Every day, more and more people are looking into how to buy NFTs. The industry as a whole is on the brink of becoming mainstream and several projects, like the Bored Ape Yacht Club, Boss Beauties, and NBA Top Shot, have helped spike massive growth in the trend of buying and selling NFTs. Additionally, companies in numerous markets have begun integrating NFTs into their products.
This includes social media giants like Twitter, video game companies like Ubisoft, beauty brands like Clinique, and sneaker companies like Nike. Even US congressional candidates are now dropping NFTs in hopes that the general public will participate. But with so many NFTs to choose from, how does one get started?
Choosing an NFT
First and foremost, choosing an NFT should always begin with a project or item that you like. Landing on an NFT that has some type of intrinsic value to you is always a good starting point. After all, if you really like something it’s possible that someone else will.
Successful NFT projects often have a few basic things in common, including a platform for communication with some form of team leadership, a website where you can learn more about the project, and even an official roadmap or whitepaper. All of these touchpoints help to create a sense of community as well as contribute to growth in excitement for any given project.
Consider the project or artist reputation
Filtering through the literal open sea of projects can be overwhelming. There are many successful NFT projects with good reputations, but everyone wants in on the trend, and this has resulted in a plethora of copy cat NFT projects. It's important to make sure you are finding high quality NFT projects. There are many low quality NFT projects and scams. Here are a few things to keep in mind when making these decisions.
Before you invest in an NFT, you should do your due diligence on the project. You can start with jumping into a project's social media channels and seeing what type of engagement they are getting. Two of the most popular platforms where NFT projects communicate company messaging and community members interact are Twitter and Discord.
Keep on the lookout as sometimes projects will buy followers on their social networks to make it seem like their engagement is higher than it is. Make sure to check how many of the interactions may just be bots. You can spot a bot by looking for content similarities, looking for time based correlations (are multiple tweets or messages created in a short amount of time), or they have short replies that look like it’s been automated. If it looks like there is genuine interest and ongoing conversation from real people who want to support the project over time, this is a good sign.
Reading into the background of an NFT artist or project creator can help you get a feel of the long term direction of the project. Sometimes great information can be found listening to podcasts interviewing founders or people involved with a given project. Remember that you’ll be investing in the project’s team members themselves as much as you are investing in the NFT project. Additionally, many influencers in the space are well known for writing massive threads on crypto twitter that can be quite helpful in gauging the quality of an NFT.
Who are the makers of NFTs?
NFTs are created by a diverse set of groups and individuals. There are project builders that solely work in NFTs, like Non-Fungible Labs, art collectives where many artists contribute like NFTense, and big brands that create their own NFT projects or collaborate with others.
What is the rarity of the item?
A general rule of thumb with most collectibles is that the more rare an item it is, the more valuable it is; and this rings true with NFTs. Each project typically has a set number of NFTs that they initially launch with, meaning that there is a limited supply.
NFTs will usually have a few data points attached to them, or the project, that will let you know as the consumer how rare a project or item is. At the project level, you’ll be able to see the total number of items, total number of owners, the floor price, and the volume traded (which is the total number value of trades of a particular project). Anyone browsing a marketplace like OpenSea can view this data directly on their website, in a section dedicated to the details.
At the item level, you’ll be able to see details that the creators have established themselves as ‘properties.’ Properties are reusable designs built into the NFTs that are shared across the project's items. NFTs with properties that are less shared are more rare.
A property might be something like an item of clothing that the character in the NFT wears, or the color of the background. People buy NFTs with certain properties both because they are rare, as well as the fact that they plain like them. You can view properties directly in Open Sea or using a tool like rarity.tools.
Consider the blockchain or token
Most NFT projects are built to be compatible with a specific blockchain, and the vast majority of NFTs are on the Ethereum blockchain. If you want to purchase an NFT on the Ethereum blockchain you’ll first need to convert regular money (fiat) for ETH (the ethereum cryptocurrency). The same applies to projects on the Binance Smartchain, Solana blockchain, or Flow blockchain, for example.
Different projects on different blockchains may require you to use compatible cryptocurrencies in order to purchase them. For example, in order to purchase a Solana NFT on the Solana Blockchain, you would be required to convert fiat into Solana (SOL).
Where to Buy NFTs
For beginners, the best place to start participating in the NFT market is by using NFT marketplaces. There are platforms besides marketplaces where you can find NFTs - the gaming space for example - but marketplaces are the main way most people participate in buying or selling NFTs.
NFT marketplaces are online platforms that allow you to buy and sell NFTs. Some marketplaces allow anyone to create an NFT and contribute to the marketplace, and some marketplaces are closed to public creation, and are solely managed by the project creators themselves.
