So you want to own an NFT? But are not sure where to begin? We can walk you through a beginner’s guide on how to set up your accounts, purchase your first NFT, and set you on the way to becoming a pro in no time.
First, let’s walk through the steps that are required before you begin. Understanding the components of NFT purchases will help you comprehend what is necessary for your purchase process.
Terms for the NFT Beginner
It can be difficult to get involved in the game of NFTs and cryptocurrency if you aren’t familiar with the basic terms of the industry. Getting a better grasp of those vocabulary words will help you make your first purchase.
What Is an NFT?
Starting with the basics makes the most sense. So, if you want to buy an NFT, it is ideal to understand precisely what you are buying. By definition, an NFT is a non-fungible token. Non-fungible means that the item cannot be replaced with an equivalent. There is nothing equal and exactly the same as the item, and therefore it is irreplaceable.
A token means that it is something that stands in for something else. If you think back to your arcade days, you likely are familiar with the word.
A token was used in many arcades in place of a quarter. Instead of the typically circulated coins, gamers would take their funds into an arcade, place them in a change machine, and out popped golden tokens.
At the time worth 25 cents each, these tokens were used to get a game started. The token stood in for a quarter. While of value to gamers in the arcade, the same token outside the arcade wasn’t technically worth anything. But, in the right “market” (or inside the arcade in this example), they had a value.
A Digital Asset
In the NFT marketplace, the token of choice is typically representing a digital asset. In technical terms, it can represent nearly anything you can imagine. From a piece of real-world real estate to a picture of an ape’s digitized face, an NFT represents anything you’d like it to.
Most often, you will hear the term NFT to discuss the tokens bought, sold, and traded as a form of digital art. NFTs are most often digital files. There can only be one digital art file that is the true, real article.
You can think of digital art much like physical artwork in the tactile world. You may have a print of the Mona Lisa, for example. Posters are sold all over the world for little or no value. But, you don’t own THE Mona Lisa.
In other words, if you take a digital piece of art, let’s say a picture of a butterfly, and you designate a value for this piece of art, there can be only one, true piece. The original photo file can be saved, protected, and encrypted in ways to protect its authenticity.
Could you take screenshots of that butterfly photo? Sure. Does that make it the real, true article? No.
Similarly, the NFT may have copies made, but there is only one true and authentic NFT. No more than one person can steal it, replace it, or co-own it. In terms of non-fungible tokens, there can be only one.
A Digital Wallet
Once you understand more about what you are buying in an NFT, it is good to know the moving parts that make the process possible. To start, every purchase you make for an NFT will require one main starting piece of technology: the digital wallet.
A Space for Your Assets
But, what precisely is a digital wallet? To begin with, one of its more simple tasks to understand (and thusly get why the name sticks) is that it is a place to store your NFTs. Just like a real-world wallet holds your credit cards and cash, your digital wallet will hold your digital assets.
A Space for Your Keys
However, its second role is that more like a key chain than a wallet (if you were seeking to compare it to something in the tangible space). A digital wallet has the important role of holding your keys. You will have personal keys and numbers that you can provide to the out-facing public.
For example, think of your digital wallet as an online bank account. You would be able to share a routing and account number in order to send or receive payment. You would not, however, share your personal PIN, which grants you access to your funds.
Likewise, the NFT marketplace relies on similar keys in order for users to function. You will need a set of outfacing account numbers so that you can accept funds, hold your NFT, and communicate on the marketplace.
Additionally, you will need passcodes, much like the PIN to your account, that you keep private to yourself. These codes get you access to your funds, protect your digital assets, and must be protected as such.
Options in Digital Wallets
Stating you should grab a digital wallet, also sometimes called a crypto wallet, sounds simple. However, when you even test the waters searching for one as a beginner, you are likely to notice right away you have a plethora of choices before you.
While it can be hard to decide precisely which is best for you, knowing a few basics about your decision can help. Firstly, you will want to narrow down the style of wallet that you think might be a good fit.
Types of Digital Wallets
There are three main kinds of wallets: hardware, software, and paper. As the names imply, they come with the pros and cons you might easily imagine, even as a starter new to the NFT space.
