How to Buy NFTs• 8 min read
NFTs have made a splash in recent years, surging to the forefront of cryptocurrencies and blockchain technology. The alternative pathway commanded the attention of various individuals, especially artists, speculators, and art collectors. With countless celebrities and influencers buying and selling NFTs, many people want in.
This article discusses NFTs and how to buy them, as well as the risks and rewards associated with investing in NFTs. If you’re considering dabbling in NFTs and want to learn more, continue reading!
What Are NFTs, Exactly?
A non-fungible token, or NFT, is a digital asset that is unique and irreplaceable. NFTs come in various forms, including digital art, music, video clips, tweets, etc.
To better understand an NFT, consider bitcoin. Bitcoin is fungible, which means you can trade it for another bitcoin and have precisely the same thing.
However, on the other hand, consider a one-of-a-kind trading card. The card is non-fungible since it's the only one of its kind. If you trade your card for another card, you will end up with something entirely different.
The same concept applies to NFTs. There’s a significant buzz around these tokens, especially digital art NFTs, but they can be just about any digital asset.
How to Buy NFTs
There are many ways to purchase NFTs, in most cases the first step is purchasing ETH (Ethereum). Read on for the complete steps.
Most NFTs are Ethereum-based, which means most of the marketplaces that sell these collectibles only accept Ethereum tokens as payment. Buying Ethereum is one of the first steps of buying NFTs, as it opens the door to Ethereum-based NFTs.
To do so, you need to set up a cryptocurrency exchange account or ‘crypto wallet’ with a service such as MetaMask or Coinbase. Once you have one, you can purchase Ethereum (or other digital currencies) on it, which opens the door to purchasing NFTs. After you buy your crypto (digital currency), you can send it to your crypto wallet, which we will discuss next.
Set Up A Crypto Wallet And Fill It With Funds
In order to access your Ethereum and use it for buying NFTs, you’ll need a cryptocurrency wallet. A crypto wallet is essentially a digital address where you store your cryptocurrencies. You can choose from various crypto wallet platforms, such as MetaMask or Coinbase.
To set up a crypto wallet, you need to choose the best fit for you. Once you decide the best option for you, visit the platform’s website and register to open a wallet with them. After you open the wallet, you can send the Ethereum (ETH) you bought from the exchange to your wallet’s address.
Connect Your Wallet With An NFT Marketplace
The following steps require you to connect your wallet with an NFT marketplace of your choice. Many websites have secondary marketplaces that offer various NFTs, but every platform has a slightly different operation.
The connection process varies slightly from one marketplace to the next. For example, consider OpenSea, one of the most popular NFT marketplaces today. To connect your wallet to this marketplace, go to OpenSea.io, then click on the icon in the top right. Select “My Profile,” then follow the prompts and instructions to connect your wallet.
Find & Buy Your Favorite Piece Of NFT
The last steps are the entertaining part of the process. Buying an NFT is simple once you’ve funded your account, so the process is easy from this point. Many marketplaces offer NFTs in an auction format, which requires you to submit a bid for the NFT you want to purchase.
However, some marketplaces operate like an exchange, using things like the highest bid and lowest ask for specific NFTs with several prints.
Find an NFT you like and follow the marketplace’s steps for buying/bidding on it. You can buy from a primary or secondary marketplace. If you buy from the primary marketplace, you could potentially sell the NFT for much higher right after the release. In some cases, high-demand NFTs sell for 5 to 10 times the initial price.
However, while the potential for a high resale value is there, it's hard to estimate the demand for the art. If you buy from the secondary marketplace, you can compare your new purchase to previous sales.
More About NFT Marketplaces
There are several widely recognized NFT marketplaces. Some of the most popular NFT marketplaces include:
- OpenSea: This NFT marketplace operates on Ethereum. OpenSea’s users can interact with its network to exchange NFTs for cryptocurrencies. NFTs range from video game items to digital artwork. If you want to use this platform, you need a web3 cryptocurrency wallet, such as MetaMask.
- Notes: Covers any type of NFT, accepts over 150 cryptocurrencies, now uses Polygon blockchain. Also Uses Ethereum (has high gas and carbon fees) Gas fees are the extra ‘tax’ or transaction fee on top of the price of the item you want to purchase.
- Nifty Gateway: This NFT marketplace is owned by the cryptocurrency exchange Gemini. The platform collaborates with various trendy artists, including Grimes, 3LAU, and Steve Aoki, among many others. Users can fund their accounts with Ethereum or connect a credit card directly to the site.
- Notes: Can purchase with Fiat currency, makes use of limited Open Editions. Primarily dominated by celebrity NFTs.
- SuperRare: This platform offers a social network for NFTs. Every single piece on the platform is unique. Users can buy and sell original pieces on the platform. To purchase something from this platform, you need to fund your account with Eth tokens.
