How to buy NFTs?
The use of non-fungible tokens has increased exponentially over the past year. According to the report published on Non-fungible in late 2020, the total market capitalization of the NFT sector in 2019 was just under $210 million. It was predicted that market capitalization could reach more than $700 million in 2021.
However, NFT’s market cap has exceeded expectations and is currently valued at over $33 billion, according to CoinMarketCap. This means that NFTs have the potential to become a trillion-dollar market in the future.
Below, we will share with you how to buy and sell NFTs and examine their pros and cons. Let’s start with what an NFT is in general.
What is NFT?
Non-Fungible Tokens, in short NFTs, represent ownership of unique digital objects. They allow every person to tokenize art, collectibles, and even real estate. NFT is used to buy and sell digital art, such as trading cards, tweets, images of objects, skins for video games, and more. NFTs can be owned only by one party at a time, as the blockchain protects them.
Cryptocurrencies can be traded because they are defined by their value, not their unique properties. For example, Bitcoin is fungible — 1 BTC is equivalent to any other 1 BTC. In contrast, each NFT is interchangeable and unique. In this way, NFTs create scarcity among infinitely available assets.
How to buy NFTs
To purchase NFT, you should consider a few things, especially if you are new to this field. You need to decide which marketplace you want to buy from, what type of digital wallet you need, and what cryptocurrency you want to use to complete the sale.
Here is a step-by-step guide to buying NFTs from a specific marketplace:
- Most marketplaces currently use the Ethereum network to make their transactions secure. So, to buy non-fungible tokens, you would need to have Ethereum in your wallet. If you don’t have enough ETH, you can open an account with PointPay or Binance and buy cryptocurrency there.
- Check which crypto wallets are compatible with the platform’s blockchain you want to buy NFTs on. You are good to go once your funds are in the crypto wallet.
- You can purchase NFTs at a fixed price or through a virtual auction, similar to an exchange system for buying and selling cryptocurrencies. Buying and selling NFTs is done on dedicated NFT marketplaces. The price of NFTs offered for sale through an auction may fluctuate depending on the demand for the particular NFT. The more popular an NFT is, the higher its price will be. The leading marketplaces where NFTs are bought and sold are OpenSea, Rarible, SuperRare, and Foundation. There are other marketplaces that focus on a specific type of asset. For instance, NBA Top Shot, owned by the National Basketball Association, sells clips of player performances as NFTs.
- Create an account on your preferred marketplace. Each marketplace has a different sign-up procedure. Connect your wallet to the respective marketplace.
- Select an NFT you like and place a stake for the NFT you want. Once you have successfully placed a stake and completed your transaction, the required amount of crypto will be debited from your wallet. You will also pay the transaction fees depending on the network congestion.
The most popular platform for buying and selling digital assets is OpenSea. It primarily uses Ethereum, although Polygon and Klaytn are also available. Other marketplaces also offer the ability to trade tokens on alternative blockchains. Still, Ethereum has dominated this space in recent months, accounting for at least 97% of every sector of the NFT market on a weekly basis, including gaming, collectibles, and marketplaces.
How to sell NFT?
First, you should convert the item you would like to sell into an NFT in a few steps. To sell NFTs, you must first “mint” one of your digital assets in the form of an NFT — a type of digital certificate created on the blockchain that guarantees ownership of your work. The final selling price of your digital work depends on factors such as its creativity, quality, and demand of potential customers.
To sell your NFT, you need to go through the following steps:
- First, you need to choose a marketplace. Once you select the marketplace you want, you should connect your cryptocurrency wallet, select the “Mint NFT” option, and upload your digital file. You can also earn passive income from your artwork, for example, in the form of a percentage of each subsequent sale of your NFT on the secondary market. You can set this royalty during the minting process.
- After creating your NFT, you can list it for sale on the marketplace. Please note that while you can transfer and sell your NFTs on other marketplaces, additional fees may apply.
Click the “Sell” button and follow the prompts. You can specify some details about your auction, such as the price of the artwork. After that, the market calculates gas fees. The platform itself also charges fees, usually as a percentage of the final sale price of the NFT.
- You need to promote your artwork to potential buyers through your website or social media. You can also manage your NFT listing. Please note that changing the information or permanently deleting the listing may incur additional fees and that gas fees already paid are non-refundable.
Reselling the NFT you’ve bought
Once you own an NFT, you can do whatever you want with that digital collectible. You can keep it as a collectible, sell it, or use it as part of a larger digital project. When you are ready to sell your non-fungible token, you must upload it to the trading platform that supports the blockchain on which the NFT was minted. You can then put it up for sale at a fixed price or choose an auction-style sale where buyers bid on it.
After you upload the asset, it is verified by the particular marketplace. Once it is sold, the marketplace handles the transfer of the NFT from the seller to the buyer. It also transfers the cryptocurrency directly to your wallet, minus the marketplace’s fees and transaction costs.
When to sell NFT
The purpose of NFT that you created or purchased determined the right time to sell it. For artists, minting and selling NFTs could be a new way to get paid for work. You should be aware that gas fees can significantly cut your profits or even cause you to sell your tokens at a loss if buyers are not willing to pay enough.
Selling NFTs is not an easy way to make money. If the NFTs you bought went up in price, it might be a good idea to resell them. When calculating the potential profit or loss from this transaction, you should consider the gas fee, the marketplace listing fee, and the royalties paid to the original creator. But if you are a creator looking for a way to grow your business, selling NFTs is worth considering because it can open up new business opportunities for you to monetize your talents.
Advantages and disadvantages of NFTs
There are some advantages to consider when buying and using NFTs:
- Physical collectibles such as art can significantly increase value over time, and digital art can experience similar price increases.
- Trading digital items as NFTs gives sellers access to a larger potential buyer base than in the past.
- Smart contracts can ensure that artists and creators are paid for the use and resale of their work in the future.
Of course, there are a few potential downsides to consider before investing in NFTs:
- Because most non-fungible tokens are static assets that do not generate income, they are valued according to subjective measures like consumer demand. As a result, non-fungible tokens can lose significant value in the long term.
- Creating and selling NFTs involves a certain amount of effort, and fees can wipe out the value of an NFT on the market.
NFT is an example of how cryptocurrencies can bring the digital economy to more people. Creating and selling digital assets can make a lot of sense for creators, but when it comes to buying NFTs as collectibles, it’s a speculative investment. The price is not fixed and fluctuates depending on the demand for the work itself. There is no sure way to predict which collectibles will be worth more in the future. Some digital artworks that started selling for a few dollars have recently been trading for thousands of dollars.
Even though NFTs have great potential, they are still in the early stages of development. PointPay will join the non-fungible token market and launch its NFT trading platform in 2022. We are working on establishing a strategic partnership plan for the top NFT artists. So stay tuned for the launch of the PointPay NFT platform in the following year.
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