Thanks to technological innovations and improvements, new investment opportunities are emerging all the time. Often, these new markets are seen as unstable and unpredictable, so they’re perfect for quick learners who like to experiment. After a while, some of these markets will show potential to develop and enter into the mainstream.
It seems like this is exactly what happened with NFTs. What basically started as an extra functionality on blockchains has grown to become a full-fledged, $25 billion-a-year industry, with huge potential to get even bigger in the forthcoming years.
But how to start with NFTs? Where to buy them and how? How to choose NFT projects that can bring you money in the future? In this article, we’ll try to answer all these questions and more.
What are NFTs?
But, first of all, let’s briefly explain what NFTs are in the first place. The best way to do this is by looking at the etymology of NFTs, as NFT means non-fungible token.
The “token” part suggests that NFTs exist and circulate in the crypto ecosystem, on a blockchain. So in order to buy NFTs, you’ll need some cryptocurrency and a crypto wallet, and you’ll do that on blockchain marketplaces that are also a part of the crypto infrastructure.
Now, the “non-fungible” part is what basically sets NFTs apart from regular cryptocurrency. A crypto coin of a particular kind (let’s say SOL) is the same in value and in attributes as any other coin of the same kind and thus can be easily convertible. SOL coin in your wallet won’t be any more expensive or different in any way from SOL in anyone else’s wallet. This is because they’re fungible.
But it’s very different with non-fungible tokens. Every NFT is unique in properties and they cannot be exchanged in a straightforward way like you can do with cryptocurrencies. Also, you can’t just sell 0.1 NFT like you can do with coins. NFTs only have value as a whole thing. You can buy a fraction of it though, but only if you team up with other buyers to purchase the whole NFT as a group of investors.
Because of all these properties, NFTs are perfect for representing digital items, prevalently digital art. NFTs can be associated with a certain piece of digital art using lines of code and a link to this piece, and by buying an NFT, you’ll be buying the confirmation that you own this piece. Just like a work of art, an NFT is unique, it can’t be copied, and, of course, you can make money by trading it.
Why would you buy NFTs?
1. To support the artists
Digital art is not among the most luxurious of markets nor among the highest-paying jobs. At least for the vast majority of digital artists. There’s really a limited number of methods they can use to earn money from their art, so more and more of them do it only as a hobby.
With NFTs, this could change. You have a great chance to publicly recognize, support, and even promote an artist whose work you actually really like. It’s an excellent way to encourage them to continue creating great artwork.
2. To make money
In 2021, the NFT market exploded and is still going strong. Its future is still not totally predictable, but this seems like a great time to make money by trading NFTs.
For those who can identify low-cost NFTs with the potential to become really valuable, there are thousands or even hundreds of thousands of dollars at stake. Later in the article, we’ll share some tips on how to recognize NFTs worth investing in.
3. To use them in a crypto game
Some of the NFT crypto art can be used in video games as well. These games are also built on a blockchain and they’re all supposed to follow a very similar protocol, so this means that some NFTs can serve as in-game items and can even be transferred between different games.
These NFTs can be anything – from digital weapons, armor, accessories, and even parcels of digital land. These are also basically pieces of art, but with additional functionality that can be employed in video games. There are several ways you can actually make money by playing blockchain games (which is why they’re also called play-to-earn games), but you can play them just for fun as well.
If you’re still not sure what crypto games are all about, try our new game, Solchicks, and play to earn some great rewards!
4. Because you simply love arts
Just like the “real-world” art collectors, you can choose to collect NFTs with no particular interest or agenda.
NFTs have outgrown the crypto environment and now they’re being exhibited at museums and sold at most prestigious auction houses. The artistic and symbolic value of NFTs is indubitable. So if you just want to enjoy and collect art, NFTs are also the way to go.
How to buy NFTs?
Now that you know what NFTs are and why you would want to buy them in the first place, it’s time to get to the point. Where and how can you become a proud owner of an NFT?
Typically, NFTs are sold and purchased on specialized digital marketplaces. In principle, every marketplace has its own procedures, both in terms of registration and trading of NFTs. But there are certain similarities and certain protocols in place, and the process of buying an NFT looks something like this:
Step 1: Get some cryptocurrency
So, first of all, you’re going to need some crypto coins. If you don’t have any, you can easily exchange some fiat money for cryptocurrency. There’s a huge number of exchanges around the internet and the whole process is pretty straightforward.
You should also pay attention to which cryptocurrency you’re buying. Most marketplaces accept only one or a limited number of different cryptocurrencies. Of course, even if you buy the “wrong” currency you can always change it to the “right” one in order to buy an NFT, but you’ll want to save yourself from the hassle and additional exchange fees.
Step 2: Get a wallet
A crypto wallet is a place where you can keep all your tokens, both fungible and non-fungible. Most marketplaces will require that you have one and you’ll have to check whether the wallet and the marketplace are compatible.
Once you found the wallet of your choice, you’ll also receive a “seed phrase”, which is basically a bunch of words that you absolutely have to memorize or write down if you don’t want to risk losing access to your account as this would mean losing all your crypto assets.
