Table of Contents
- What are NFTs?
- How does NFT work?
- How to Purchase NFTs
- 1. How to Buy NFT: Set up and Fund your Crypto Wallet
- 2. Where to buy NFT: Choose a Marketplace and Set up an Account
- 3. How to invest in NFT: Connect your wallet to the NFT Marketplace
- 4. Explore the NFT Marketplace
- 5. Choose and Buy an NFT
Curious about NFTs? Check out our handy step-by-step guide to buying NFTs and start your own collection today.
What are NFTs?
NFTs (Non-fungible tokens) are digital assets that represent a specific item whose ownership and proof of authenticity are embedded in blockchain technology. In essence, NFT’s are the digital equivalent of a physical item. NFTs are unique assets that are not interchangeable, unlike fungible items. In simple terms, a fungible item is an item that is mutually interchangeable with another. Money is a good example. A $200 bill is worth the same as other $200 bills (or even two $100 bills). Bitcoin and Ethereum are examples of fungible tokens. On the other hand, digital art, vehicles, and houses are examples of non-fungible items that are unique and not interchangeable with one another.
How does NFT work?
NFTs are created through a process known as minting. Mining records NFT data which can represent digital arts and other items on a blockchain. A validator validates the data, leading to the formation of a new block. Smart contracts assign ownership and manage NFT transferability during minting. Each NFT is minted with a unique blockchain address. Digital objects that represent both tangible and intangible objects are "minted" into an NFT, such as art, music, collectibles and video files to mention a few. Digital items as trivial as tweets can also be sold as NFT, with Jack Dorsey selling his first ever tweet for more than $2.9 million.
Although other blockchains aside Ethereum like Solana, Polygon, and Tezos, also enable NFT minting, the majority of NFTs are minted on the Ethereum blockchain.
Every NFT is unique and stamped with a digital signature that is stored on the blockchain public ledger. This makes the ownership and authenticity of NFTs verifiable.
How to Purchase NFTs
NFTs are still worth purchasing as a means of earning money in 2023, even though the 2021 NFT frenzy that witnessed spectacular sales like the $91.8 million "The Merge" digital art sale has somewhat subsided.
Now the big question is, How do I buy an NFT? Stay tuned as we take you on a journey to buy your first NFT in five unique steps.
1. How to Buy NFT: Set up and Fund your Crypto Wallet
You need to set up your crypto wallet. Afterwards, transfer a base asset to your wallet to buy NFT. For example, you can transfer Ethereum (ETH) to your wallet as a base asset. You can purchase ETH and other base assets such as BTC and USDT on centralised cryptocurrency exchanges like Coinbase, Binance, and Kraken or decentralised exchanges like Uniswap and 1inch. Depending on your choice, you can use a cold wallet (hardware wallet) or a hot wallet (software or web-based wallet).
Best NFT Wallets of 2023
- Exodus Wallet
- MetaMask Wallet
- Trust Wallet
- Zerion Wallet
- Safepal Wallet
- Zengo Wallet
2. Where to buy NFT: Choose a Marketplace and Set up an Account
After funding your wallet with Ethereum (ETH), you need to select an NFT marketplace to purchase NFTs. Depending on your choice and what works for you, you can choose an open, closed, or proprietary NFT marketplace. Some cryptocurrency exchanges, like Binance and Coinbase, also host NFT marketplaces.
Setting up an account may involve some verification and security checks. Creating accounts on multiple NFT marketplaces may be beneficial to have access to more NFT drops.
Top NFT marketplaces in 2023
3. How to invest in NFT: Connect your wallet to the NFT Marketplace
You will be required to connect your wallet to the NFT marketplace. This will allow you to interact directly with the marketplace using your wallet. The steps to connect your wallet to the NFT marketplace vary. However, for most wallets, such as MetaMask and Trust wallet, the process is straightforward.
4. Explore the NFT Marketplace
There are many NFTs out there, and their prices vary. While some cost a few dollars, some are worth thousands of dollars. Yet others are worth millions of dollars. There is always an NFT for you based on your pocket size. You can also use the "search" button to discover more digital items. The price of most NFTs is listed in ETH or USD. You can purchase these base assets from cryptocurrency exchanges.
Top 5 NFT collections in 2023
- Bored Ape Yatch Club
5. Choose and Buy an NFT
You have come this far; it only gets easier! All you need to do is hit the "buy" button, and the NFT is all yours. Choose your favourite digital arts and other alluring items on NFT marketplaces. Your wallet will be debited, and the NFT will be transferred to your wallet immediately. Don’t forget to check out amazing digital assets on cryptocurrency exchanges too. Keep adding more NFTs to your collection. Now you own a potential empire!
NFTs are still relatively new in the Blockchain space and have a lot of growth potential. You can purchase NFT’s with ease on NFT marketplaces and cryptocurrency exchanges. However, they are associated with risks that are quite common for other cryptocurrency assets. All in all, NFTs are good investment spots to generate passive income and even fortunes.