A Step By Step Guide On How To Invest In NFTs

November 24, 2021
Written By:
Written By:
November 24, 2021

A Step By Step Guide On How To Invest In NFTs

There is no doubt that NFTs have skyrocketed out of seemingly nowhere, and positioned themselves front, centre, stage in most conversations regarding what to invest in this past year. This comes as no surprise when one takes a look at the numbers. NBA Top Shot reaching 700 million dollar daily sales, artists selling their art for millions, even twelve-year-olds making hundreds of thousands of dollars in profit with NFTs.


It is no wonder people are asking: Can we actually have NFT investments? How to invest in NFT companies? Is NFT art a good investment? NFT investing is the new talk of the town, no one wants to miss out on a piece of the cake. But no worries guys, we’ve heard you loud and clear, and we’re here to tell you a little bit about how NFT investments work so that you can know how to invest in NFTs.


But first, let’s take it back to basics…


What Does NFT Stand For?

NFT stands for “Non Fungible Token”. A special type of cryptographic asset which represents something irreplaceable, not interchangeable, something essentially unique. A digital creation which employs blockchain technology to ensure authenticity and ownership.


Why is it important to understand the meaning of NFTs before investing in them? Well, we need to understand exactly what and NFT is, in order to appreciate the differences between investing in NFTs, crypto coins and cryptocurrency, and stocks. While Stocks and crypto are both fungible, NFTs are non-fungible. This means that one stock, or one crypto coin, has the same value as another stock, or another crypto coin. On the other hand, the meaning of an NFT being non-fungible is that once you buy it, it is a unique item, the NFT token is irreplaceable. So, if we wanna know how to invest in NFT tokens, that is the first thing we have to take into account.



Is NFT Art A Good Investment?

There are many areas in which one can dive into NFTs, music, fashion, sport… However, it is common for people who are first getting into NFT investing to dabble into art first. Simply because it seems that it is a little bit easier to understand. After all, it’s a piece of art, only digital, so ultimately it is still a piece of art you can look at and it’s purpose doesn’t vary all that much between physical and digital. When it comes to fashion, or sports, some people seem to have a hard time wrapping their head around its use. What they fail to see, is that NFT investments are like investing in collectors items. You bet on something being more valuable in the future.


In essence, the way in which one profits from the NFT game, is buying and selling the NFT itself. NFT investing, is nothing else than getting a hand of reselling in this market. That is how to invest in NFT tokens. So if you’re asking yourself, is NFT art a good investment? You need to realise that NFT investing is not a science, and the profit isn’t in NFT investing generally speaking, but rather in being able to see the appeal and value in a particular piece of art, and predicting its capacity of increasing in value.


Buying an NFT is the same as betting on the future of respective creator/artist. So if you feel that the originator has a brilliant road ahead then it can be a lucrative investment.



So now that we’ve weighed in on the question of ‘is NFT art a good investment’, let’s move on to the next steps. And those would be, how to buy NFT, how to sell nft, and which nft marketplaces can be used to do so.



How To Buy NFTs

In order to buy NFTs you first need to head to an NFT marketplace, and open an NFT marketplace account.


Step 1: Open an NFT Marketplace Account

Anyone can browse and NFT marketplace without an account, but in order to be able to buy NFTs and to sell NFTs, you need to open an NFT marketplace account. The most common NFT marketplace is OpenSea, with Rarible following suit very closely.


Step 2: You need a Digital Wallet to Buy NFTs

Once you have an account at an NFT marketplace, you need to create a digital wallet in order to buy NFTs. A digital wallet is basically a normal wallet, you need physical wallet in your money to buy stuff in shops don’t you? And in order to buy digital assets, you need to have cryptocurrency in your digital wallet.


It is not possible to buy NFTs or to sell NFTs without a digital wallet.Still, you need to make your choice of digital wallet according to the NFT marketplace that you are using. When choosing which digital wallet to go for you need to make sure that your digital wallet is compatible with the specific cryptocurrency that you want to buy and sell. For example, the NFT marketplace OpenSea works well with the digital wallets Trezor One, which holds the cryptocurrency Ethereum. On the other hand, the NFT marketplace works well with the digital wallet Dapper, and holds the Flow blockchain cryptocurrency.


Once you’ve decided on a digital wallet, you need to fund your account, and buy cryptocurrency in order to buy NFTs.


Step 3: Buy An NFT That You Want To Invest In

There are two ways in which you can buy an NFT at an NFT marketplace. The sales of NFTs can happen via a fixed price, in which case you simply pay the price stated and the NFT is yours, or via a virtual auction. When buying an NFT via the auction format, you will submit a bid for the token you wish to purchase, and the sale will happen if you are either the only bidder, or the highest bidder, much like at a normal auction, only digital.


Step 4: How To Sell NFTs

Once you buy an NFT it is yours to do as you wish. You might wanna keep it as a collectible simply because you like it, or you might want to sell it. How to sell an NFT? Well, you need to know that NFT marketplaces charge a fee every time you sell an NFT. This is known as a “gas fee”, as a reference to the energy consumed to verify the NFT.


In order to sell an NFT you need to make sure that the NFT marketplace supports the blockchain the specific NFT was built on. Once all that is set up, simply decide whether you wish to sell your NFT fixed price or at an auction. When you sell an NFT, the NFT marketplace will then transfer the cryptocurrency from seller to buyer, minus any applicable fees and voilá, there you have it. That is how you buy and sell an NFT.

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