A hardware wallet can be removed. It is a device just like a thumb drive, which is inserted typically via a USB port to your computer or smart device. This drive can be stored where you wish and keeps your private information in “cold storage.”
Cold and hot storage are terms you will see as you search simply mean how they are stored on the web. Cold storage means it is not “living” online, but is kept elsewhere. The hot storage options mean that they will be online, which can mean a security risk as hackers may be able to obtain the data.
If a removable device sounds risky to you (as in, you fear you might misplace it or you travel too much to be able to keep it safe), you can choose a software wallet. These wallets can be located on a desktop, laptop, or mobile device, depending again on your needs and wants.
There is a convenience in being able to access your digital wallet from nearly any place you have an Internet connection, but again these would be considered a “hot storage” of your personal information. This means that the data is stored online, and even with a trusted company backing the security, could mean a risk to hackers or malware.
Lastly, a paper wallet is chosen by some. If you are unclear about how this technology is used, it is best to not overthink it. A paper wallet for your digital passcodes is as simple as it sounds. It means actual paper. A piece of tactile, real-world paper paired with a pen or pencil can arm you with the materials needed to safely store your passcodes.
While it sounds “old school” when we are talking about NFTs and crypto, the use of a paper wallet is preferred by many that not only want the offline (i.e. cold storage) method for keeping their information safe but also choose not to invest in another device to have to carry around.
In addition to the three main options, users can also decide that create a combination of these devices. For example, you may have a digital wallet, but keep your log-in information safer by having it on paper.
Whatever you decide is right for you, you WILL need to make a choice. A digital wallet is needed to make your first NFT purchase, not to mention to offer a space to store the NFT once you buy it.
While there is a vast sea of information on what a blockchain is and how it works, knowing the minimal basics when buying your first NFT can help you understand how the NFT creation process works, and what keeps your purchase safe and authentic.
The blockchain is a public ledger. It is distributed through a peer-to-peer network which keeps information secure by breaking from a centralized server, but also eliminates a central authority, too.
A peer-to-peer marketplace relies on this tech, too, in order to secure your NFT purchase. The comings and goings (i.e. all the transactions) are stored in these blocks. They are protected by a complicated series of computations, which take vast resources and bandwidth to create.
Your data is kept safe and also authenticated (remember, there can be only one, true NFT) by this tech. It is the interworking of what makes NFTs work.
Select an NFT Marketplace
Your next steps will include selecting and understanding an NFT marketplace. And, if you thought you had a mess of choices when it came to a digital wallet, you have not yet begun to scratch the surface of marketplaces.
There are countless choices when it comes to selecting a space to do your NFT business. In simple terms, an NFT marketplace is a space in which users can come together to buy, sell, trade, and discuss in some cases the NFTs of today’s world.
To narrow your choosing field, it is a good time to consider why you want to purchase an NFT. Knowing what you are in the market for will help to narrow the search.
In some cases, certain NFTs are only sold in specialized markets. These unique NFTs may only be bought or sold in the native markets for which they were created. This does not mean that they lack value or are any less important as digital assets.
For example, Axie Infinity is an online game that users play much like the famed Pokemon series. In this game, players must buy Axies (small, monster-like creatures), battle them, breed them, and use the NFTs as a type of in-game currency. For these purchases, you may want to focus on the Axie Marketplace.
While some Axies themselves are sold on secondary markets, many beginners may find comfort in the guides if they are new to the NFT marketplaces.
It is simply one thing you may want to consider when narrowing down your marketplace choices. If you want to purchase these specific NFTs, search the markets where these are available.
Digital Art NFTs
If you have less specific needs in wanting to own NFTs, for example, you love the art of the NFT, you have far more options in where to make a purchase. You might be seeking NFTs more by design and aesthetic, and not just value. Digital artwork can be an amazing purchase simply as digital collectibles.
Depending on the desire, you will find a vast host of NFT marketplaces out there for simple NFT sales. There are, however, some spaces that are better designed for a beginner, no matter what your focus.
Marketplaces for New Users
In the world of digital assets, some sites are more user-friendly than others. Sometimes, if the NFT marketplace has been out there longer, it has had time to hone its skills and make its steps somewhat smoother.
Using sites with longevity also gives even the newest users some peace of mind when it comes to security. If the product has been around for years, it is less scary to some that it will pull stakes and roll out of town.
