How To Buy NFTs
So you want to buy a non-fungible token (NFT). Maybe you’re a technologist who wants a digital art collection to hang in your Metaverse office. Finally, Bill Gates says that most virtual meetings will take place in the Metaverse within the next three years. You might want to find NFT hidden gems to sell for a profit because you expect them to gain popularity. Or maybe you just want a piece from this cool new collection as your social media avatar. The reason might be different, but the process remains the same.
NFTs have evolved from an obscure computer science concept to billions of dollars in sales in popular marketplaces. With the recent explosion of interest, buying and selling NFTs has never been easier. Here we go over where you can buy them, what the process looks like and what you need to get started. There are many options for every type of NFT buyer. However, before you take the plunge, there are a few things to keep in mind:
- What type of NFT am I looking for?
- Which blockchain will I use?
- Do I have a Web3 wallet?
- Am I comfortable using my own private keys?
- What fees are incurred when buying and selling?
- What can I do with my NFT?
Sources of supply for NFTs
The first thing you need to do is go to an NFT marketplace. Below is a list of the top 5 by weekly volume as of March 2023. As you’ll see, Blur has a sizeable lead in total volume traded, at more than 10x the level of runner-up OpenSea, the previous leader.
However, that doesn’t mean you should rush to Blur or Opensea right away. Most NFTs on OpenSea are Ethereum
After looking at your network, you should start browsing. The great thing about NFT marketplaces is that users can filter collections based on their interests, budget, and a number of other options. You’ll soon find that marketplaces like Blur, OpenSea, Magic Eden, and Nifty Gateway are more collectible focused. For those specifically interested in high-end digital art NFTs, marketplaces like SupeRare have a more creative flavor; Think of it as a cross between Instagram and Christie’s.
A potential NFT buyer should also consider marketplace fees. In the past they were typically between 2 and 5%. However, the emergence of Blur as a usurper of OpenSea has led to fee compression in the NFT industry. Many fees are now trending towards zero as price wars ensue. Because marketplaces like Superrare tend to be higher. For example, SuperRare has a 15% levy on sellers (only 3% on buyers).
How to save NFTs
Let’s say you’ve found an Ethereum-based NFT that catches your eye. Great! You now need a wallet to store this token. For readers who don’t like the idea of self-custody, the end of this section goes into alternatives to managing your own wallet.
The most popular Ethereum wallet is MetaMask. A counterpart to Solana is Phantom. These wallets act as gateways to the world of Web3. Just follow the instructions on how to download a wallet and always remember that if you lose both the private key and the seed phrase, which work similarly to passwords, they are decentralized and there is no way to recover your holdings.
When you create your wallet, you receive a 12-word recovery secret code, which is the seed phrase. Be sure to write these words down. In case you forget your password and need to recover your wallet, you can use your seed phrase or private key to do so. Do not share both with anyone. If someone knows your phrase or keys, they can access your wallet.
If all this talk about private keys and seed phrases seems complex, don’t worry. Some NFT marketplaces offer custody services that hold your NFTs for you. Most crypto purists will argue that you don’t really own a digital asset if it’s being held by a third party who holds your private key. However, many of these exchanges are reputable and have robust security measures in place. Binance and Nifty Gateway’s omnibus wallet are two services that do custody for you. Users can also pay with a credit card or connect their bank accounts for ease of use.
Funding your wallet
NFT marketplaces like OpenSea or SuperRare are based on smart contracts. Therefore, you need to send crypto to your Web3 wallet to get started. You can do this by buying crypto on a centralized exchange like Coinbase
These exchanges have the ability to send and withdraw funds. To fund your metamask with Ethereum, copy and paste your wallet address into the “Send to” bar. Ethereum wallet addresses have a 0x
make a purchase
With a funded wallet, you now have everything you need to buy an NFT. For marketplaces like Coinbase NFT, Magic Eden or SupeRrare, the first step is to connect your wallet. Some marketplaces require basic customer information such as name and email address.
Once you’ve found an NFT that you want to buy, the easiest way to buy it is through the Buy Now feature. After clicking Buy Now and agreeing to checkout, confirm the transaction with your wallet. You will receive confirmation that the NFT has been purchased by you. As a secondary confirmation, you can view your profile in the marketplace to see all NFTs in your wallet.
Another option is to use the Bid feature. Similar to eBay, potential NFT buyers can bid to purchase an NFT for less than the asking price. The seller has the option of accepting the offer or letting it lapse. If the NFT is an item you really want to buy, bidding may not be the best course of action as there is no guarantee the seller will accept it. However, if the seller agrees to your offer, you have just secured an NFT at a discount off the list price.
Rather than asking for a price up front, some NFT sellers offer their pieces at auction. In such cases, there is a minimum bid, reserve price or maximum bid allowed and a countdown to the end of the auction. Assuming the minimum bid has been reached, the NFT goes to the highest bidder at the end of the auction. Below is an example of a Bored Ape Yacht Club NFT temporarily listed on Opensea. Users have the option to buy immediately at the asking price or make an offer to the seller.