From pet rocks to CryptoPunks, NFTs have been the centre of attention for several years now. NFT sales reached a whopping $25 billion globally in 2021, even as people continue wondering how to buy an NFT. While we agree that NFT transactions aren’t as simple as purchasing a rug on Amazon, you can crack the code with a bit of guidance.
Whether you’re a trader, a digital artist, or plain curious about the latest hype, this guide will walk you through the basics of buying your first NFT. But before delving into the details, let’s quickly recollect what an NFT is and why you should buy them.
What is an NFT and Why You Should Care
NFTs, or Non-Fungible Tokens, are currently all over the news. These include assets like digital artwork, music, audio, video, in-game collectables, and more. NFTs are unique, irreplaceable, and in high demand for their exclusivity and projected value.
These digital assets have witnessed a stark growth in demand over the past couple of years through popular cryptocurrencies like Bitcoin and Ethereum. Dedicated crypto marketplaces facilitate NFT transactions, and the process is similar to traditional crypto transactions.
What makes NFTs unique is the identifiable information embedded in every token. This makes it easier to trace the owner and prevent piracy. So, if you buy an NFT, its value comes from exclusivity. Owning an NFT is exactly like owning a fine piece of art that can appreciate over time. You can also program your NFTs to generate royalty.
Here’s an overview of the pros of buying an NFT.
- Greater Demand – NFTs are scarce, and the potential to appreciate over time defines their value.
- Investment Opportunity – NFTs offer crazy money-making opportunities when traded. Hence, they’re popular as a digital economy.
- Collectability – NFTs are popular digital collectables, like in-game characters or skins, making them popular with collectors.
- Utility – Certain types of NFTs offer utility. Popular examples include in-game avatars, weapons, and trinkets, among others.
How to Buy Your First NFT?
You need a crypto wallet to buy your first NFT. There are several popular options to choose from. But we recommend opting for an Ethereum-compatible wallet since it’s the digital currency of choice for NFT transactions.
To buy an NFT, you must visit a reputed crypto marketplace and pay using ETH. Most crypto wallets support ETH, but we recommend MetaMask since it’s user-friendly and perfect for beginners.
Buy ETH with eToro
If you don’t have ETH, you’ll have to buy some from a reliable broker or crypto exchange. We recommend eToro as they’re FCA-approved and allow transactions as little as $10. There are reputed alternatives if you’re more comfortable with using them. Here’s how to buy ETH on eToro in three simple steps.
- Open an eToro Account
Visit eToro’s homepage and click on Start Investing. Enter your email ID, username, and password to create a new account. Click on the Complete Profile button and comply with the KYC checks.
- Make a Deposit
Once your account has been verified, eToro will send an email, following which you can make a deposit. You must invest at least $10 via any listed payment method. eToro accepts credit/debit cards, bank transfers, PayPal, Neteller, Skrill, and Klarna.
- Buy ETH
Once your account is operational and you’ve found a preferred payment mode, it’s time for your first transaction. Find ETH and enter your desired investment amount to get started.
You’ll need a reputed Ethereum wallet to buy NFTs. Here’s how to set up MetaMask in three simple steps.
- Download MetaMask Wallet
Visit MetaMask and install the wallet on your browser.
- Create Your Account
Find the Create a Wallet button and follow the instructions to set up your MetaMask account.
- Find your ETH Address
Find your ETH address from Account Overview. Your public wallet address shows up as a long string of alphanumeric characters.
Send ETH to MetaMask
Once your wallet is ready, it’s time to send ETH to MetaMask.
- Download eToro Money
Transferring ETH to MetaMask is a two-step process. First, you’ll need to download eToro Money and log into the app using your eToro credentials. Now navigate to Portfolio and click on the Edit Trade button. Select Transfer to Wallet on the next screen to initiate the transaction.
- Send ETH to MetaMask
Find the Crypto tab on your eToro Wallet and click on Ethereum. You’ll be prompted to enter the address of your crypto wallet when you click the Send button. At this point, eToro will send a unique code via text. Enter the secret code on the eToro Wallet prompt, and your holdings will be transferred to the MetaMask wallet.
Buy an NFT
Once your MetaMask account is sufficiently funded, you can buy your first NFT.
- Submit a Bid
Since most markets feature an auction format, you must submit a bid towards the NFT you want to buy. Several markets operate as a crypto exchange, comparing the highest bid with the lowest ask for NFTs that have multiple copies.
- Relish Your Purchase
Once your bid is accepted, the amount is subtracted from your wallet, and the transaction is successful. You may have to pay a transaction fee, depending on the marketplace.
