As the prices of art and sports NFTs continue to rocket into the millions of dollars, many investors are beginning to question whether or not NFTs make for a profitable investment. Let’s take a more in-depth look at the process of how to buy an NFT.
What are NFTs?
To begin, what exactly are NFTs? NFTs, or non-fungible tokens, are, in the simplest terms, online sales and purchases of digital assets. They are typically traded for other cryptocurrencies, with Ethereum being the predominant one.
If you are familiar with the technology behind blockchains, you will know that NFTs are a component of the larger blockchain structure. However, unlike cryptocurrencies, NFTs are what are known as “non-fungible” tokens, which means that they cannot be exchanged for one another.
To provide a deeper explanation, fungible assets such as money and cryptocurrencies can be exchanged for one another, unit for unit. It is possible to trade one dollar for another dollar because each dollar is equal. Because each bitcoin has the same value as the others, it is possible to exchange one bitcoin for another.
Because of the unique structure of NFTs, no two of these tokens have the same value, even if they are fundamentally the same object. You are unable to trade one NFT for another of the same kind. Because each NFT carries its own one-of-a-kind digital signature, it is not possible for them to be traded with one another.
NFTs are most frequently examples of digital works of art; yet, in theory, they can take the form of anything existing in the physical world. NFTs can be based on virtually any asset that exists in the physical world.
How to buy an NFT?
How to buy an NFT? If you have an interest in NFTs and would like to begin your collection of NFTs, the following is a comprehensive guide that will walk you through the process of purchasing your first NFTs.
Create an account on a cryptocurrency exchange
The first thing you need to do to buy an NFT is to sign up for an account on a cryptocurrency platform or exchange. Because there is frequently a lack of clarity regarding the distinctions between bitcoin exchanges, wallets, and marketplaces, it is essential to first acquire this knowledge to accomplish this goal.
- Act as a brokerage where a variety of cryptocurrencies can be bought and sold. • Issue and hold your public and, in some situations, private keys.
- Ensure that only authorized users can access the bitcoin stored in your account.
- Offer assistance with various account operations, such as resetting a user’s password
Exchanges are online marketplaces that operate much like traditional brokerages and allow users to buy, sell, and trade a wide variety of cryptocurrencies. You need to sign up for an account with the platform of your choice before you can purchase NFTs.
Because different businesses offer a variety of services, you need to investigate each one to learn how it operates regarding public and private keys, cryptocurrency wallets, trading fees, on-chain, and off-chain services, and customer support.
Open a crypto wallet
- Store both your public and private keys
- Protect your digital assets, such as cryptocurrencies and tokens like NFTs
- You are solely responsible for the safety of the seed phrase
- The phrase and the keys are two separate entities. Provide independent access to your funds and crypto assets by using a seed phrase.
The next step in learning how to buy an NFT is to open a crypto wallet. Crypto wallets, despite their name, do not store the coins and tokens that you possess. In reality, what they’re storing are the keys that enable users to access your digital stuff.
To access your wallet, you will be provided with a one-of-a-kind seed phrase, which is also commonly referred to as a phrase or a recovery phrase. It is essential to keep your seed phrase safe since, in the same way, if you lose your physical wallet, you would lose everything that was stored in it.
Alternatively, if you wish to purchase, sell, and trade NFTs without the assistance of a third party, you will need a wallet that is connected directly to the blockchain. By utilizing the public key in this manner, monetary value can be transmitted directly from one person to another.
You should also make sure that the cryptocurrency wallet you choose is compatible with the Ethereum blockchain, the network that the majority of NFTs are sold on, as well as Ether, the cryptocurrency that is native to the Ethereum blockchain. You can check this by visiting the website of Ethereum blockchain. The MetaMask wallet is the one that is utilized the most frequently across the majority of marketplaces; however, there are other choices available.
The third step in learning how to buy an NFT is to purchase Ethereum. The Ethereum blockchain is the foundation for the vast majority of non-fungible tokens. Ethereum is a sort of network in which transactions are recorded and dispersed among members on a shared ledger. This type of network was developed by Vitalik Buterin.
Ether, also abbreviated as ETH, is the name of the cryptocurrency that is unique to the Ethereum platform. However, you may also hear people refer to it simply as Ethereum. Ethereum, which also functions as a cryptocurrency, is comparable to Bitcoin in that its value can be increased through buying, selling, trading, or simply storing it.
Transfer Ethereum into a crypto wallet
After selecting an exchange and making a purchase of ETH, the next step in how to buy an NFT is to move the cryptocurrency from the exchange to a wallet of your choosing. How you carry this out will be dictated by the marketplace from which you will purchase your NFTs, the wallet that you use, and the exchange from which you will purchase ETH.
For instance, if you purchased a cold storage wallet because it is a physical piece of hardware, you will also be required to connect your cold wallet to a third-party connection to the NFT marketplace, such as MetaMask or Coinbase Wallet. This step is necessary to access your cryptocurrency holdings. These are the wallets that are utilized the most frequently in NFT marketplaces.
Connect your crypto wallet to the NFT marketplace
After you have registered an account on the marketplace, you will need to connect your wallet to the marketplace so that you can purchase the NFT. The procedure is typically carried out in the same manner at each location. Several online markets provide users with the option to create a new wallet directly from the website, while others utilize their custom-built wallets.
When using a marketplace’s internal wallet, customers may be eligible for discounts and/or a decrease in the additional gas fees that are incurred when using external wallets.
You will want to make sure that your wallet is connected to the internet and has sufficient funds before the NFTs drop, as well-known NFTs tend to sell out extremely rapidly. It is essential to keep in mind that purchasing an NFT does not imply that the customer has acquired the copyright unless that specific provision is included in the direct agreement between the purchaser and the artist.
There is a possibility that the NFT you purchased will be subject to a different set of limitations depending on the marketplace.
Where to buy NFTs?
Where may one purchase NFTs? There is a multitude of different NFT marketplaces. OpenSea is now the most popular platform, and while it is powered mostly by Ethereum, it is compatible with more than 150 different payment tokens. Binance NFT, Rarible, and Foundation are a few examples of other NFT marketplaces besides Foundation that offer a diverse selection of art and collectibles.
Some marketplaces trade in assets that are more specialized. As an illustration, the Musician Marketplace is primarily concerned with music compositions, but NBA Top Shot is the only marketplace authorized by the National Basketball Association to sell digital video highlights from the league’s games.
There is a market out there that sells whatever it is that you are looking for, whether it be artwork, collectibles, materials for video games, or domain names for websites.
NFTs provide opportunities for people from many walks of life, whether they are aspiring digital artists interested in making money from their hobby or speculators trying to make a return on their investments. You will probably be surprised at how easy it is to learn how to buy an NFT, and we hope that after reading this guide, you will have the self-assurance to go ahead and get your very first NFT.
The use of cryptocurrency in gaming is at the forefront of an ongoing economic and digital revolution. Lunar Sky Games is a team of gaming product consultants with over 10 years of expertise in the industry. We work in partnership with web3 companies to help them build and grow their products. We help turn your vision into a reality. Contact us now for a consultation.