- Notes: Offers curated and rare artwork, excellent editorial blog, Acceptance rate for listing NFTs is low
- Rarible: This NFT marketplace is a go-to for rare media and sports collections. The marketplace sells single art pieces and collections, attracting sports, gaming, media brands, and artists.
- Notes: Three different blockchains, community-owned, can offer low carbon/gas fees. Can be overwhelmed by major brands
- Binance NFT: This NFT platform is one of the largest and future-proof marketplaces among the pool of options. In addition to its lofty status as one of the largest NFT marketplaces, it’s also one of the largest crypto exchanges.
- Notes: Low fees (1%), cash-out using Fiat, large and secure marketplace.
- Async Art: Known for “programmable art,” this NFT marketplace is filled with art composed of Masters and Layers. Each element is ‘tokenized,’ which means that different artists can own each layer and contribute to the overall result.
- Notes: Forward-facing digital art, blueprints provide a new opportunity, supports numerous creators and owners. Some advanced NFT knowledge is necessary
Why Are NFTs Exclusively Tied With Ethereum?
Most NFTs are exclusively correlated with Ethereum, skipping all other cryptocurrencies entirely. Even Bitcoin, a well-known cryptocurrency, doesn’t tie into NFTs. Why? The main reason for this is that the primary form of NFT is a brainchild of the Ethereum Network.
Most NFTs, at an extremely high level, are part of the Ethereum blockchain. The correlation between the two is undeniable, but some experts predict that NFTs will move away from Ethereum. As ETH rises in price and gas fees increase, a shift may occur, driving NFT auctions away from Ethereum.
Can You Buy NFTs Without Crypto Altogether?
If the prospect of NFTs sounds interesting but dabbling in crypto doesn’t, you have a few options. While the majority of NFT marketplaces hinge on some type of cryptocurrency, usually Ethereum, this isn’t the case for all.
A few marketplaces allow you to purchase NFTs with your bank card. Although your options are pretty limited, it’s doable. Marketplaces that allow you to purchase NFTs without crypto include KnownOrigin and Mintable.
The process to connect your bank card is relatively simple, although it requires more involvement than spending money on mainstream sites, like Amazon or Shopify. You will have to connect a wallet, such as MetaMask, to the marketplace.
Browse the selection to find an NFT. When you’re ready to complete the purchase, select the option to buy with a credit card. You will have to confirm your identity using an ID card, then enter your card details and phone number. Lastly, complete the transaction, and you’re good to go.
As NFTs become more mainstream, purchasing with a credit or debit card will probably become more available as an alternative to crypto.
Investing In Cryptocurrency & NFTs Aren’t The Same Thing?
Without a solid grasp on cryptocurrency and NFTs, many people lump the two together. It's easy to confuse the two since they’re closely related and require considerable knowledge to understand the somewhat vague explanations.
However, despite the similarities, the two couldn’t be more different. The primary difference between the two is indicated in the name. Cryptocurrency is just that, a currency. As with any other currency, crypto only holds economic value and is fungible.
On the other hand, NFTs aren’t fungible, so the value surpasses way beyond economics. While investing in cryptocurrency is similar to investing in the stock exchange, investing in NFTs hinges on buying an asset.
Should You Invest In NFTs?
Investing in NFTs is risky; there’s no doubt of that. However, like all things, investing in non-fungible tokens has its own ups and downs.
For example, the potential to profit exponentially is there. If you purchase an in-demand NFT, you could potentially make up to 5 to 10 times its initial value on the resale.
The caveat here is that the price of an NFT is entirely driven by the people. If there’s no demand for that particular NFT, you may not make anything on it. Unlike a stock or bond, where you usually know its intrinsic value, NFTs are only as valuable as the price people are willing to pay for it.
The buying process for an NFT can be complicated, involving crypto wallets, cryptocurrencies, and various marketplaces. On top of that, NFTs are susceptible to crypto hacks and scams, which have become prevalent as digital assets gain traction.
The risk to reward ratio is skewed, particularly for beginners with little to no knowledge. As of now, investing in NFTs may not be the best idea as they’re not entirely ready for primetime investing. With that said, individuals might be able to invest and profit from NFTs. However, it’s crucial to understand its risks before proceeding.
NFTs have something to offer for everybody, from rare digital art to sports clips. The buying process requires a few steps and may be complicated for some. Whether you choose to go with the classic route to buy your NFT with crypto or pick a platform that supports credit and debit cards, purchasing a new digital asset doesn’t have to be difficult.
However, it’s essential to understand the risks and rewards of NFTs thoroughly, should you choose them as an investment. Whether you decide to invest in NFTs or simply want to buy a unique item, ensure you’re well aware of the potential risk.