NFTs exploded in popularity in 2021. The industry made billions in total revenue and private sellers earned up to 69 million on a single sale. Want to learn how to buy NFTs for yourself? Our guide can help get you started on your NFT investing journey!
What Is an NFT?
An NFT, or non-fungible token, is a one-of-a-kind digital asset that can be bought, traded, and sold with cryptocurrency. NFTs are made of code that prove you alone own the digital work, plus potential NFT physical assets that come with some NFTs.
Each time you buy or sell NFTs, the transaction is permanently and publicly recorded in blockchains—that is, distributed databases that can’t be edited or deleted. Types of NFTs include photos, graphics, music, collectibles, video games, event tickets, memes, and much more.
Types of cryptocurrency, like Bitcoin, are digital forms of real money that have the same value from coin to coin within a currency. In contrast, an NFT’s value comes from intangible and unpredictable factors like its uniqueness, the cultural importance of the piece, the popularity of its artist, and its overall quality.
What Do You Need to Buy an NFT?
Wondering exactly how to buy cryptocurrency? Choose between a crypto exchange to trade currency directly with other buyers and sellers, or use a crypto broker which offers easier-to-use interfaces at slightly higher prices. Create and verify your account, deposit some real world cash, and place your order for one of the available digital currencies. Top cryptocurrencies to choose from include Bitcoin (BTC), Ethereum (ETH), and Tether (USDT).
Next, you’ll need to transfer your crypto coins into a crypto wallet. You can use a software-based hot wallet like MetaMask that’s always connected to the internet for fast transactions and easy coin storage—some crypto exchange platforms like Coinbase offer free hot wallets when you open an account, too. Or you can use a cold wallet, a more secure option that stores coins and tokens in physical, offline hardware like a crypto USB. Whatever wallet you choose, be sure to keep track of your public keys and private keys. You can’t complete crypto transactions without them!
Where to Buy NFTs
There are already hundreds of NFT marketplaces to choose from, so you’ll need to determine the best NFT marketplace for you. Beginner NFT buyers should consider which tokens and wallets the marketplace prioritizes and accepts. A beginner-friendly top NFT marketplace is OpenSea. It was the first NFT marketplace founded and is still considered the most popular option.
There are also plenty of niche marketplaces to check out. For instance, you can purchase NFTs like NBA highlight videos featuring pro athletes on NBA Top Shot or high-end art in a digital gallery on SuperRare.
How to Buy NFTs
Once you’ve browsed the NFT marketplace and found an NFT you love, it’s time to buy. Most NFT sales work on a timed auction format, but some OpenSea NFTs also allow you to buy the piece at a set price. In most cases, you’ll make an offer that’s higher than the previous bid, link your wallet, and confirm your bid. The NFT auction timer resets to 15 minutes with every new bid, so it may take several offers to secure your NFT.
If your NFT bid is accepted and verified, you’ll be notified and the transaction will be solidified in the blockchain, showing you as the NFT’s new owner. In addition to the cost of the NFT itself, you’ll pay some fees on the transaction. These “gas fees” are paid to crypto miners, but rates vary based on how busy the marketplace is. Each marketplace can also determine their own service fees—for example, OpenSea fees are 2.5% of the entire sale.
How to Store NFTs
The best NFT storage option for you depends on your investing priorities. If you want to keep trading, selling, and bidding, a hot wallet makes it easier to access and transfer your NFTs as needed. For more secure storage of your digital masterpieces, cold wallet storage keeps NFTs out of reach from potential hackers. That way, your NFTs will be safe forever—or until you decide to sell for an appreciated profit!
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