Additionally, some marketplaces have one type of NFT, and others have multiple projects. Several of the biggest NFT marketplaces, to name just a few, include:
- Nifty Gateway
- Axie Marketplace
Well-known NFT projects
There are a number of NFT projects that have risen to the level of being able to be called “Mainstream.” Examples of these projects include Bored Ape Yacht Club, CryptoPunks, Meebits, CloneX, and NBA Top Shot, as well as others.
Many popular projects allow you to buy their NFTs directly on their website, like CryptoPunks and NBA Top Shot. Some projects will launch their NFTs on their website, from which they are then only available through a third-party marketplace once the initial offering is sold out. Any given project is usually compatible with a particular blockchain. For example NBA Top Shot is on the Flow blockchain, and not yet available on sites like OpenSea.
Buy an NFT, step by step
Buying an NFT can be done by anyone by following a few steps. Keep in mind that you’ll need a few tools in order to make the transaction happen.
Choose a valid crypto/NFT wallet
To navigate the NFT world, and indeed to login to many of the NFT marketplaces, you’ll need to set up a proper crypto wallet. A crypto wallet, or NFT wallet, is software that allows you to store cryptocurrency via the company’s application. Much like a real life wallet, it’s where you keep your money - just the digital version.
You’ll more than likely want a wallet that has a browser extension associated with it, and if you're going NFT shopping you should also check to see if it allows you to store NFTs. Check the marketplace you intend on buying from, and make sure they support the NFT wallet.
Different marketplaces accept different cryptocurrencies as payment methods. You’ll at least be able to load your NFT wallet with cash and then convert it.
Set up an account on a preferred NFT marketplace using your wallet
Once you’ve created your wallet, you’ll be able to create an account and login to the marketplace using that wallet. As stated, marketplaces will have a list of wallets that you can use on their site, which usually correlates with the wallets and marketplace’s supported blockchain.
Find an NFT and make an offer
Once you’re set up on the marketplace, it’s time to go NFT shopping. Find an NFT that you're interested in purchasing by using our tips listed above.
Use filtering tools that allow you to shop by price, recently sold items, and other options. The marketplace will let you make purchases with your wallet by either bidding, or buying the product outright.
Finalize the transaction
If the time runs out on an auction, and you remain the highest bidder (or if you are able to purchase the NFT at any time), then the NFT marketplace will automatically complete the transaction given you've used the correct cryptocurrency. Note that many marketplaces will take a transaction fee that varies, but usually hovers between 2-3% of the sale price.
Investing in NFTs
If you’re using NFTs as an alternative investment opportunity, then doing your due diligence is extremely important. There are several steps you can take to make sure you are making solid decisions as it pertains to investing in NFTs.
Read the whitepaper
If you’ve heard about an NFT project, either through word of mouth, or social media, and are thinking about investing in the long run, one of the essential things you should check for is whether or not the project has a roadmap - and specifically this can come in the form of a whitepaper.
The whitepaper should outline the long term plan of the project, its business model, and list any milestones or phases of the project that will be completed. This should also outline any utility that the project aims to provide.
Stay involved with project community
Jumping into the social channels is a great way to make sure you are aware of any announcements that the company makes regarding updates to the roadmap, prices, recent sales, and other highly valuable information to those looking to invest for the long run.
A good project will have multiple channels, including but not limited to, a Discord channel, Telegram channel, Twitter profile, ubreddit, and Medium blog.
Contests & giveaways
An important reason to stay involved with the community is to capitalize on contests. Some projects will use contests in order to keep the community active as well as increase the value of specific NFTs during certain time frames.
For example, NBA Top Shot frequently runs a promotion called “Flash Challenges” where members that collect certain NFTs within a given time period are rewarded with free packs that contain a few NFTs.
Find an NFT that means something to you
At the end of the day, a great strategy for beginners is to find an NFT that has some type of meaning to you. And of course, you’ll want to make sure that the NFT is well within your budget. Be diligent in your research and fully understand what the NFT is offering.
Finding a project that’s in its early stages, and then spending a minimal amount of money is a great way to get introduced into the NFT market. Projects evolve over time, and if the company is able to maintain a solid reputation there'll likely be more opportunities for your NFT in the future.
Q: How old do you have to be to buy an NFT?
A: Typically speaking, you have to be at least 18 to purchase an NFT. This is because you’ll need to do things like set up a crypto wallet, have a bank account, and other steps that require you to be 18.
Q: Can you buy an NFT without crypto?
A: The vast majority of NFT marketplaces require you to have crypto in order to purchase an NFT. That being said, this is changing and more marketplaces are allowing purchases through fiat.
Q: Why would anyone buy an NFT?
A: People buy NFTs for the same reason they purchase fine art, pokemon cards, or any other item with intrinsic cultural value. These reasons can range from people feeling a sense of identity through ownership to recapturing nostalgia from their childhood experiences to gaining access to community events. Many NFTs are also bought as investments, where people have the expectation that the price will increase over time.