How to Stay Safe in The NFT Space: Change Your Mindset!
If Web3 space is the Far West, NFT space is the Wild Wild West!
When in Crypto, you will find yourself at the hands of a scam, it’s usually the result of a large-scale scam: shitcoins, shady exchanges,…
Well, the true beauty of NFTs is that you can be screwed six days to Friday in a hundred ways possible: classic rug pulls, slow rug pulls, inside trading, stolen assets, phishing,…
And these scams, be they in crypto or NFTs, are mostly made possible due to our mindset when we first step into the Web3 world.
So today, we will discuss how by changing our mindset we can avoid most of the web3 landmines!
Let’s start with the human emotion that will make web3 a hazardous path: TRUST.
Lesson n°1: If you want to survive, trust no one, not even yourself.
When you join the fray when you take your first step into web3, crypto, NFTs, you’ve done your research and you’re convinced: THIS is the future. And you wanna be part of it.
You choose, in a leap of faith, to put your future into web3 welcoming, unregulated hands. In other words, you’re ripe for the picking.
You’re even more prey if you’re working class, living paycheck to paycheck.
I’m linking this article(sorry it’sin french) Even if the author is lacking some nuance, he’s making a really good point: if you’re financially vulnerable, chances are you’re not going to make it in web3.
Why?
Because more often than not, your trust is proportional to the depth of your hopes. And when you’ve been living your life dealing with economic stress, sometimes even gone through episodes in your life where you had to fight to keep a roof over your head or feed yourself, web3, crypto, NFTs, seems to be your way out.
To finally break away from this life.
For all intents and purposes, this world looks like a lifeline for you and your family.
You will enter this world convinced that “You’re going to break through. You’re going to finally achieve financial stability and even build intergenerational wealth. You will. It’s a certainty. “
And THAT, holding these beliefs, is the recipe for disaster.
You will be trustful when you should not because you’re going into this world with an overly good perception of it, thinking scams are the exceptions and legit projects and good-natured people are the rule and that overall it’s a safe space.
Sorry, it’s not.
You’re going to step into a world where everybody is out to get you (ok not everybody but a great number of them!), and nobody can protect you; wearing pink-tinted glasses! That’s why you will be prey.
And breaking away from this perception of this space, your positive bias, seeing it for what it is at its core, takes time.
But by then, when you have finally understood the lesson, maybe it will already be too late for your financial stability.
Hence, lesson n°2!
Lesson n°2: REDO THE MATH!
In the Web3 Church, if there is one sermon you can not escape, alongside “DYOR”, it is “ Never invest what you can not afford to lose”.
But in NFTs, the ones who get to “ WAGMI” are actually, more often than not, people who are financially comfortable and privileged, because to “make it”, you actually have to go through a learning curve that includes a string of “failed” NFT investments and/or having the money necessary ( A LOT) to have access to Real Alpha
And this is the truth of it for a majority of people: you have to lose a lot of money before even beginning to win back enough to cover your loss.
This is even truer during bear markets.
During this “test & trial” period, unless you’re being tipped by the Alpha God before you become something of a connoisseur it will take time. The issue is that you’re not in a simulation or a mock trial. You’re betting with your hard-won money, and this could go on until you run out of liquidity.
And sometimes, in the worst-case scenario, people who are on a losing streak, in a very gambling fashion, will double-down, and even use critical money, borrow money to try and redeem themselves.
For a great number of people, this preaching makes absolutely no sense whatsoever. For non-privileged people foraying in NFTs when the entry point of most NFT projects is in the 200–500$ range, it’s already a lot of money they can’t actually afford to lose. And when you go into the trade channel in these project’s discords, you will see so many people who are in very palpable despair trying to sell their NFTs, not even with profit but just trying to redeem what they have lost.
At the core of this issue is the same thing as in lesson n°1: the mindset.
Because when people do the math about what they are ready to invest aka what they’re ready to lose, none of them go through this process thinking they’re going to lose any of it. Here, this is the crux of it.
Consequently, they grossly overestimate the amount of money they can invest without putting themselves in a difficult position. Especially during a bull market, where a great number of people are being swept up by euphoria.
And then the math is mathing no more.
So first, to take yourself away from this risky situation, you really have to understand and accept at a depth level that losing is a possibility. And that if it happens to you, instead of denying the reality of what you’re going through, and being stuck into wishful thinking that it all gonna be alright, you will have to make a hard decision to litigate the situation.
DO NOT ‘HODL”
We’re being taught that those who are getting rich in web3 are the ones who “HODL”, but no one ever talks about the ones becoming poor because they were left holding the bag.
DO NOT HOLD if you can not afford it.
Sell your NFT(s), exit your positions, do whatever you can to mitigate a situation where you’re losing money. You know what? You can always buy anew, but once you have lost this money you may have lost it forever, especially during bear markets!
If you’re not in a situation where you can afford to lose money, to wait indefinitely for the bull market to kick in, do not follow the lead of people who can.
Make your investment decision based on your reality.
And one of the tools to do that is to redo the math!
REDOING THE MATH
The real investment equation would be more along these lines:
What you think you can invest / 5 -> 10+ . Depending on your personal situation: debt, children, work stability, mortgage, rising daily life cost, house project, health cost,… Add +1 for every liability.
If applied this equation would slim down drastically the real amount you can invest? YES.
Do you find this disheartening? Probably.
But the real question is how disheartened will you be if you lose the money you will need along the way?
If you cut down the amount you will invest, it will make this venture actually safe and enjoyable, even profitable for you. Because with really limited resources, before investing, you will make all the right moves.
