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How to Buy NFTs: An Informative Guide
There are currently around 360,000 people globally who own at least one NFT.
In recent years, NFTs have exploded in popularity, with many selling for hundreds of thousands of dollars. Despite this, the majority of people still have no idea what an NFT is, much less how to invest in one.
If you want to know how to buy NFTs, keep reading.
What Are NFTs?
NFT stands for non-fungible token, which is an item that can’t be reproduced or replicated in any way. While this can apply to a range of assets, they most commonly take the form of digital artwork. These can be bought, sold, and traded using blockchain technology through various online marketplaces.
Artist/creators can choose what blockchain to launch their NFTs on. Ethereum is currently the most popular, but people also use other blockchains such as Solana and WAX.
One of the main reasons that NFT investments have become so popular is the rise in value that many NFTs have experienced in recent years. Some NFTs that were worth just hundreds of dollars a couple of years ago have sold for hundreds of thousands of dollars more recently.
Because of this, many more people have decided to purchase NFTs with the hopes of making similar profits.
How to Buy NFTs
If you want to invest in NFTs there’s a bit of a process. It’s not as simple as going online and making a purchase with your credit/debit card.
Set Up a Wallet
NFTs are purchased with crypto, and before you buy any crypto, you’ll want to make sure you have somewhere to hold it. There are two main types of crypto wallets available.
Soft Wallets
Also known as hot wallets, these are entirely digital. They typically work as browser extensions or mobile phone apps and are a very easy way to store crypto. One of the most important aspects of a soft wallet is your seed phrase.
A seed phrase is a 12-24 word code that you can use to retrieve your wallet if you lose access to it. Do not lose your seed code.
If you do lose it, your wallet (along with the funds in it) may be lost forever. You also want to make sure you don’t give this code to anyone else, or they might be able to steal your crypto.
Hard Wallets
Had wallets (or cold wallets) are physical devices that you can use to store cryptocurrencies and NFTs. Like soft wallets, these come with a seed phrase, so you’ll need to keep this safe.
The main advantage of these is that they aren’t always connected to the internet like soft wallets are. This makes them the safest way to store crypto or NFTs. It’s only possible to make a transfer by physically connecting the hard wallet to a computer and authorizing the transaction.
The slight downside here is that this makes them a bit less convenient if you’re doing a lot of transfers. What a lot of people do is maintain a wallet of each type. This way you can hold most of your crypto on a hard wallet, then keep a small amount on your soft wallet for regular trading.
Buy Crypto
You can buy crypto from an online exchange. There are several of these available such as Coinbase, Binance, and Kucoin. Most exchanges operate similarly, but they do tend to offer some different features.
You should look into each one to determine which is best for you. Once you’ve decided, you need to create an account. Depending on the exchange, you may need to verify your account with your ID.
When you buy Crypto on an exchange, it will go to your account, and from there you can send it to your wallet. Just bear in mind that wallets support specific coins, so make sure you’re only sending coins that your wallet supports. If you send some crypto to a wallet that doesn’t support it, that crypto will likely be lost forever.
Connect Your Wallet to a Marketplace
Once you’ve got some crypto in your wallet, you can connect to a secondary marketplace. This is where people buy and sell NFTs. Like crypto exchanges, there are many of these, and each one is slightly different.
You’ll want to use a marketplace that operates on your chosen cryptocurrency. SuperRare, for example, is a marketplace that uses the Ethereum blockchain. As Ethereum is the largest cryptocurrency after Bitcoin, exchanges like this are widely used.
SuperRare is centered around digital art, and creators can sell their work at a set price, or through an auction. Head over to the SuperRare website if you want to know more.
Make Your First Purchase
Take your time to look at the options available to you. Some NFTs are simply a piece of digital art, while others offer additional utilities. The price of NFTs varies greatly, so you might want to start with something at the lower end for your first purchase.
DYOR (do your own research) is a popular term in the NFT/crypto space. You shouldn’t purchase something on impulse or because someone else has said it’s a good investment. Before you buy an NFT, you should look into it to make sure it’s worth the money to you.
Knowing if an NFT will increase or decrease in value with time is difficult. There are NFT trends that can be followed to make things a bit clearer, and most projects have roadmaps that detail their plans to add value.
Minting NFTs
Other than buying NFTs from someone on a secondary marketplace, you can mint them from the creator. This is essentially buying it at launch. Many collections will have thousands of NFTs, and they will all launch at the same price.
You won’t know what one you’ve got until after you’ve bought it. Within some projects, the rarity can have a significant impact on the value of the NFTs, so this can be a bit of a gamble.
Are NFTs Worth It?
This decision is ultimately down to you. If you’re going to buy NFTs, make sure you have done the research and fully understand what you’re buying. Always remember that you should never invest money that you can’t afford to lose.
The best thing to do in the NFT space is to take your time and make sure you understand everything, then you will have a much better chance of making profits. For more crypto-related articles, check out some of our other blog posts.
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