Smart contract usage
Decentralized applications using smart contracts on the blockchain as a backend have a tremendous momentum. Multiple use case has already been discovered, but it's still early days and has a significant risk involved.
Early adopters need to be extra careful with scams, unintentional errors in smart contracts, high transaction cost and so on.
During my ThinkWeek I've looked into various existing use cases that already show potential. This is not intended to be an exhaustive list but to show prominent examples of the various types.
Getting started as a user
It may seems daunting at first to get started as user of smart contract projects. There definitively will be innovation on simplifying the user setup, but for technical adapt persons it's quite straightforward already today
Step 1: Get yourself a hardware wallet
To me, a hardware wallet is a must if you are going to own items of significant value. It mitigates risk related to virus, keyloggers, rogue extension as the transaction signing is done on the device. Recommend the Trezor One which cost approximately 50 euros.
Step 2: Acquire some ETH
Almost all smart contract projects today are running on the Ethereum blockchain, so to interact you need to own the currency ETH.
A simple way of acquiring ETH in Norway is to use the MiraiEx exchange. It's registered with the Norwegian Finanstilsynet, you log on with Vipps and has simple support moving NOK from norwegian banks. Please don't aquire more ETH than you can afford to lose.
Once you have acquired some ETH in MiraiEx, you need to move it to your hardware wallet. To do this, you create an Ethereum account on your hardware wallet and supply this address to a withdrawl transaction from MiraiEx.
Step 3: Install MetaMask
MetaMask has become the defacto interface to blockchain apps (it's also a wallet). Whenever you navigate to a site which sells smart contract projects, it will typically ask you to log on to MetaMask and this will represent your user.
You will then connect your hardware wallet as an account in MetaMask. The instructions are found in How to connect a Trazor or Ledger Hardware Wallet.
Step 4: Log in to marketplace
https://opensea.io/ is the dominant marketplace and will allow trade regardless of where the NFT token was initially created.
Step 5: Stay up to date
Twitter and Discord are the two main channels to keep any eye out for what is happening in the space. Each project typically has their own discord environment where there is alot of activity between collectors.
Step 6: Buy your first NFT
A lot of NFTs have a current listing price. By clicking Buy Now in Opensea, the MetaMask plugin will ask you to confirm the transaction and the expected transaction cost (called gas in Ethereum). Once the transaction is completed, the NFT is immediately available in your account which resides in the hardware wallet. If the transaction cost supplied is lower than the rest of the market, miners will add your transaction to the blockchain and you will be left waiting. If this is the case, you can go to MetaMask and select speed up transaction. Here you can set the transaction cost as fast and it will likely be completed in a few seconds. Do not cancel the transaction as then you still pay the transaction cost.
Some NFTs are up for auction. You then typically use wrapped ETH (WETH) which allows you to bid on many items in parallell (even if you don't have the balance to buy them all). Convert 1-1 between ETH and WETH in MetaMask.
Step 7: Enjoy your tax return
Tax return will be come a bit more complicated and not all rules are in place for NFTs. Norwegian Skatteettaten has some information at Skatte- og merverdiavgiftsmessig behandling av bitcoins og andre virtuelle valutaer and Krypto for kongeriket recently had a stream called Skatt og Krypto til Frokost: Bitcoin, DeFi og NFT | OBC, EY & Skatteetaten shown below
