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We’re in the midst of a technological revolution and virtually every tenet of modern civilisation is getting a digital makeover. And if you don’t believe us, ask yourself the last time you used a physical map or a phone book or hailed a cab from the nearest street corner. These changes and innovations are happening at such a fast rate that it can be all too easy for one to get overwhelmed or even dismayed. But to cut through the jargon is to discover a somewhat familiar world that’s been reimagined through a futuristic lens. Suddenly, it’s not so hard to get around.
So what does all this have to do with NFTs? You might wonder. Shorthand for “non-fungible tokens,” NFTs arguably represent yet another digital update to previously existing creations, namely certificates of ownership. In the process, they also cultivate an ecosystem with ever-expanding possibilities. Whilst you might see the very letters “NFT” and picture a work of digital art (probably a Bored Ape), that’s merely scratching the surface of what this technology offers potential users.
Alas, we’re getting ahead of ourselves. We promised a beginner’s guide to buying your first NFT so let’s stick to the basics. Oh, and if you’re ready to get some Ether to purchase NFT, investment platform eToro puts the essential tools at your disposal. For everyone else, here’s everything you need to know.
What is an NFT?
Collins Dictionary dubbed NFT its “word of the year” in 2021 so allow us to present their definition verbatim: “a unique digital certificate, registered in a blockchain, that is used to record ownership of an asset such as an artwork or a collectible.” As a reminder, the “blockchain” is a decentralised digital ledger that records cryptocurrency-based transactions across multiple computers through a peer-to-peer network.
What we’re looking at here are three unique entities that all operate in conjunction. First, there’s the asset itself, which can be either a physical or a digital product, meaning anything from a real-life house to a virtual trading card. Then there’s the actual NFT, which is the certificate proving ownership. This certificate is supported through the blockchain, a ledger that records the transaction and verifies that you—and only you—are the particular owner of this NFT.
For the sake of simplicity, we tend to streamline these three separate entities into one concept. Hence, the work of digital art that you purchase online is often called an NFT, even if the NFT really pertains to the proof of ownership. Should you buy and then sell the NFT, you’re selling both the asset itself and the underlying certificate of ownership, with the transaction being verified through the blockchain.
With the evergreen development of virtual worlds, NFTs will potentially take on even more functionality. For instance, you can purchase real estate in the Metaverse as an NFT. Since this is a beginner’s investment guide, however, we won’t go into the many ways that NFTs can be used to purchase different assets. Their most common representation is in the form of digital artwork, which can be purchased and also sold online through specific marketplaces.
You might have a tenable grasp on the concept by now, but that doesn’t mean you’re up to speed. As it turns out, buying and selling NFTs is a little more involved than merely hoping online and clicking a few buttons. Here’s how to invest.
Do Your Own Research
The current NFT marketplace is very crowded and filled with plenty of bad actors. Meanwhile, even legitimate projects and creations can essentially crater in value overnight. For these reasons and more, you’ll want to perform extensive research before making your first purchase.
There’s no shortage of resources and communities dedicated to NFTs and you’ll find that most collectors and creators are quite eager to share information and insight. Along similar lines, a legitimate NFT should have a certain amount of transparency attached to it. Look for projects or creations that link to a social media account or Discord server, where you can communicate with others.
Also, when purchasing your first NFT, don’t succumb to peer pressure or feelings of FOMO. The whole idea is that crypto and NFTs are here to stay and so there should be other opportunities down the road. Of course, if you simply feel like playing around with disposable money and don’t care whether you lose it or not, don’t let us stop you.
Get Yourself Ethereum
The overwhelming majority of NFTs are created on the Ethereum blockchain, meaning you’ll need its cryptoasset, Ether, to make a purchase. Thankfully, Ether is one of the most popular cryptos and it can be easily bought (and sold) through online marketplaces such as eToro. Be prepared to pay networking fees along the way, which can vary based on current levels of blockchain activity.
Get a Crypto Wallet
You can’t buy an NFT without crypto and you can’t store crypto without a crypto wallet. To get started, follow these steps:
- Set up an eToro account, verify your identity, and deposit funds.
- Once your account is verified and funded, you can purchase Ethereum.
- Transfer your Ethereum to your eToro wallet by going to the Portfolio button on your account, selecting Ethereum, and hitting “Transfer to Wallet.”
- When transferring Ethereum to your wallet, make sure you have enough to cover the cost of the NFT and also the adjoining network fees (which will vary depending on a number of factors).
- Download MetaMask, a crypto wallet that serves as a gateway to the Ethereum-based decentralized finance and NFT ecosystem, and is available as either a browser add-on (for Firefox and Google Chrome) or an app (for iOS and Android).
- Send your Ethereum from your eToro wallet to your MetaMask wallet.
Choose a Marketplace
As with all things Internet-related, the search for an NFT marketplace can lead to an endless supply of rabbit holes. We suggest playing it safe the first time around by sticking with OpenSea, the most popular marketplace of them all. If you followed the steps listed above, here’s what to do next:
- Visit OpenSea, click the wallet icon, follow the prompts, and connect your MetaMask wallet.
- Once your wallet is connected, use the search function to find the NFT you want to buy or freely navigate through OpenSea’s expansive list of NFTs until something catches your eye.
- Use the “Make Offer” option to make an offer or the “Buy Now” option to buy the NFT at its listed price.
- You are now the owner of an NFT. Congratulations!
The technology train is rolling but there’s always time to come aboard. Thanks to websites like eToro, investing in crypto or stocks can be a safe and effortless process, even for newbies. Sign up today and you’ll be on your way toward your first NFT purchase soon after. Make it count!