Where to Buy NFTs?
Several reputed NFT marketplaces accept ETH transactions. Prominent names include OpenSea, Rarible, and Binance, to name a few. All of these platforms primarily use Ethereum but accept all major digital currencies.
If you’re looking for niche marketplaces, you’re in luck! For instance, The Musician Marketplace specialises in music compositions, while NBA Top Shot is the official platform for buying digital video highlights from the NBA.
Top NFT Buying Tips for Beginners
You must consider the following factors before settling on an NFT marketplace.
Decide the type of NFT you want
Not all NFTs offer the same value. While some are excellent investment opportunities, others are a waste of resources. The type of NFT you choose has a lot to do with the intended purpose. Is it an asset, a collectable, or simply something you fancy? Turning a profit isn’t always the goal here.
Compare Marketplace Fees
NFT marketplaces charge a commission called “gas” for facilitating transactions. The amount varies between platforms. So, compare a few vendors to ensure you’re not overpaying.
Ensure You’re Settling for a Reliable Platform
If you’re a beginner, select an amateur-friendly marketplace with a detailed yet straightforward interface and instructions that are easy to follow. Buying your first NFT is complicated enough if you’re unfamiliar with the crypto space. Hence, you should avoid overcomplicating simple stuff.
Find a Secure Marketplace
The digital ecosystem is rife with scams. Hence, ensure that your shortlisted crypto marketplace is reliable and offers sufficient security for all transactions.
Why The Sudden Craze for NFTs?
The frenzy around NFT transactions paves the way for a new digital economy. NFTs have created a sustainable market for digital art where creators are recognised for their effort, and users can buy, store, sell, or collect their favourite digital artwork without the fear of being ripped off.
With the help of blockchain, digital artists can trace future sales and earn royalties from their creation, ensuring a steady revenue flow. While finding the right NFT to buy or trade requires careful planning, the returns are worth the risk.
Top 5 NFT Marketplaces in 2022
Let’s take a look at the top five NFT marketplaces in 2022.
OpenSea is one of the largest NFT marketplaces, with trades exceeding millions of dollars every month. The platform’s popularity drew some of the largest NFT collections to the site. With over a hundred thousand items listed on the forum, OpenSea has something for everyone.
OpenSea flaunts a user-friendly interface. And all you need is a crypto wallet to start trading. Buyers pay a 2% fee, while sellers pay 2.5% for every transaction made on the platform. Acceptable denominations include ETH and MATIC.
Rarible is another major NFT marketplace where millions change hands every day. The marketplace is famous for its sports collectables, although you’ll also find digital artwork, music, and trading cards on the platform.
Rarible is compatible with MetaMask, making it amateur-friendly. The platform charges a flat 2.5% fee that is only payable via ETH. If you’re a first-time NFT buyer, we recommend Rarible for getting acquainted with the process.
One of the top choices for NFT trading, Crypto.com has over 10 million active users. The platform launched in March 2021 and boasts an eccentric collection of digital artworks, including music, photos, sport and video game characters, skins, and other collectables.
Crypto.com doesn’t charge buyers for NFT transactions, while sellers must pay a meagre 1.99% for making a trade. The website accepts debit and credit card payments, a novelty in the NFT trading space. These factors combine to make Crypto.com one of the premium NFT marketplaces in 2022.
Launched in June 2021, Binance NFT marketplace is a specialised platform supporting both the Binance Smart Chain and Ethereum. You can buy NFTs ranging from entertainment, art, gaming, collectables, etc. Binance offers users a Mystery Box feature, which delivers a secret NFT entirely chosen at random.
Binance charges a 1% commission from the buyer and seller for every trade. The platform supports both MetaMask and WalletConnect, simplifying your post-purchase storage struggles. The entire process is amateur-friendly and can be customised according to your requirements.
Another popular NFT marketplace that sells high-quality items. Unlike the other platforms on this list, Nifty employs a team of curators who verify the quality of every item listed for auction.
If you’re interested in finding the best assets, Nifty Gateway is the marketplace for you. However, you won’t find memes or related artwork here. Nifty accepts debit and credit cards, although the centralised nature of the market makes it prone to cyberattacks.
The Future of NFTs
While NFTs are mainly used in digital art today, they don’t only serve for the ownership of the artwork. As the industry continues to expand, many companies are experimenting with newer applications of NFT technology.
Despite the hype, NFT is still in its nascent stages. Hence, you must tread carefully. Remember, blockchain assets exhibit extreme price volatility. Exercise extreme caution if you decide to invest in NFT.