Venturing into an unfamiliar, risky asset class is always a daunting task. This is doubly true when the asset class is still extremely nascent, has just undergone a severe price correction, and is sometimes viewed as requiring significant domain expertise to invest in safely. Much of this applies to NFTs, the blockchain-based digital assets which did USD$102M in daily sales at the peak of their latest speculative frenzy and have more recently done a scant 2% of that volume. The following article is meant to be a practical guide on investing in NFTs as you consider adding this young but enigmatic asset class to your personal portfolio.
The first step to investing in NFTs is settling on the specific assets you want to own. New investors in the space should find no shortage of attractive investing opportunities, with everything from viral collectibles to in-game resources to one-of-one works of art available for purchase. Doing your due diligence before making any investments is essential, and thus you should always begin by perusing the sites for prospective NFT investments and reading any related whitepapers or other documentation on the overall project.
Once you’ve settled on a specific class or collection of digital assets in which you’d like to make your first investment, the next question you must consider is in regards to the marketplace from which you’ll buy the NFTs. Such marketplaces can broadly be stratified based on whether they offer a general selection of varying NFTs for sale, or whether they’re built to cater to the userbase of one niche application. We’ve written extensively about your options when it comes to NFT marketplaces here, so for brevity’s sake we’ll avoid going into great depth in this guide. But briefly, some marketplace alternatives to consider include:
After identifying the sorts of NFTs you want to invest in and the marketplaces on which they’re sold, it’s time to open your wallet. Your digital wallet differs from your physical one in that it doesn’t technically hold any of your cryptocurrency funds or NFTs, but rather allows you to manage the blockchain account that owns them. The digital wallet is vital in that it acts as your key to the blockchain, enabling you to send transactions such as buy orders for NFTs. It’s important to note however that different wallets are compatible with different blockchains, so you must carefully do your research to select a wallet that can interface with the blockchain on which your desired NFTs were minted, and which is integrated into the marketplaces you seek to transact on. For the sake of illustration, we’ll detail wallets compatible with the Ethereum blockchain given that it continues to be the primary home of notable NFT projects both old and new. Some alternative Ethereum wallets include:
Once you’ve chosen a wallet provider and set up your first account, you’re now ready to connect it to your marketplace of choice. Generally, this step should be as easy as selecting the option to connect a wallet – something that should be found in the top right corner of most marketplaces’ landing pages – and simply following the steps on screen.
Following is arguably the most difficult step in the process for beginners, but you may take solace in knowing that it’s effectively the final hurdle you need to jump in order to start investing in NFTs. In order to place bids in open auctions and send transactions to the marketplace’s underlying smart contracts, you’ll need to fund your wallet with ether or some other accepted cryptocurrency to finance the blockchain’s transaction fees. There are a number of options for loading your account with ether, some of which include:
Now that you’ve created a wallet and deposited an adequate amount of cryptocurrencies in it, you’re ready to make your first purchase. Visit the marketplace of your choosing and take the time to browse the NFTs on offer. Once you’ve found one that captures your attention, be it the same or different from the assets you set your sights on at the start of this process, you can place your bid for it. Depending on the seller’s preferences or the marketplace’s defaults, items may be put on sale in a few distinct formats:
After winning the auction, you’ll be asked to confirm your purchase in order to transfer the NFTs from the seller’s account to yours, and the funds from your account to the seller’s.
If you’ve made it to the end of this guide then congratulations, you’ve just bought – or you’ve taken great strides towards buying – your first share of the digital asset world!
Daniel, W. (2021, June 3). NFT sales plummet nearly 90% from their peak as collectibles market cools. Retrieved from Business Insider.
Kim, J. (2019, November 28). The portal is now open — Fortmatic fiat on-ramp is in public beta! Retrieved from Fortmatic.
OpenSea. (2020, May 8). Welcome to OpenSea. Retrieved from OpenSea.
The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.
A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!
Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.
Get an inside look into web3 industry news, the most innovative technological DePIN and metaverse developments, our company updates, and events.