You’re not only going to tweet DYOR without doing any DYORing of your own. You will actually find yourself building an investigation process to evaluate the true value and risks of a project, giving you all the information needed to make good and wise choices.
And maybe, just maybe, you won’t lose money and could turn a profit.
And then use these profits to reinvest in other projects rather than taking needed resources away from your pockets.
This approach, this renewed mindset will help you dodge one of the worst NFT bullets, a trap waiting for you to step in: FOMO.
Lesson n°3: “Thee Will Not FOMO”
Thee will not truly know the meaning of FOMO until you’ve stepped into the NFT space.
And resisting the FOMO is almost impossible, especially in your first months in this space.
Why?
Because 99% of NFT projects are built to create FOMO and a lot of them are VERY good at it!
1. They will create a reality where they’re without a doubt possible the next “blue chip”, they’re going to sold-out immediately and reach the moon in a beat. They’re the chance of a lifetime, they’re the project that will make all your dreams come true.
2. FOMO is exacerbated because usually between the launch of the project and its mint, the time frame is extremely short.
Consequently, the FOMO strategy will make you buy first and think later.
And here lies the trap.
LOSING YOUR CRITICAL THINKING
You will see a project that will grab your attention, and you will think maybe this is it!
To be on the list of the lucky selected few that will have access to the premint and be assured of getting your hands on this NFT, you will join the community immediately because remember you don’t have much time (and grind).
And this is when you could find yourself losing some of your critical thinking.
When you step into an NFT project, you become a part of it.
Ridden by the FOMO, you will spend so much time within the community, investing your free time and yourself, creating sometimes deep parasocial relationships with other members of the community or the project founders, you become an actor, sometimes even a pillar of the community. What you will feel very quickly for the project is devotion, and you will dedicate yourself to the project’s success.
And as your investment in this project grows, your faith grows, and you will lose more and more of your ability to analyze the project with neutrality.
So much so that sometimes when you will find yourself implicated with shady/scammy projects, and when some people will raise legitimate questions you will call them FUDers, and when you will see red flags you will find excuses and justifications, and stand even firmer in your beliefs.
Recommending to you to listen to the first minutes of “Understanding the cryptocurrency crash” ; one of Terra victims explain how he was so entrenched in the community and its beliefs, he would close himself up to any criticism of the project and how his beliefs just run deeper everytime he was faced with it.
FOMO and FOMOing create the perfect conditions for successful scams.
And FOMO is an intrinsic part of NFT Culture as of now. That’s why in the web3 space there is nowhere, not even in crypto, where you can observe as much scamming happening as in NFTs.
It can give you vertigo.
FOMOing makes it so we lose critical thinking, we just jump in.
And sometimes we jump into traps.
LITLLE TIPS TO TRY AND QUIT THE FOMO MINDSET:
1. Do not join any community without in the first place going all Inspector Gadget on the project (we will talk about how to successfully do so in part 2 of this article). This way you will not be influenced by other people in the community before you’ve made your own conclusions. But do join the community without participating to observe and find red flags if they exist.
If you think you don’t have time to DYOR, well what about the time you will invest grinding for a project that will wipe out all of your assets?
2. If you apply lessons n° 1 & 2, you should already be more or less out of the hoods because you will have a healthy approach to your investment.
You’ve stopped “betting” on projects and developed a due diligence strategy to make you approach these projects with a cool head. Even after you’ve joined a community, you will know to stay extremely aware of everything going on, and when you spot something suspicious, you will ask hard questions and not put on blinkers.
3. Reminder: There are always opportunities in NFTs.
It’s okay to bypass a project, if there is something that does not sit well with you, do not buy into the FOMO. If this project you’ve your eyes on suddenly becomes a success, remember that what worried you about this project did not go away, and will come knocking at its door if not now later. And instead of thinking of the money you did not gain, think about all the money you’ve not lost by practicing precaution with all these other projects that turned out to be rug pulls.
No need to chew your hat over “missed opportunities”
Tomorrow is another day.
Tomorrow will be ripe with new opportunities.
4. If you feel you’re in a bad mental space, that you’re FOMOing hard, take yourself out of the NFT space. And do it now. Touch the grass, ground yourself in real life, and go down from the NFT high.
Conclusion
Positive Bias, Trustfullness, FOMOing, Euphoria, Gambling Mindset,…Nobody is immune to it. And feeling any of them is certainly not a failing, it’s just deeply human. Especially, in these given circumstances.
That’s why we’ve made a point of tackling this aspect first in our “How To Stay Safe In The NFT Space” two-part article.
It’s only by redefining our mindset deeply, and building good, healthy, safe habits that we will be able to protect ourselves from the worst web3 can offer.
And in bear markets, as we’re now, it’s even more crucial, because we’re so much more vulnerable.
If you know us, you know how much we care about making web3 an enjoyable, fulfilling place, where everyone could find value and feel valuable.
Mass adoption can not happen as long as web3 equates to mass losses.
To guide you through web3 perilous water, and help you build a web3 safe journey, we’ve prepared in part2 quick and efficient strategies to implement!
See you then!
Have any questions, comments or subject suggestion ? We’d love to hear from you! Please share with us all your hindsights down below or write to us at contact@nefture.com.
Interesting Reads In Connection With Our Subject:
Crypto Crash Widens a Divide: ‘Those With Money Will End Up Being Fine’
Crypto collapse reverberates widely among black American investors
About us:
Nefture is a WEB3 Company that allows brands to tap into web3 through a 360° support on their project: from building Smart Contracts, Audit, Dapps,.. to Building Community and Marketing Srategy !
Start your web3 journey with us: https://www.nefture.com/
Book a call with our team: https://nefture.calendesk.net/
