How to Buy NFTs in 5 Easy Steps

Non-fungible tokens (NFTs) became a hot topic of conversation last year. Many people were simply just trying to wrap their head around this new crypto commodity. But as the popularity of NFTs grows and this new trend seems to be sticking around you may be wondering how you can purchase one of your very own. Here we explain how it can be done.

What are NFTs?

Non-fungible means that something is unique and not able to be exchanged for a different identical item. For example, one piece of artwork cannot be exchanged for another, because they both have unique properties that will change their value. However, fungible items like cash or coins can be exchanged for another – one dollar is always equal to another.

So, what exactly is a non-fungible token? Non-fungible tokens are a digital asset that is designed to signify the ownership of a unique digital item. It is worth noting that an NFT only represents ownership, the owner may not have the original digital asset in their possession. NFTs are mostly known for their association with digital art, but they can technically represent anything that is digital, such as music, videos and digital trading cards.

NFTs are housed on a blockchain, typically Ethereum, however, you can also find them on Ergo and Algorand. They are generally in the format of a smart contract which is a self-executing contract where the terms of the agreement between buyer and seller have been written into lines of code.

To date the most expensive NFT to be sold was Beeple’s Everydays: The First 5000 Days, a piece of digital artwork that sold for US$69.3 million.

How to buy NFTs

If you are interested in exploring the world of NFTs and potentially owning one yourself, here’s how it can be done.

Step 1: Buy crypto

As most NFTs are based on the Ethereum blockchain you will need to purchase Ether (Ethereum cryptocurrency) in order to buy an NFT. If you already have an account with a cryptocurrency exchange it should be easy enough to buy Ether. If you have yet to open an account with the crypto exchange, here’s our step-by-step guide to buying cryptocurrency.

Step 2: Top up your crypto wallet with tokens

Once you’ve purchased Ether you will need to transfer your coins into a digital wallet. You’ll need an Ethereum-compatible crypto wallet to purchase most NFTs. If you are not sure about wallets, here’s an explainer on how they work and what is available.

Step 3: Decide on an NFT marketplace

OpenSea is the largest and most popular NFT marketplace, but it’s not the only one. Here are some other marketplaces that you can use.

• SuperRare
• Nifty Gateway
• Rarible
• NFT ShowRoom
• Axie Marketplace

Bear in mind, each one will function slightly differently and may require different things in order to make a purchase on their platform. So make sure you choose wisely and select one that is compatible with the wallet that you are using and the currency you have.

Once you’ve decided on one, you can connect your wallet and start exploring the market.

Step 4: Find the right NFT to buy

A good place to start when deciding on a NFT is to work within your own interests. For two reasons, if you are interested in something you may already have some good knowledge of it, and it will be easier to research it so you can learn more. Secondly, you are better off buying something you like, rather than something you don’t.

Research is hugely important. Some things you should endeavour to learn about an NFT is:

• who the creator is
• the community of people who may be interested in the NFT

Step 5: Buy the NFT

NFTs are sold in a virtual auction. In order to purchase one you will need to have the highest bid. Each NFT marketplace will operate these virtual auctions differently, so before bidding it’s a good idea to check how the auction will work on the platform that you’re using.

Should you buy NFTs?

Whether or not you should buy an NFT comes down to your own personal circumstances and reasons behind your potential purchase. If you are buying an NFT as a collector and are genuinely interested in being the owner of a particular digital item, you may not need to think so much about the potential resale value. However, buying an NFT as an investor is a lot more risky. Just like any investment there is no guarantee that you will make a return, particularly with NFTs where, just like artwork, the value is subjective.

If you do decide to place a bid on an NFT it is best not to spend more than you can comfortably afford to lose.

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