Unless you’re living under a rock, you must’ve come across news headlines about non-fungible tokens (NFTs).
Since we've arrived at a position where avoiding NFTs is no longer an option, maybe you’re now interested in knowing more about, or even buy some!
But before you get all worked up and start a shopping spree, let’s understand first what an NFT is and know why this industry is estimated to grow from $3 billion in 2022 to $13.6 billion by 2027!
What are NFTs?
An NFT is basically a digital object that cannot be duplicated. NFTs are dubbed "non-fungible tokens" because they are unique.
Let's go a little more into what “fungible” means, because it actually does a fairly excellent job of explaining how NFTs work.
If an asset is fungible, it’s interchangeable, meaning it can be exchanged for another item in the same category without losing value.
For example, if you exchange BTC for another, you would still have a BTC. That means that one Bitcoin is fundamentally identical to another.
However, that's not the case for non-fungible assets. Therefore, each NFT is unique and couldn't be exchanged for another NFT.
NFTs can be created by content creators using a process known as "minting," in which they generate a representation of their material on a blockchain network. These distributed networks can retain immutable records of when an asset is bought and sold, as well as who currently owns it.
Benefits of Buying An NFT
You may wonder why would anyone invest their money in something that only exists online?
Well, the answer relies in understanding how these digital assets function, and what gives them worth.
NFTs are considered revolutionary because they made they introduced the concept of intellectual property to digital assets. Aside from that, some believe that NFTs have the ability to transform the interaction between content creators and consumers.
That being said, investing in NFTs is still considered a risky investment. Therefore, it is suggested that the purchase of an NFT shouldn’t be more than 10% of your investment portfolio.
In addition to owning a unique piece of digital art, some big players in the NFT industry added more exclusive benefits to NFT owners. For example, ownership of a Bored Ape NFT automatically provides various benefits to NFT holders, including free access to more NFT collections (such as the Bored Ape Kennel Club puppies), access to the interactive "Bathroom" virtual wallet, and the opportunity to attend exclusive real-world events.
Another example is the Dirtybird Flight Club whose members have access to exclusive music from Dirtybird artists, merch that can only be purchased by NFT holders, the chance to win tickets to Dirtybird Campout, Dirtybird CampINN, and BBQ festivals and events, and the opportunity to participate in exclusive original events and meet-ups for members only.
How to Buy An NFT?
- Setting Up Your Ethereum Wallet
We recommend using MetaMask, the most secure and popular ether wallet available as a browser extension and a mobile app.
Just download the wallet and then all you have to do is follow the instructions supplied by the crypto wallet. Congratulations! Now you have a crypto wallet. Now, you need to fund it with ETH or ETH-based tokens like ERC-20, and ERC-721 tokens.
In this article, we’ve picked the 5 best Ethereum-based ERC-20 Tokens that have great potential for mooning.
Adding funds is quite simple, start by linking your debit or credit card within MetaMask and clicking "Add funds" to buy Ethereum directly via your wallet.
- Signing up to NFT Marketplace
We suggest that you use the most reputable one, Opensea.io.
It will require you to sign up via the MetaMask wallet you just created. However, depending on what kind of art, the creator, and the budget of the NFT you want to buy, there may be other websites also you'd be interested in exploring. For example, if you’re into basketball collectibles, NBA Top Shot has its own marketplace for licensed NFTs based on basketball games and players.
- Buying an NFT
You can track your favorite NFTs and marketplace activities on your profile pages.
To receive notifications regarding NFT dips, you might consider making accounts and subscribing to a variety of other marketplaces.
Platforms like Discord and Twitter, are essential for investors, as good NFTs sell very quickly all the announcements can be shared there immediately.
Let’s say that a piece of art got your attention, some NFT listings will have a Buy Now option, while others will allow you to make an offer to the seller. When you click Make Offer, you can choose the amount you are willing to pay as well as set an expiration date for the offer.
Following the completion of the exchange, the NFT is transferred into your wallet and shows under the Collected tab on your profile page. Every marketplace transaction is subject to a fee (2.5% in OpenSea case).
- Storing Your NFT
Both MetaMask and Opensea allow you to store your NFTs.
Members of the community can view the NFTs you've collected in your Opensea profile. Just like any other crypto, a cold-storage hardware wallet, like Ledger, is the safest place to keep your NFTs.
Hardware wallets are safeguarded by a seed phrase, a password, and touch authentication, and they remain offline, preventing hackers from gaining access. In contrast, an online software wallet is easily compromised. If you want to learn more about crypto wallets, you can click here.
