You may have heard of NFTs but only have a foggy understanding of what they are. NFTs are one-of-a-kind digital assets that can only be used by the people that own them. If you’re interested in learning more about what they are and why you should care about them, look to our NFT Beginner’s Guide. This article also details how to find and buy NFTs as well as the interest that people have in their sales and creation.
What is an NFT?
NFT means non-fungible token, but what does that mean? Let’s break it down. What is fungible? A fungible item is something that can be exchanged 1:1 with another item of the same classification/description, like currency. For example, a fungible transaction would be if I gave you a dollar bill and you gave me a dollar bill. Although they are two different dollars they equal the same amount; non-fungible items cannot be exchanged this way. In other words, an NFT couldn’t ever be equally exchanged for another NFT.
Furthermore, NFTs are held on the Ethereum blockchain, a distributed database that is shared among nodes of a computer network that allows digital information to be recorded and distributed, but not edited. This way, the NFTs keep their value because you can verify their authenticity and they cannot be truly copied. I say truly because you can screenshot an NFT, but you wouldn’t be able to use the utility or resize the image without losing quality on the already lower-quality screenshotted image.
Sometimes NFTs are 2D assets that look like the image below, and other times they can be so much more. Often, the biggest NFT projects blow up because of the art, popularity, utility, and great branding.
The utility is what the NFT comes with aside from its beauty. Sometimes owning a specific NFT allows people to get into certain concerts or have exclusive meetups with celebrities. NFT collections in the past have sold randomized digital assets that had rare assets mixed in.
Where to Find NFTs
The only way you can get an NFT is by purchasing it from marketplaces like OpenSea, the largest NFT marketplace, or MetaMask. There are dozens of NFT marketplaces and they primarily use Ethereum, however, many also support over 150 other cryptocurrencies. To purchase from a marketplace, you need a Crypto wallet with currency ready to buy the asset you want.
While OpenSea and MetaMask are general NFT marketplaces, some marketplaces deal in more specific assets. For instance, the MODA DAO Marketplace focuses on music industry NFTs, micro-licensing, DAO governance, and DeFi. Whether it’s art, collectibles, or video game assets, there’s a marketplace that has what you’re looking for.
How to Buy an NFT
NFTs are built and managed on a blockchain that represents ownership of an asset. So, most NFTs require payment in Ethereum or the other crypto blockchain that they’re built.
Crypto wallets aren’t just for purchasing an NFT. Once you’ve made your selection, you’ll also need a place to store your NFT. Simple options include Coinbase Wallet and MetaMask, and other cryptocurrency exchanges offer wallet features included with an account to trade cryptocurrencies.
However, there are other wallet options for securing cryptos and NFTs offline, outside of an account directly connected to an exchange (known as cold storage). For example, the companies Trezor and Ledger offer actual hardware wallets that can store crypto assets. With a private security key, the wallets can provide an added layer of security for storing NFTs.
Step One
First, you need to purchase Ethereum on a crypto exchange like Coinbase or Crypto.com. You cannot buy an NFT for USD, CAD, or other government-regulated currency.
Step Two
Secondly, you need to transfer your crypto to a crypto wallet. Your wallet acts as a digital checking account, allowing you to store and transfer your cryptocurrency.
Some exchanges, like Coinbase, have built-in wallet features that are offered when you open an account, but other options include dedicated wallets like MetaMask.
It’s easy to transfer cryptocurrency to your wallet. On Crypto.com, you just log in, press a few buttons, continue with the on-screen flow to select the cryptocurrency, and complete the transfer.
Step Three
Lastly, you need to connect your wallet to an NFT marketplace. Once connected, you can start browsing the marketplace’s NFT collection and make a purchase.
Why Should You Care About NFTs
As a Consumer
You may only get why NFTs make sense as a concept, but why are people into it? People are attracted to different NFTs for many reasons. This includes people’s interest in the art & artist; they may believe the art will go up in value, they may want to display the art, or they may be in it for the perks that give them real-life experiences and more. The list goes on and on because while many people just think NFTs are pictures, some have contracts that guarantee with certain reached milestones, there will be a payout on owning an NFT at the right time.
For instance, it’s like a car that goes through the market’s assumption of its price over time. As a result, the price is affected by how many cars are left in the world, their condition, among other factors. Similarly, NFTs are affected by several factors. This includes factors like the amount that are minted, the rarity of certain NFTs, and the popularity of the project.
Furthermore, there are lots of events and exclusive experiences that NFTs can allow you to have. To read more about NFT events coming up in Los Angelos, read our article on ‘NFT Conventions Coming to LA.‘
As an Artist
While you may be an artist that is interested in the consumer aspects of NFTs, there is money to be made in the NFT game. You can sell your art on a booming new marketplace that may help hype up your upcoming projects and collaborations in the future. Artists can team up with brands to create NFTs for their companies and usher them into the new marketing wave. This goes for more than just visual artists; there are also many opportunities for music and performing artists within the NFT space.
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