NFTs stand for non-fungible tokens. Over the past year, they have been gaining a lot of traction to say the least.
The creators have certainly outnumbered the number of collectors, and good projects have been lost to the infinite number of projects that are now available.
For the avid collector and the fervent enthusiast who wants to get in the space, it is absolutely crucial to understand the different ways that they can buy NFTs.
In this article, we’ll be exploring how to buy NFTs and breaking it down for beginners, and including some of our favorite websites and also a tiny guide on how to securely store them.
Let’s dive in.
Buy NFTs on an NFT Marketplace
One of the easiest ways of buying NFTs is accessing them on a dedicated marketplace. What is an NFT marketplace? It is a purposefully created online store where creators and traders alike can sell/trade their favorite NFTs.
It is one of the easiest ways of getting your NFT since the process of buying one is quite similar to that of buying your favorite goods off of a online shopping site.
If you’re looking for a specific guide on which NFT marketplaces are the best, then you can check out our curated list of NFT marketplaces here.
But, here’s the catch: You can easily buy most goods online using your credit card (which operates using fiat currency). For NFTs, however, you would need to install a crypto wallet and add funds to it.
In this example, we’ll show you how to use MetaMask to buy art on the OpenSea marketplace using Ethereum. Here’s what that process looks like:
- First, select a cryptocurrency wallet that you would like to use to add funds to. There are many crypto wallets available within the market right now. MetaMask is one of the easiest to install and use. It is also supported at most NFT marketplaces.
- When you visit the MetaMask website, you’ll be asked to download and install their wallet. On your desktop, that will be installed as a browser extension; and on your mobile, it will be installed as an app.
- Once you have installed the wallet as a web browser extension, it’ll look something like this:
Note that in this example image, you will see that about $8 has been deposited and converted to ETH in this demonstration.
- To buy an NFT, you will have to a) deposit your funds to the wallet by clicking on “Buy”. Once you have deposited, say, 10 USD, then you will have to buy ETH using that amount.
- Once you have bought ETH, it will reflect in your wallet just like its shown above. Now, you can easily go to any marketplace of your choice and login.
Here’s how logging on to an NFT marketplace will look like.
- Let’s say you want to purchase an NFT collection that is available on OpenSea. When you visit the marketplace, you’ll have to click on the “wallet” icon as shown below.
- It will then prompt you to connect the wallet of your choice.
- Once you have connected the wallet of your choice, you will be directed to another page, which will look something like this:
- You can then easily browse the marketplace and choose the NFT that you’d like to buy. Once selected, you can either buy the NFT for the fixed price or make an offer as highlighted in the image here.
Once you have purchased the NFT, it will reflect in your wallet, and you can store the image on your device.
Given that it is non-fungible, you are now the owner of the artwork. And given the conditions of the agreement, you might even have the rights to use it as a commercial product. But for this you are advised to communicate with the seller/creator first.
The process for buying NFTs on a marketplace will look mostly similar on all major marketplaces.
The crucial thing to understand here is that you will need a cryptocurrency wallet (and some crypto loaded on it) to be able to purchase the NFT that you’re looking for. If you wish to sell an NFT that you bought, then you can do so using a similar process.
What are the most trusted sources for buying NFTs?
Buying NFTs on a marketplace like OpenSea and/or SuperRare is probably the easiest way of acquiring one.
Most of the ground-level processes are taken care of by the marketplace itself (albeit they do charge a fee for that) and you have the freedom and ease to buy/sell your NFT at the click of a button.
While this process is simple and straightforward, there is another way of minting (read: buying) NFTs when they are initially being launched. This is usually done when a newly created collection is being launched by the creator.
The perfect example for this is the DeGods NFT collection which was launched on Solana. The first few buyers who wanted the NFT had to mint it on their marketplace.
Minting is the process by which a token is created on a blockchain. So, in this context, minting implies the creation of the NFT on the blockchain.
While this process does require a tiny bit of technical knowledge, it is probably another trusted (and cheaper) way of getting an NFT.
The only fee that you are paying in this instance is the minting fees which is essentially the fee that you pay for any transaction you want executed on a blockchain.
If you are a creator who is thinking of launching your own collection, then you need to mint your NFT on the blockchain first. You can learn more about minting NFTs on a marketplace here.
Can I buy an NFT straight from the creator?
Simply put, it’s up to the creator. The process of having ownership rights over the NFT still requires you to mint it on a blockchain and provide your wallet address to denote that that NFT belongs to you.
A crucial point to understand here is that whenever you buy NFTs, you are essentially minting it on the blockchain and adding your wallet address to signify that you are the owner.
You don’t own the digital asset itself. You own a blockchain-based token that points to where the original digital asset is kept (which could be a web server or a third-party website). Thus, by owning the token, you indirectly own the asset too.
But, to reiterate, in order to buy the NFT straight from the creator, they still need to mint it on their website. Or, you could transact with them off-chain (that is in real life) and give them the money for their work, mint the NFT on a marketplace as your own and then put it up for an auction.
Do I need to pay a commission for buying NFTs on a marketplace?
Yes! While the entire NFT industry prides itself in being truly decentralized, the truth is that most NFT marketplaces charge a commission for selling/buying NFTs.
These fees can range from 2.5% to 15% depending on the marketplace and the services that they are providing among others. These fees can also vary depending on whether you are selling the NFT or buying one. However, in most instances, it is like to remain the same.
In addition to this, you need to pay what is known as gas fees for every item that you create/mint using the marketplace.
Now this minting fees is the fees that is paid for creating the token on the blockchain and varies on the marketplace on which you are creating the NFT, the protocol that the marketplace runs on and the overall network usage at the time among others.
While Ethereum is the most preferred protocol when it comes to creating NFTs (and even most NFT marketplaces run on it), there are other networks like Solana and Binance Smart Chain that are also offering the same experience but at a considerably low cost.
While the costs of creating NFTs on these protocols are quite low, they have their own limitations (Binance Smart Chain is not decentralized; Solana has had notable downtimes in the past). And that is why Ethereum has proven to be one of the best protocols to mint NFTs on.
Are there any other ways of buying an NFT?
Apart from buying NFTs on a dedicated marketplace or minting them just when they are launched, there are not many ways of buying an NFT. Marketplaces have been the preferred platform for trading NFTs.
In fact, OpenSea saw over $1.3B in traded volume in the month of August.
For something that came into the limelight earlier this year, this was a huge step ahead. And, this was also telling of the fact that marketplaces are the most secure and easy ways of acquiring these digital assets.
While you might be tempted to check out some alternative ways of buying an NFT, we’d recommend sticking to a marketplace because the entire process is quite easy and straightforward.
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