The world of NFTs (non-fungible tokens) can be overwhelming. It can seem very technical and expensive at times. My hope is that after reading this post you will have a clear understanding of how to navigate the Ethererum-powered web3 ecosystem.
From my perspective, web3 is an extension of the internet in which important information is stored in a decentralized way.
Custodial vs non-custodial wallets
Cryptocurrency exchanges like Coinbase and Gemini are centralized organizations that help people dip their toes in crypto but don't complete the full picture. By purchasing cryptocurrency from an exchange, you don't technically own that asset. The exchange is holding it on your behalf. This is called a custodial relationship.
The real starting point for web3 is a non-custodial wallet. This means that you are the only person in the world with access to your assets, and you accept the responsibility that comes along with that. If you lose access to your wallet for one reason or another, there is no company or organization to call and get help. It might sound intimidating at first, but for many people this is what gets them most excited about crypto — the ethos of true ownership and independence.
The easiest and most popular way to create a non-custodial wallet on the Ethereum (ETH) blockchain is with MetaMask. MetaMask is 100% free, and acts as your key to the web3 world.
Setting Up Your Wallet
On a computer go to the MetaMask.io download page and press "install MetaMask for Chrome". This is a Google Chrome extension that makes it super easy to interact with dApps, or decentralized applications. In simpler terms, MetaMask allows you to easily connect to web3 websites.
Once you install the extension, follow the directions to create a wallet. Assuming you're just getting started, you'll want to select "Create a Wallet" rather than "Import Wallet".
At this point you'll also be prompted to create a MetaMask password. In the grand scheme of things, this is not overly important. This password is specific to MetaMask, and is simply a way to lock access to the Chrome extension on active devices so that somebody can't simply take your device out of your hands and access your wallet. It can be locked and unlocked easily, but this can be overridden by the seed phrase at any time, which will be the next step in the setup process.
On the next page, you'll see a video explaining the importance of security with this wallet. I highly recommend you watch that.
After the video, you'll be given a 12 word seed phrase which MetaMask calls a "Secret Recovery Phrase". This is the most important piece of your web3 identity. If you lose this, it's impossible to restore your wallet. As I mentioned earlier, this is the risk that comes along with being non-custodial - no person or organization can help you get this back.
Read the following section on seed phrase security before saving this anywhere.
Once you've finished creating your wallet in MetaMask, you will see a 42 character string that starts with "0x" under the name "Account 1". This is your public address, meaning there's absolutely no harm in sharing this with people. If somebody were to ever transfer ETH or NFTs to you, this is the address they would send it to. In fact, this is how you will send yourself ETH from Coinbase or another exchange in just a few minutes.
How to keep your seed phrase safe
You should store your seed phrase totally offline - away from any internet connected device that hackers might be able to access. Don't save it in a note in the cloud, a text file on your computer, or anything like that. Write these 12 words down on an old fashion piece of paper and store it somewhere safe. Many people store this in a bank safety deposit box, and/or engrave it in a fireproof enclosure such as this Keystone steel enclosure.
Almost all crypto hacks you hear about are not due to security breaches into blockchains themselves. Instead, most hacks are simply social enginerring; people pretend to be support agents and trick you to hand over access to your seed phrase, or send you to a fake website that prompts you to approve a malicious transaction.
In order to help prevent yourself from approving malicious transactions, I recommend installing Stelo. It's a Chrome extension that sits in front of MetaMask and provides extra context around important actions.
Nobody should ever ask you for your seed phrase. If they do, it's a scam.
It's important to understand that this 12 word phrase can never be reset or changed - that wallet will always have the same seed phrase.
Down the line, it's worth looking into a hardware wallet like a Ledger Nano X, which is basically two-factor authentication for your crypto wallet. It doesn't protect against a stolen seed phrase, but it does protect against lower level hacks such as someone stealing your computer even if you're already logged into your wallet.
At the end of the day, if your seed phrase is stolen and hackers access your wallet before you realize its been compromised, there's nothing you can do to recover those assets.
Connect to a dApp (Create an OpenSea profile)
Now that you've created a wallet and understand the importance of keeping it secure, you can begin accessing dApps (as a reminder, this stands for decentralized applications). For NFTs, the first dApp you'll want to use is OpenSea. OpenSea is an NFT marketplace that allows you to buy, sell, and create NFTs.
It's now time to connect your wallet to OpenSea. An important note here is that I said "connect" rather than "login" or "register". Typical registration systems do not exist in dApps. There is no username, email, or password (at least there doesn't have to be these things), everything is accessed by connecting your wallet.
Simply go to the OpenSea login page and select MetaMask. The MetaMask extension should then launch a small window that prompts you to approve the action. In theory this is essentially getting rid of the "Sign in with Google" button you're familiar with, and replacing it with "Sign in with Ethereum".
Once you approve this action you'll be brought to your new OpenSea profile page! Wasn't that easier than setting up a new account on most websites you normally use?!
By default it is unnamed. You can set a username, but it's not required. The account is completely unique based on your wallet address starting with "0x" that we created earlier.
Congratulations! At this point you will have created an Ethereum wallet using MetaMask, stored your seed phrase somewhere safe, and connected to your first dApp (OpenSea) all for free. Now it's time to add funds to your wallet and buy your first NFT.
Buying Your First NFT
To buy an NFT, you will need ether (ETH) in your MetaMask wallet (there are other blockchains where you can buy NFTs with other cryptocurrencies, but we'll ignore that for now). You can buy small amounts of ETH via credit card directly in MetaMask, but I'd recommend transferring funds in from crypto exchanges instead. I won't cover the details here, but you'll have to buy ETH on Coinbase (or another exchange) and then transfer ETH to your MetaMask address.
At this point you should have some ETH in MetaMask and have your wallet connected to OpenSea. From here it's rather simple to buy an NFT, somewhat similar to shopping on eBay. You can place an offer/bid, buy an asset outright, and join auctions.
It's important to go into your first purchase without any expectation of making money. You should be interested in doing this as a learning experience in new technology, not solely because you want to flip a jpeg for a profit.
Sure, it's possible to make money trading NFTs, but that shouldn't be your primary goal on day one. For that reason, I recommend buying a cheap NFT just to get a handle on how this all works. No speculation, no expectations, no serious investment.
If you're looking for a recommendation, BlankFace may be a decent place to start simply because they are cheap. They are worth only a few dollars (and I'm confident won't increase in the future).
Signing transactions in MetaMask
Whenever you're making a transaction on Ethereum, such as buying an NFT, MetaMask will popup prompting you to approve the transaction. When this happens you will have to pay a gas fee.
While gas on Ethereum is usually higher than you'd like it to be, it's important to know at least a little bit about how gas works.
What is gas and why is it so expensive?
On the Ethereum network, gas is priced in gwei (a very small fraction of ETH), and changes throughout the day based on network activity. It's often cheapest to make transactions late at night or early in the morning. To stay on top of when gas is cheap, follow my Twitter account @ETHGasAlerts, or just check the website ethgasalerts.xyz for a nice readable scale.
Unless you're in a rush to make a transaction, it's worth waiting for gas to drop (if ethgasalerts.xyz says that it's expected to). There are ways to schedule this so that transactions will go through automatically when the fee decreases, but that's a more advanvced topic for another day.
Now that you know how to create a non-custodial wallet securely, connect to a dApp and buy an NFT, these are a few good follow-up articles to learn more about the whole ecosystem:
