Beginner's Guide on How To Invest In NFT
NFT. One of the many BUZZWORDS this year.
Whether you want to buy NFTs, sell NFTs, trade NFTs, create NFTs, it can be quite a good investment for digital artists or anyone interested in the NFT community.
But how exactly do you invest in NFTs? Let’s break down the process!
What The Heck is an NFT?
We’re sure this question popped up in your head a couple of times.
Well, an NFT is a NON-FUNGIBLE TOKEN.
A non-fungible asset or non-fungible tokens are one of a kind and cannot be replaced, like the Mona Lisa or the Last Supper.
People can make replicas, but they will NEVER be of equal value as the original asset.
Non-fungible tokens are collectibles’ tokens like a STAMP or CERTIFICATE OF AUTHENTICITY on the digital asset to signify the OFFICIAL OWNER.
How Do NFTs Work?
The ownership is assigned by smart contracts, a series of codes that the blockchain reads to note, “Okay, this person is the rightful owner of this asset.”
A piece of land or real estate is another example of something non-fungible. Real estate is unique to its location, owner, and other characteristics.
Imagine creating a piece of digital artwork, or any digital asset for that matter. If you “stamp” an NFT on it, that makes YOU the rightful owner.
Someone else can now BUY that piece you just created, and THEY become the new owner.
Digital assets can range from:
Oddly enough, Charmin has its line of non-fungible toilet paper.
NFTs are ways to BUY DIGITAL ASSETS using BLOCKCHAIN TECHNOLOGY, a digital ledger that keeps track of all transactions and ownership changes being made in the digital world.
Because it is one of a kind, there is no exact recognized market price, like the paintings mentioned earlier.
There are many NFT marketplaces where creators buy and sell digital art for INSANE prices, so to say digital creations and digital collectibles are high in demand is a big understatement.
How to Buy NFTs
Much like how people buy and sell things in an online marketplace, the buyers and sellers have a money transaction.
1.) Convert to Cryptocurrency
NFTs are like that too, but instead of a dollar bill or any other currency, you use a
Ah, another popular word on the internet.
If you have never heard of cryptocurrency, it is also a digital asset that acts as your money. You must first CONVERT your physical cash to cryptocurrency to work in the digital economy.
Digital art is worth digital currency.
The most popular NFT marketplace right now is called OPENSEA, with its cryptocurrency for NFTs being ETHEREUM (Ether or ETH).
For example, if you see an NFT worth 0.6 ETH, that is equivalent to a certain dollar amount (roughly $1072 as the value changes a lot).
But you can’t just pay with $1072; you must first CONVERT your money to ETH.
2.) Create a Digital/Crypto Wallet
When buying NFTs, you will be asked to create a DIGITAL WALLET or CRYPTO WALLET.
This digital wallet will house your cryptocurrency, and there are many different ones to choose from (COINBASE is probably the most popular right now).
Of course, keep in mind that converting your money to cryptocurrency also costs a lot of TRANSACTION FEES.
3.) Add Funds
Next, FUND your digital wallet by connecting your bank account or credit card and other personal data to convert your money to cryptocurrency.
Once you have enough money converted to ETH, you can now buy NFTs!
How to Sell NFTs
Before you sell NFTs, you have to make one. And once you have one, you set a FIXED PRICE on it, or you can have people BID on it, and the highest bidder wins the NFT.
Since NFTs have no intrinsic value or real market data, they are only worth the amount that people are willing to pay.
But there is a little extra obstacle.
To sell NFTs, you will have to pay for the GAS FEE.
Because the blockchain network uses a lot of energy to make transactions, the gas fee is used to COMPENSATE for it. It is similar to processing fees made by credit cards when transferring money.
Once you have enough money, your own NFTs are now ready for sale!
Read more: Sell NFT Without Gas Fee
Pros and Cons of NFTs
Remember that getting into buying and selling NFTs is a very high-risk/high reward situation. It is important to know the good and bad sides before starting.
Should You Invest in NFTs?
How do you know if NFTs are the right investment?
Investing in NFTs is a big GAMBLE.
It all comes down to the artist or creator of the digital asset AND the buyer.
Much like before making any purchase, it is important to consider where your money is going, if it is something WORTHWHILE, and if you think it will increase in value over time.
If you have a piece of art that you think people will pay big bucks for, then, by all means, make that NFT.
But consider the RISKS as well. Nowadays, it is very easy to duplicate or even steal someone’s artwork, claim it as their own, and resell it on the blockchain, profit, and there is NOTHING you can do about it.
Not to mention our ENVIRONMENT.
Is the reward worth the risk? It is ultimately up to YOU to decide.
NFTs are reshaping the e-commerce industry as we speak.
Nowadays, any real-world asset can be DIGITIZED into a new asset class and sold for millions of dollars.
But is it just some trend that will be gone tomorrow? Or will we be seeing a new world where non-fungible tokens (NFTs) are one of the biggest investment markets in the world?
Only time will tell.