OpenSea.io is the largest NFT marketplace out there. And, it isn’t just the size that gives new users comfort. The platform boasts NFT technology that others long for. Having years of history, those seeking to sell NFTs appreciate the fee structure, and those hoping to buy NFTs can enjoy low costs.
The Ethereum Blockchain
Another popular choice for new users is the Ethereum blockchain. This “second most” popular space gives plenty of options for those seeking to mint NFTs. Users appreciate an open use format, with shared tech and smart contracts making it easy to create and sell NFT projects.
Both OpenSea and Ethereum offer a robust NFT ecosystem for users to buy NFTs, sell NFTs, and also learn more about the products. This vast system also means they support most NFTs out there, making it a space many can enjoy, even if they are just getting started.
Depending on your marketplace, and of course, what type of NFT you have decided to purchase and why, you will then notice there are varying methods in which to make a purchase. Some sites will have a simple price tag posted. Users can go onto the site, view NFTs for sale, and make a basic purchase.
In other cases, an NFT might be sold in a timed auction. There will be a clock, likely counting down to the final moment, and users can place bids on the NFT up for sale. The site will announce a winner, the highest bidder in the auction, and then the transaction can occur.
There have even been NFTs valued in the millions sold at traditional art auctions, such as Christie’s. Depending on the value, and sometimes the past owner of the NFT, these high-value pieces have been known to go for some hefty prices.
Other sites may offer trading grounds, and provide a space where users can discuss options for an exchange. Some sites use apps like Discord to allow open discussions between users. Others post boards much like a trading cards sale, in order to see what NFTs are out there for trade.
Marketplaces vary in their terms of sale. Like any purchase, be sure you have read the fine print and understand the policies of your chosen site of sale. Just as unique as the art itself, these different methods of sale, across many big brands across several marketplaces, are all part of what makes NFTs interesting.
How To Make Your Purchase
Clearly, given the vast amount of variables in making your first NFT purchase, there are many factors that will slightly change from marketplace to marketplace. From the reason you make your purchase, to the type of wallet you decide on, there will be minor changes from space to space.
However, on the plus side, each platform typically offers step-by-step guidance, not to mention helpful directions, technical support, or guides for your process.
Steps for Buying
1. Research the crypto required to make a purchase.
For example, NFTs on the Ethereum network are purchased using its native cryptocurrency, Ether (ETH). To make your purchase there, you would first need to make a purchase of ETH.
- Purchase said cryptocurrency with your digital wallet.
Whichever crypto wallet you have chosen to purchase will have the acceptable types of crypto it works with or is compatible with listed. Find the crypto you want to purchase, and buy the required amount.
- Find the NFT on the marketplace.
Next, you will select the NFT you aim to own. Depending on the method of sale (an auction would require you to bid, a sale may just ask you to post the crypto), you will have somewhat unique steps here. However, by selecting a trusted and reputable marketplace, you should have no trouble understanding the stages required.
- Make Your Purchase
Having your funds ready (transferred typically from a bank account to your digital wallet where it is converted into the required crypto), understanding your marketplace choice, and being prepared with the right research will help you greatly in this stage of the game.
By having these pieces in place, this step should involve just a few clicks of the button to post funds to your wallet, purchase the required crypto, and use that to buy on your marketplace.
- Enjoy Your NFT
Whether you aim to buy and sell NFTs like a broker on Wall Street, or simply hang onto digital artwork for the sake of digital collectibles, doing business on the NFT marketplace doesn’t have to be difficult.
Staying armed with the resources you need to understand digital assets and make researched purchases when you buy NFTs can mean the world of difference.
A Word to the Wise
Like any investment, there are plenty of risks involved. And, the NFT marketplace is notoriously volatile. From reading the fine print (have you heard of gas fees?) to researching your options, it is always advised to make well-researched choices in your purchases.
Trusted resources are crucial in your process, and when you are new to NFTs especially. Check out FLOLiO for information on all of the most popular NFTs out there, how trading volume is looking across the market, and what to watch for in your process to buy and sell an NFT.
Stay informed and on top of all the latest news. From the Ethereum network to new art for your profile picture, you have so much to choose from in the NFT space.