In general, getting a high-quality wallet is crucial as they’re basically your last line of defense against scams and hacks. Wallets are usually just apps on your phone or browser extensions, but if you want to be really safe, experts recommend getting a separate, hardware wallet (“cold storage”) that will keep your assets as safe as possible.
Step 3: Connect the wallet to a marketplace
Now that you found an appropriate wallet, you need to connect it to a marketplace of your choice. At most marketplaces this process is very straightforward, and some of them will even prompt you to do so.
Once you do that, you will be able to easily monitor, control, and spend your funds from the marketplace’s dashboard.
Step 4: Explore the marketplace and find the right NFT
Next up, take your time and explore the marketplace. If you’re in the NFT business to make money, here are a few tips on how to recognize potentially profitable NFTs:
- Check out the selling and price history of an NFT. If it’s been traded many times and its price is generally increasing, it means it’s liquid and probably profitable, even short-term.
- Take a look at the entire collection that the NFT belongs to. How many NFTs are in that collection? How much are they worth? What’s their floor price? How expensive are the rarest ones? How many of them have actually been bought, and by how many different buyers? All these questions can give you some context on how much a particular NFT might be worth in the future.
- Find out who’s the artist or the team behind the particular NFT or collection. Take a look at their reputation and their previous work. If the artist has other NFTs that are rapidly increasing in price, it’s usually a great sign.
- Check the artist or the project’s community on Discord, Twitter, and other social media. If their communities are active and all hyped up about new drops, that’s very promising.
- Try using digital tools that can help you analyze different stats for particular NFTs, or even follow the real-time behavior of the most successful NFT traders.
Step 5: Buy the NFT
Once you’ve made a decision, it’s time to buy. Some of the NFTs will be auctioned, and some of them you can just buy right away. If they’re auctioned, once you make an offer, you’ll obviously have to wait for some time until the auction is closed. Then, if nobody else makes a higher offer, the NFT’s all yours and you’ll be able to find it in your wallet and on your profile page on the marketplace.
Finally, most marketplaces charge some “gas fees”. Trading NFTs demands serious IT infrastructure and computational power, and this obviously costs money. Gas fees can be wildly different at different marketplaces, and they usually depend on how busy their network is at the moment. Just make sure you check the gas fees before you buy – they will usually be clearly displayed on the checkout page.
Some final remarks
In the end, let’s just emphasize that the whole process doesn’t always look exactly like this, but it’s the most common way. There are some marketplaces like Nifty Gateway that accept credit cards, for instance, so you can basically buy NFTs with fiat money. Moreover, there are marketplaces such as Binance that also operate as exchanges and offer their own wallets that can store your NFTs for you. This means you don’t need the extra steps of depositing cryptocurrency in an external wallet and connecting it to the marketplace.
And now you’re all set. We hope this article helped you understand how to buy NFTs and how they generally work. It’s an evolving industry and it’ll be exciting to see new solutions and features that marketplaces will be offering in the future.
As for now, there are a few things to remember at all times when trading NFTs – be careful, be thorough in your research, and enjoy the process, whether you’re planning to buy them for profit, for fun, or both.
FAQ: How to buy NFTs?
Where to buy NFTs?
You can buy NFTs on specialized NFT marketplaces that work similarly to any other online marketplace. The main difference is that they’re built on a blockchain and can support NFT trading.
Of course, to buy NFTs you’ll need some cryptocurrency in your crypto wallet. But be careful – most marketplaces accept a very limited number of different cryptocurrencies, depending on the blockchain they’re built on and other structural characteristics. For instance, DigitalEyes is built on Solana and accepts SOL, while Rarible is built on Ethereum and accepts ETH.
How to make money with NFTs?
It’s very similar to making money on cryptocurrency – buy it when it’s low and sell it when it’s high. Of course, this is easier said than done.
It’s important to recognize different signals that indicate that the price of an NFT will go up in the future. This means you should research the NFTs selling history, the collection it belongs to, its creators, their community, and then try putting two and two together to find the best opportunities for investment.
How to make an NFT?
Making, or minting an NFT can be done on different online platforms. Some NFT marketplaces provide this service. You just upload the file you want to “turn” into an NFT and they do the rest of the job for you, usually for compensation that ranges from less than $1 to more than $1000, depending on many factors. Once you’ve minted an NFT, you can immediately put it up for sale on the same marketplace.
What is NFT art?
NFT art is any kind of digital art that has been minted into an NFT. The NFT here works as a digital proof of ownership, so whoever owns the NFT, owns the particular piece of digital art itself.
Also, NFT crypto art is sold on specialized NFT marketplaces. You can buy it with cryptocurrency and keep it in your crypto wallet. Potentially, any digital file can become NFT art if its owner decides so since there are many online platforms that offer minting services. This process is quite quick, simple, and usually relatively cheap.
How to sell NFT art?
You can sell NFTs on specialized NFT marketplaces. Of course, you have to own NFT art in order to sell it, so you have to either buy it or mint it beforehand.
Often, you can mint an NFT on a marketplace itself and then put it on sale right away. You can do the same with the NFTs you bought – the process of putting an item to sale is pretty simple and intuitive at most marketplaces.