How & Why I decided to buy my first $1,000 .jpg
That cartoon man right there might not look like much, and he sure doesn’t look like me. But Cryptodad #6127 represents the start of a journey. This is how and why I bought my first ever NFT last Friday.
The whole NFT space has been gaining a lot of attention and hype in recent months. After a twitter-inspired Web3 deep dive (check-out my curated reading list here), I decided it was finally time to put some skin in the game and invest in my first NFT.
I might write sometime in the future why I’m so interested in NFT’s and Web3 as a whole, but for now, this is just my documented decision-making process for this particular investment.
Note: I am not a financial advisor. I know nothing about investing. This is just documentation of my thought process. Part of this was written while I was making the decision. Part of it was written in reflection.
🐂Bull Case for CryptoDads
Lots of hype in discord (40k+ members before launch)
Founders seem genuine & committed to long term
Roadmap, consistent messaging & infrastructure seem to support holding at least for the next 2 months.
Will drive up long-term value if people decide to buy in long-term
Lowkey celebrity backing
A couple verified accounts tweeting about
GaryVee follows founder
Unique roadmap with charity, metaverse, and IRL niche collab with beer/whiskey
Lots of public accountability at stake with the promised roadmap, and large giveaways
ford raptor, Rolex, etc.
🐻Bear Case for CryptoDads:
Gas will be crazy at mint, could cost a lot without even getting anything
Very early to tell. Still a gamble. If founders ghost after launch, I could be fucked
pfp projects can be overdone
NFTs are a very illiquid market if this project doesn’t skyrocket.
❓What are my options (T-~2 Hours to Launch):
- Mint @ drop and try my luck at copping at release. Seems like higher demand rn than there is supply, so risk losing a shit ton of gas and getting nothing
- mint cost: 0.08 eth
- People are estimating about 0.3-.5 gas fees
2. Buy current floor @~ 0.6 ETH ($2k)
3 . Hold off and cop another project
In an attempt to mitigate my excitement-backed emotional decision-making, I tried looking at the numbers of if this decision would make sense and arrived at the following expected value calculation.
BC = Best Case | LC = Most Likely Case | WC = Worst Case
$ = Estimated financial value in ETH | P% = Estimated probability
To be completely honest, most of these numbers were arrived at through intuition, and I was aware of that at the time. Going forward, if I use this decision-making framework, I want to look at making it more objective. But I’ll breakdown the different scenarios and my thought process:
I estimated the Best Case scenario at a positive return of 6 ETH, minus the initial investment (0.59 if I buy at the floor, 0.23 if I buy at mint [that was my estimation])
The project’s future roadmap allows you to mint a CryptoMom and a CryptoTot if you hold on for 6 weeks. So I guessed that best-case scenario, each of my 3 NFTs is worth 2 ETH.
I estimated a 10% chance of that happening.
For buying at the mint, I estimated a 60% chance of me losing my mint money and not getting anything, which is why I estimated best case likelihood at 10% of 40%.
I thought the most likely cause would be the average project, which pretty much sustains the pre-drop floor price of 0.6 ETH per NFT. Multiplied by the 3 I would be getting, that would mean about 1.8 ETH gain total.
In hindsight, I realized here I didn’t factor in the initial investment
And I estimated a 40% chance of that happening (18% for buying at mint if factoring in the likelihood of me not getting anything)
The worst-case scenario is the project goes to zero or becomes so illiquid that I won’t be able to move any assets I have. Meaning I would essentially lose all of my initial investment. I was pretty skeptical given this was my first project, and estimated the likelihood of that at about 30% (if I’m able to actually get my hands on one)
If you add up the expected values, I land on 1.1 if I buy at the floor and 0.42 at the mint. This means it makes the most sense for me to buy on the floor before launch.
Before I partook in the riskiest financial decision of my life, I prepared myself for the genuine possibility that this project could go to $0, and I would be essentially throwing away upwards of $1.1k. I was okay with that and excitedly took myself to Open sea.
📕A note on methodology
As I said earlier, I want to find a way to make these values more objective.
With that being said, given past experience with business consulting case study prep, I know that generally, my intuition is pretty good, so buy-and-large, I felt comfortable with my estimations.
Because I was so excited about this project, I think intuition mostly made this decision for me. That could have skewed my answers to the matrix. I don’t think intuition was always bad, but I want to note this to myself every time I notice it to look back and see how reliable it really is.
I need to look at if I even used Expected Value calculations correctly. I’ve never seen someone add in a most likely scenario in the middle, but I think that shouldn’t change the underlying math. Right?!
💰Buying the Dad
I logged into Opensea, slowly moved my mouse over to the “Buy Now” button that sat next to the staggering “0.6 ETH” next to it. And on that faithful Friday afternoon, I clicked.
Only to be met with overwhelming disappointment because I realized Coinbase had locked $500 worth of ETH in my account for the time being, and I didn’t have enough in my Metamask wallet to buy the CryptoDad.
I tried to resolve the issue but couldn’t in time for the launch. But I still had a positive expected value if I attempted to mint at launch, and I actually did have enough ETH to try that.
So, again, I prepared myself to launch into the unknown. I watched as the clock ticked up to 5:00 pm exactly, then scurried to mint the NFT in time.
I was met with an ABSURD recommended gas fee (somewhere in the rank of $2,000).
I definitely didn’t have enough balls or ETH to pay that and tried lowballing with .2 ETH to no avail. A minute later, I got a discord notification that they had sold out, and I felt defeated.
The good news is I was able to cancel in time to not lose any gas.
I closed my laptop and walked downstairs in disappointment. When I got to the living room, I decided to open up my computer and check Opensea to see how the project was doing.
To my surprise, the floor had dropped to 0.35 ETH. The dads weren’t going to be revealed for another 5 minutes, meaning nobody knew what their NFT looked like yet. I was scared that after the reveal, the price would shoot back up again. And at this point, gas had returned to an average amount. And keep in mind, this was actually well below what I was willing to pay earlier in my EV calculations.
With those thoughts in mind, I saw my chance and pulled the trigger.
And that is the story of how I officially began my NFT trading career. Cheers to Cryptodad #6127, to the moon we go.
ps. I hope I don’t get called out for virtual blackface lol. I bought this guy before I knew what he looked like, and now he has a place in my heart, so I don’t want to trade him.