How to Buy an NFT
Non-Fungible Tokens (NFT) are all over the news right now. NFTs include digital assets like digital artwork, music, videos, collectibles, or in-game assets that are unique and irreplaceable and fast becoming sought after as collectibles. These digital assets have seen growth in trading through the use of cryptocurrencies such as bitcoin or Ethereum. Most users buy NFTs on dedicated marketplaces, similar to how they might buy cryptocurrencies. There are millions of Non-Fungible Tokens in the various NFT marketplaces and if one or two catch your eye and if the price is right, why not put in a bid or buy it? Do you want to know how to buy and NFT? If you do, there is a process that involves several steps, and here is how you can get started.
Here is another resource on how to Sell an NFT.
Why You Should Buy NFTs
The popularity of Non-Fungible Tokens is that they are digital assets that contain identifying information on their owners recorded in smart contracts. The specific information makes each NFT truly unique as it cannot be replaced by another token, easily verifiable, and can be easily be traced back to the original issuer- making them be considered as having originality certificates. If you own NFTs, the value of NFTs comes from their scarcity just like real-life fine art and also have the potential to appreciate over time. NFTs can also be programmed by their owners to help generate royalties for them as well. In a nutshell NFTs offer:
- Scarcity: Their scarcity defines the value of the NFT and has the potential to appreciate in value over time.
- Collectability: like baseball cards, art, and antiques NFTs are popular digital collectibles offering a unique niche for collectors.
- Offer utility: Some types of NFTs provide utility, such as in-game items (avatars, weapons, trinkets), and even virtual real estate.
- Investment: NFTs are the craze in the digital economy offering money-making opportunities when they get traded.
Exactly How to Buy an NFT
Though the NFT market is relatively new when it comes to ease of use, buying your first digital collectible isn’t hard —below is our step-by-step guide to buying your first NFT.
1. Set Up a Crypto wallet
For you to buy an NFT you will need to first purchase some cryptocurrency and link it to your funded cryptocurrency wallet. You can buy crypto currencies like Bitcoin, and Dogecoin Ethereum, from the Ethereum, blockchain. Essentially your digital wallet is the place you can keep your cryptocurrency, a place to send or receive it, and your funds to purchase crypto apps and services. Once you set up and funded your digital wallet then it becomes an easy process to buy an NFT. Later on, when you’ve collected some NFTs, they will be stored inside your metamask wallet or digital wallet. There are several digital wallets out there such as the coinbase wallet, the Ethereum network, and others.
2. Choose an NFT Marketplace
Once you have set up your digital wallet you will need to settle on an NFT marketplace to buy your NFTs from. There are several top NFT marketplaces such as OpenSea, Rarible, Mintable, Axie Marketplace, or NBA Top Shot Marketplace that sell NFTs. Most marketplaces offer to sell digital art, music, collectibles, virtual assets, in-game items, and more. Most marketplaces make t easy for users to create, sell and buy NFTs. Before embarking on purchases, you will however need to do your due diligence and educate yourself on how to avoid NFT scams.
3. Connect Your Digital Wallet to the Marketplace
Once you chose your NFT marketplace you will then need to link it to your cryptocurrency wallet to the marketplace on which you decide to make the NFT purchase. OpenSea is considered the largest peer-to-peer NFT marketplace out there, allowing users to interact with and exchange NFTs from numerous different marketplaces and blockchains. Once you’ve set up, and connected with a marketplace to buy, sell and trade NFTs.
4. Find an NFT You Like
In the catalog of items being offered for sale in the marketplace of your choice, choose the NFT that appeals to you. Remember for your NFT purchase to attract higher prices in the future you will need to choose ones that are popular, are going viral, and are rare. Another tip is to find collections early on and is preferably rare that would increase the chances that you could make a great return out of it.
5. Place a Bid
Once you decided on the NFT of your choice you can start your buying by placing a bid on the NFT or meeting the asking price of sellers. NFT sellers will provide potential buyers with details on the buying process including the selling price of the NFT, the auction time limit, and the cryptocurrencies they will accept from buyers. On the NFT’s page, click the Make Offer button and enter the amount of cryptocurrency that you would like to bid for it.
6. Complete the Transaction
If your offer for the NFT is the highest when the auction ends and your offer is greater than or equal to the reserve price, then the NFT marketplace will automatically complete the transaction. In some cases, the seller can opt to can accept your offer anytime, regardless of when the auction is scheduled to end.
The fact that an NFT can only have one owner at any given time, means that you have purchased the exclusive ownership of a particular digital asset. You can hold on to the NFT until it fetches a price that can gain you a profit or save it as part of your unique personal collection.
Buying an NFT Tips
The best way to decide on a marketplace is to consider the following:
Deciding the type of NFT you looking for: Not all NFTs are created equal some are highly sought while others are popular among niche markets. The purchase of your NFT will be determined based on what you seek to do with it. Is it for your personal needs as a collector or fan? Or do you want to make money over it when its price appreciates?
What fees are charged by the NFT marketplace: NFT markets come with commissions and ‘gas prices’ (amount of computing need to make transactions), they vary from marketplace to marketplace make sure that the marketplace you choose does not charge an exuberant amount of fees for transactions.
User-friendly marketplace: if you are a newbie to buying NFTs make sure that the procedures and user interface are easy to follow and are not complicated to ease your buying experience.
Secure marketplace: Scams can be prevalent in the digital economy make sure that the marketplace you chose to buy your NFT from ensures that your data is protected and the NFTs you buy is secure.
How do you know what NFT to buy?
Depending on the purpose of your purchase will determine what kind of NFT you would want to buy. If you are a collector or fan you can opt to buy memorabilia, sporting cards, digital artworks, and more that are aligned with your passion. If you are looking towards investing in NFTs look for NFTs that stand to fetch good prices in the future. The best bet is to go based on popularity, hype, going viral, rarity, and others to get good returns in investments.
Can you resell an NFT?
Yes, you can buy or resell an NFT on the secondary, just like anything item you would own. In fact, the big part of NFTs appeals is to create a unique marketplace where items can be exchanged with little fanfare. For you to resell your NFT you will need to make sure your NFT is in the crypto wallet paired with the marketplace in question and put it up for sale.
Why do people buy digital art NFT?
Trading in digital art like NFT is all the craze ownership fueling the new ear of the digital economy. Today NFTs have helped create a market for digital art where users can securely create an NFT, store them, buy them, sell them and collect them. In addition, NFT blockchains help NFT creators track all transactions after their initial sale allowing for perpetual royalty paybacks helping them get a steady flow of revenues. According to Chainalysis, in 2021, users sent at least $44.2 billion worth of crypto currency to two types of Ethereum smart contracts associated with NFT marketplaces and collections. Finding the right NFT project for your long-term investment portfolio is not easy and will require careful planning. How to make money with NFT can be easy, use these three simple rules to guide you through your NFT journey: find the NFT you like; do your own research; never spend more money than you can afford to lose.
This article, “How to Buy an NFT” was first published on Small Business Trends