How to Buy NFTs 2024: Benefits and Risks

In recent times, the NFT markets have been on the rise, and this is due to the unique advantages they offer over traditional tokens. This article will discuss what NFTs are, how to buy NFTs, the benefits they offer, and the associated risks. We will also provide a list of NFT platforms where you can buy and sell NFTs.

What are Non-Fungible Tokens (NFTs)?

NFTs are unique digital assets that another token cannot replace. Unlike traditional tokens, which are interchangeable and can be traded on cryptocurrency exchanges, NFTs represent a new class of digital assets with the potential to revolutionize how we interact with the digital world.

NFTs are primarily stored on the Ethereum blockchain, a distributed ledger that records all transactions. Other blockchain networks support NFTs, such as Solana, Polygon, Binance Smart Chain, and many others. This allows NFTs to be bought, sold, or traded like any other asset. However, because NFTs are stored on a blockchain, they can also be used to represent ownership of digital or physical assets. For example, an NFT could mean a piece of digital art, a video game item, or even a physical object, such as a house or a car. Some notable NFT projects include Bored Ape Yacht Club, NBA Top Shot, and the World Poker Tour.

What are the Benefits of NFTs?

1) Fungibility

Fungibility means that NFTs can be used to represent ownership of digital assets such as virtual real estate (buy and sell land), digital art, digital collectibles, music, or even in-game items. NFTs also potentially change how we interact with the digital world. For example, an artist could sell their work as an NFT collection and receive royalties every time they are sold. This would create a new revenue stream for artists and help them monetize their work in a way that was impossible before. It would also allow the artist to bypass traditional intermediaries such as galleries and auction houses, which often take a large cut of the final sale price.

2) Security

The second advantage of NFTs is that they are stored on a digital ledger like the Ethereum blockchain. This means that they are immutable and cannot be altered or deleted. This makes them much more secure than traditional digital assets, which can be easily copied or hacked. NFTs also have the potential to be used as a form of identification. For example, an NFT could represent your passport or driver’s license. This would allow you to prove your identity without carrying around physical documents.

3) Portability

Since NFTs are stored on a digital ledger, they can be easily transferred from one person to another. This differs from traditional assets such as property or gold , which can be challenging to transport. NFTs also have the potential to be used as a form of payment. For example, you could use an NFT to buy a cup of coffee or a ticket to a concert. You could pay for goods and services without having to use traditional currency. Digital asset sales are conducted through smart contracts.

4) Transparency

All transactions are public and can be viewed by anyone. Transparency makes it easy to track how NFTs are used and who owns it. It also makes it difficult for people to commit fraud or engage in other illegal activities.

5) Decentralization

NFTs are stored on a decentralized network such as the Ethereum blockchain. This means that they are not controlled by any central authority. This makes them resistant to censorship and allows them to be bought, sold, or traded without the need for a middleman.

What are the Risks of NFTs?

NFTs are a new asset class; as such, they come with all the risks associated with investing in any new technology. There is a risk that the value of NFTs could drop sharply in value if there is a lack of demand from buyers. There is also the risk that the NFT marketplaces that allow the buying and selling of NFTs could be subject to government regulation, which could adversely affect the price of NFTs. Finally, there is the risk that NFTs could be used to commit fraud or engage in other illegal activities.

What NFT Marketplace Can I Buy and Sell NFTs?

Before buying NFTs, you need to make sure you have a digital wallet. A popular solution is the Metamask wallet. The Metamask wallet is compatible with Chrome, Firefox, Brave, and Edge web browsers. In terms of mobile, both iOS and Android are supported.

The benefits of the Metamask wallet are the following:

• You can access, store and swap Ethereum network tokens easily.

• The UI has been improved to optimize EIP-1559 gas fees. You can learn more about EIP-1559 here.

• You can also buy crypto assets with this cryptocurrency wallet. You would click the “Buy” button to find out what Ethereum network tokens you are interested in and what the best quotes are depending on region and provider type. You can use a credit or debit card, mobile payments, and bank transfers.

