WHAT ARE NFTs?
NFTs or non-fungible tokens have two parts in it. First let’s understand tokens – a token is basically a unit in a blockchain network that can be used as a means of value transfer, eg. Bitcoin. Hence a token, by itself is fungible – which means if you trade in one Bitcoin for another Bitcoin – you essentially have the same thing. Each token constitutes exactly the same value in the blockchain.
Now the non-fungible aspect of NFT tokens mean that these are non-replaceable, or rather it is the only unique token on the entire blockchain. There can only be one of that NFT and no more. There can be a collection of related ones, but each one in that collection is completely unique and only that unique one can be attributed any value. Another way to understand it is to think of it as a one-of-a-kind trading card.
For example, one of the biggest and the most valuable NFT collection is arguably the Bored Ape Yacht Club, or the BAYC. It is essentially a collection of bored looking apes, each of which are distinctly different from each other and represent different things. Many huge celebrities ranging from Snoop Dogg to Justin Bieber own a bunch of these NFTs which give them access to a club of influential people and a suite of other benefits that come along being in such a company.
HOW ARE NFT’S CREATED?
Very simply, NFT’s are created, or rather minted with the use of NFT marketplace such platforms – where you need to create an account, upload your digital art, list it for sale! It’s that simple.
If you want to get into the nitty gritty of minting an NFT and read our detailed article on how to create an NFT for free!
HOW ARE NFTS BOUGHT OR SOLD?
From CryptoKitties to Bored Apes, NFTs are probably the biggest story from the past two years of this decade. Although the NFT marketplace is not as easy as operating an amazon or other e-commerce site, it’s not that difficult either. Everyone wishes to have their own NFTs, but the big question is how to go about it? Which NFT marketplace to choose, where to start, how to assess and find the value of an NFT, whether to buy one or many from one collection? All these questions often bug us. But not anymore, in this article we shall guide you through every small step that you must be aware of before buying your first NFT.
Before we dive into how to buy your first NFT on any top NFT marketplace, let’s take a step back and get onto the same page as to what Non-fungible tokens (NFTs) mean? Non-fungible tokens (NFTs) are nothing but encrypted digital files that can be stored on the blockchain. They are tokenized versions of digital items such as videos, audio, images, and digital art. What’s tokenization? In brief, it is the process to turn an asset into a digital token such that it can be stored and moved within a blockchain network, like Solana or Ethereum.
How to Buy NFT on an NFT marketplace?
- Get your wallet funded
- Browse the NFT collection on any marketplace
- Found the NFT you wish to buy? Make an offer or buy
Step 1: Get your wallet funded
To buy an NFT you would need funds in your digital wallet. On the NFT marketplace, like OpenSea, you need Ether (ETH) to buy NFTs. To explain things in a simpler fashion, we shall here take the example of Metamask, the most popular crypto wallet used for NFTs.
In case you haven’t already installed the wallet and are trying it out for the first time, be aware of the phishing attacks and always double-check the website URL.
In case you don’t have your wallet installed, visit metamask.io and download the web extension for the same and connect it to OpenSea or other marketplaces of your choice. To link the NFT marketplace, go to its application and click on the top right corner and then click on your profile. You shall be redirected to a new page prompting you to connect to your wallet. In this case, you shall choose MetaMask.
All the necessary permissions must be granted to OpenSea or the marketplace you have chosen to use your wallet and the signature request needs to be signed. Once the connection is installed, you can now check out the NFT collections available on the marketplace. In case you do not have the required crypto to buy NFT, go to your MetaMask wallet and click on Buy. The crypto deposit can be made directly using a credit or a debit card.
Also Read: Top 6 NFT Tokens
Watch our video to know more about What is a Metamask Wallet and How to set it up!
Step 2: Browse the NFT collection on a marketplace
Once you are introduced to the pool of NFT collections, you must first decide which NFT you wish to acquire. Go to the explore section of the marketplace and you shall find thousands of NFT collections available.
You can even filter your searches by clicking on various filters like Top Art, Domain names, Trending, collectibles, sports, Utility, Photography, etc.
