A quick mobile search for “NFT” turns up hundreds of thumb-stopping headlines.
A highlight of a LeBron James dunk sold for $208,000. The artist Grimes garnered nearly $6 million for a series of digital art. Jack Dorsey auctioned the first-ever tweet for $2.9 million.
NFTs are turning every type of art — from fine art to music to anime — into an asset that can be bought and resold for big returns. That’s particularly exciting for the reseller, but what about fans who just want to dip their toe in collecting work by their favorite artists?
Diving into the pool of NFTs is tempting. Obviously, we think you should go for it. But before spending a dime, it’s crucial to understand how to protect yourself and have a great experience as a collector and newly-minted (no pun intended) player in blockchain and digital currency.
We know you don’t have a ton of time for research. So we broke it down into four questions that aspiring collectors should ask.
1. Who owns the keys?
There’s a common saying in the world of cryptocurrency: Not your keys, not your coin.
There are two kinds of NFT platforms — custodial and non-custodial. We know that sounds a bit dry, but stay with us for a minute. Custodial means that a collector purchases the NFT, but it remains stored on that platform. Non-custodial, on the other hand, means the consumer has full possession and control of that collectible in a digital wallet.
In that digital wallet are the “keys” — a blockchain password that identifies someone as the sole owner of an NFT. With permanent and sole access to the keys through a digital wallet, that collector can admire, trade, or sell their artifact at any time. They are also a lot less likely to lose a collectible in a (god forbid, but unfortunately it does happen) platform hack.
At Artaku, we believe you should have access to the keys. It should come as no surprise that our platform is built using the non-custodial Artaku Mobile Wallet.
We understand that collectors are likely to try out different platforms, depending on their fandom interests, based on where the NFTs are available. If you’re one of them, be sure to know where the platforms stand on NFT custody, and establish a comfort level with their approach.
2. Is understanding ERC-721, ERC-1155, or MetaMask required?
Don’t understand what we mean? That’s the point.
Being an NFT collector, or a fan who dabbles in NFTs, shouldn’t require you to understand that sentence.
Many NFT marketplaces and platforms were built by crypto people, for crypto people. We know — we have many crypto people in our ranks. But the blockchain / digital currency world is evolving to be mainstream and user-friendly.
We want to make it even more user-friendly. You don’t have to understand adaptive bitrate streaming technology to watch Netflix, and you shouldn’t have to be a blockchain expert to buy and sell NFTs. Artaku lets users sidestep crypto jargon with a simple mobile wallet, eliminating the need for complex setup processes, Chrome extensions, dapp stores, and other devices.
We also want to help collectors understand more about the space — from the pros and cons of coin ecosystems to environmentally responsible approaches to NFTs.
3. How are transactions handled?
NFTs are poised to shift the paradigm of ecommerce, but we’re not quite there yet. Do you have to be a seasoned cryptocurrency trader to buy NFTs?
In most cases, no. For example, Artaku users will be able to make purchases using debit and credit cards, or USDC stablecoins for the more digital currency-inclined.
Keep in mind that there is complicated back-end infrastructure to the NFT platform business — to do it right requires a whole bunch of things you’ve probably never thought of, such as access to money transmitter licenses and a payment infrastructure that is flexible and compliant.
Speaking of compliance, the savvy collector should confirm that their platform(s) of choice follow the most stringent of Know Your Customer and Anti-Money Laundering measures. In a nutshell, that means verifying customers’ identities to prevent fraud and other bad-faith actions.
On that note…
4. Is the platform serious about security?
Whether you’re collecting wine, physical art objects, or NFTs, it’s important to know you’re engaging with entities following strict security, regulatory compliance, and anti-fraud measures.
With digital collectibles, look for platforms and marketplaces that offer state-of-the-art fraud scrubbing. The purpose is to automatically detect and stop risky transactions to ensure the authenticity of buyers and sellers, and we’re committed to those efforts here at Artaku. Scrubbing tools can verify IP addresses, match IP geolocation with billing addresses, and block blacklisted IPs — all in real time. They also scan for blacklisted or flagged credit card numbers.
This is where the Know Your Customer and Anti-Money Laundering steps come in once again. Know Your Customer is a bit like sending proof-of-life to prove you’re real and legitimate. These measures are required for compliance, and they help protect the platforms themselves, the brands and artists they engage with, and the collector.
Watch this space for further updates from us. In the meantime, our overall advice is to:
Study before you shop
NFTs are rapidly breaking down barriers in collectible ownership and redefining what it means to be a fan. We think it’s very exciting, and we hope you do too. But all the buzz can create as much confusion as enthusiasm. Before you make a big move, do your due diligence. Being a savvy NFT collector depends on it.
