it brings to its ecosystem. In other words, does the asset do anything, or is its value simply dependent on the speculation of other investors？

As for NFTs, its important to note that some tokens have a specific use case on the blockchain. For instance, NFT gaming items and collectibles can be used within a video game, providing some utility to its owners. Gods Unchained, which is one of the most popular competitive trading card games on the blockchain, allows players to compete for weekly rewards based on how well they perform when battling against other players. The more powerful the cards, the more chance a player has at earning higher rewards.

In addition, there are plenty of other use cases for NFTs, such as yield farming through providing liquidity, staking, renting, and even royalty payments.

How to find NFT collections that are minting soon

If you are planning to invest in NFT collections and want the best bang for your buck, your best bet would be to find exclusive NFT drops so you can jump on projects early before their prices increase. Back in June 2017, the CryptoPunks collections were offered for free on a first-come-first-served basis. Over the subsequent few years, the CryptoPunks collection became one of the most sought-after projects in the entire NFT space, having those who participated in the drop very wealthy without having to invest a single cent.

While it is going to be next to impossible to replicate that feat, there are still plenty of tactics you can use to keep your ear to the ground and find out about hot NFT drops before the general public catches wind.

Social media – Love it or hate it, monitoring social media is one of the best ways to find out about exclusive NFT projects before they hit the mainstream. Twitter, in particular, is often the first place that creators advertise their upcoming NFT projects before they go to market. However, the main challenge with using this method is finding a way to cut through all of the noise generated by speculators and shillers. Fortunately, you can use tools such as Whotwi to help identify up-and-coming creators without subscribing to thousands of random accounts.

NFT aggregators – Before a project launches, artists typically reach out to aggregation sites such as Rarity Tools to provide information about their collection and where people can invest. Its worth checking in on these websites now and then to look for new collections.

Minting monitors – Online tools like icy. tools monitor mining activity on the Ethereum blockchain within the NFT space. Using these platforms, you can monitor your favorite artists and find out when they mint new projects. This will ensure you are one of the first informed about new projects, so you can jump on them before they blow up.

Beware of scams when investing

With more than $17 billion traded on NFTs in 2021, it‘s no surprise that the industry has become a breeding ground for scammers and opportunists looking to take advantage of unsuspecting victims. Unfortunately, many of these scammers are finding success, especially since a substantial percentage of newbies entering the space are unfamiliar with the unforgiving nature of blockchain technology. Moreover, it’s important to note that the cryptocurrency space is mostly unregulated, which means that investors are subject to high levels of risk. As always, education is the best protection when it comes to scams, which is why we have provided a list of some of the most common that you need to be aware of below:

Rug pulls – A rug pull occurs when an artist hypes up a project so that investors jump on board, only so they can sell out of their positions and cash in. When the original creator bails from the project, the value of the NFTs typically plummets, leaving your investment in tatters.

Phishing – Phishing scams are designed to trick you into willingly handing over sensitive information, such as your usernames, passwords, or seed phrases that provide access to your NFT wallets. These scams usually involve phony advertisements through fake websites and pop-ups.

Counterfeit NFTs – These scams occur when someone steals an artists work by impersonating them and offering them in the marketplace. As a result, scammers sell counterfeit NFTs that have no value to unsuspecting victims that do not take the time to verify the identity of the seller.

Bidding scams – These rather unsophisticated scams involve fraudulent buyers switching out the currency used for bidding without your knowledge. In most cases, a buyer would bid for your NFT collection for, lets say, 10 ETH, but when the time comes to transfer, they send over 10 DOGE, which is significantly less. Fortunately, most NFT exchanges have preventive measures in place to make this scam less effective.