When you download and install the Metamask wallet, be sure to create a password and remember your secret recovery phase. Do not share this with anyone! If you do, it will provide users access to your crypto wallet and other digital assets you have. If, for some reason, you forget your password, you can restore the wallet with your secret recovery phase.

That said, other cryptocurrency wallets can be utilized for additional security. They include the Coinbase wallet, which is part of the Coinbase cryptocurrency exchange, but you still have risk as they are a centralized company. A better recommendation would be the Ledger or Trezor hardware digital wallets. You can buy NFTs directly in this crypto wallet once you connect to the NFT marketplace.

You can learn more about the Ledger crypto wallet here and the Trezor crypto wallet here.

Secondly, you will need to have Ethereum in your crypto wallet. Ethereum is used to buy an NFT and also pay for gas. You will need to create a crypto exchange account and purchase Ethereum. You can learn more about how to buy cryptocurrency here.

There are currently several NFT marketplaces that allow the buying and selling of NFTs. The most popular NFT marketplaces include OpenSea, Rarible, and Nifty Gateway. They allow buying and selling of NFTs in various categories, including art, music, games, and sports collectibles. You can also trade NFTs and mint NFTs as well.

1) OpenSea

OpenSea was founded in 2017 and is the most used NFT marketplace. They have the most NFTs and control a large percentage of the NFT market. They have 2M+ NFT collections, 80M+ NFT tokens and have transacted $20B of volume.

How Does OpenSea work?

Click the “Wallet” icon on the top right and connect the crypto wallet of your choice. You will need to approve it and then be able to make an NFT purchase or sale. Once you have done this, you can set up your profile. As you can see, a search bar at the top will let you find specific digital artwork that interests you.

Fees:

When you connect your wallet and are a new user, there may be an initial fee that OpenSea takes for authorization. OpenSea takes 2.5% of every transaction on its online marketplace.

If you are minting NFTs, there will be two fees. The first one will be to initialize your account and the second one is for OpenSea to access your NFTs. You want to keep an eye on Ethereum gas fees when you are doing this. The lower, the better.

 

2) Rarible

Rarible was founded in 2020 and is an NFT marketplace based out of Moscow. In July 2020, Rarible issued its governance token called RARI. The idea was that RARI token holders would have control of the online marketplace.

How Does Rarible Work?

You click the “Connect wallet” button, and it will ask you what digital wallet you would like to use. They support Ethereum, Flow, Solana, Tezos, and Polygon networks.

Fees:

When you connect your wallet and are a new user, there may be an initial fee that Rarible takes for authorization. Rarible takes 2.5% of all NFT sales (buy and sell) on its online marketplace.

If you are minting NFTs, there will be two fees. The first one will be to mint your NFT and the second one is for Rarible to make your NFTs available for sale.

3) Nifty Gateway

Nifty Gateway was founded in 2018 by the Gemini founders. They are another popular NFT marketplace for users in the NFT space.

How Does Nifty Gateway Work?

You click the Metamask wallet icon on the right and connect your wallet. They do not support other wallet providers, so you should consider this. They have a wallet-to-wallet feature which has some great benefits listed below.

Fees:

When you connect your wallet and are a new user, there may be an initial fee that Nifty Gateway takes for authorization. Nifty Gateway has one of the highest fees at 15%. In addition, they take 5% + 30 cents on each secondary NFT sale. This fee covers credit card processing fees and their NFT marketplace management cost.

If you are minting NFTs, Nifty Gateway covers this except the standard gas fee that the user has to cover.

FAQ:

How much money did you need to invest in NFTs?

It depends on the NFT marketplace you use and the Ethereum network fees on a particular day. You want to pay attention to the specific platform and understand all its costs before buying or selling your first NFT.

Are NFTs still the future?

NFTs have been around for a few years and are becoming more popular. It is still early in the game, and only time will tell how big the NFT industry will become.

Do you have to pay taxes on NFTs?

If you are generating profit, you will need to pay taxes. Make sure to keep accurate records of all your transactions. Learning about crypto tax software here can make this process more efficient.