Step 3: Make an offer or Buy Now
When you have finally found the thing you want or like, you can directly make an offer or buy NFT . While few have the option to place bids, few are direct buys. The ones with the place bid option, need the user to make an offer to the actual owner of the NFT to purchase them. In case you come across such an NFT, ensure to check the number of offers already made for that NFT which shall give you a precise idea of how much money to bid on the same.
In the case of OpenSea, the next big must be at least 5% higher than the older one. There are a few NFTs that you can buy for a fixed price as well. In those cases, directly hit on the “Buy Now” option once you are sure you want to buy NFT you have selected. The details of the NFT like name, the subtotal, respective collection as well as the total amount to be paid appears. Click on the confirm button to checkout.
Now a marketplace like OpenSea will load your MetaMask wallet. Here you can find all the necessary details of the purchase such as estimated gas fees, amount of time required for the transaction, etc.
The gas fees can be changed using the edit option, however, the lower the gas fees are the lower the speed of transaction. It is always best to buy using MetaMask when the Ethereum network is least busy.
Once ready, click on the confirm button and wait until the purchase has been processed. In the meanwhile, you can grab a cup of coffee and relax while your brand new NFT appears in your collection. You can simply go back to your profile and wait until it appears.
WHAT ARE NFT’S USED FOR?
These non-fungible tokens, as mentioned earlier, are unique cryptographic tokens that exist solely on a blockchain and can’t be replicated. NFTs can represent anything from real world items like artwork or work as an entry pass to a ‘club’. Thus, ‘tokenising’ these tangible assets makes for a more efficient experience in terms of buying, selling and trading while at the same time greatly reducing the probability of fraud.
PROS AND CONS OF NFTS
|Helps improve market efficiency||NFTs are very volatile in price and illiquid too|
|Can be used to fractionalise ownership of a real world asset||NFTs by themselves don’t generate any revenue or passive income|
|NFTs run on blockchain networks, hence are very secure||NFTs can be used maliciously to commit fraud and laundering|
|Can work as a diversification in an investment portfolio|
HOW TO CHOOSE THE RIGHT NFT’S?
- Always invest in those NFT projects that interest you
- Always do your own research on:
- The creator’s background
- The community
- The project
- Don’t invest more than you can afford to lose
How do Crypto Wallets play a role in buying NFTs?
Crypto wallets are a very necessary requirement to either buy or sell your own NFTs. That is because that is what is essentially connected to the NFT marketplace of your choice where you’ll be purchasing or selling your own NFT. Since that is connected, it will need to have some funds within it in order to be able to pay for the NFT or the gas fees involved in the transaction. Also, once you buy your NFT, those are stored on your wallet too – thus making it extremely crucial that you have one.
Top NFT tokens to consider investing in – Top NFTs & Collectibles Tokens
Some of the most popular NFT collections and projects you can consider investing in are:
- Bored Ape Yacht Club
- Mutant Ape Yacht Club
…..And many many more. There’s a whole list out there on CoinMarketCap you can visit to see the top NFT collections by sales volumes.
That’s it! This is all you need to do to buy an NFT of your own. It is always advised to do your research (DYOR) before you buy or sell any NFT. You should never fall prey to FOMO and always take your time in deciding which crypto or NFT to go for. Look for the rarity, utility, or other important factors before buying a particular NFT. Wondering how to assess the value or worth of an NFT?
Read more blogs on NFTs
What does NFT stand for?
NFT stands for non-fungible tokens - or in other words, NFTs are those kinds of crypto assets that are one-of-a-kind and can’t be replicated.
Where to buy NFTs?
NFTs can be bought over NFT marketplaces like OpenSea and Rarible being the two of the most popular ones out there.
How to make money with NFTs?
There are two ways you can make money out of NFTs. One is you become an NFT artist and you essentially mint and sell NFTs to prospective buyers. The other way you can make money off of NFTs is you can buy an NFT from the market which you think is undervalued and sell it at a higher value later on to pocket a profit.
Are NFTs Crypto Tokens?
Yes, NFTs are special kinds of crypto tokens that are non-fungible in nature.
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