How to invest in NFT: A beginner’s guide

by James · July 4, 2022

If you’ve heard of NFTs, you’ve probably already considered investing. But what would it look like? And where can you buy an NFT? Good news (maybe): It’s a pretty simple process.

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Back up. Just what is and NFT?

NFT stands for non-fungible token, which means it is irreplaceable. And it is a unique digital resource that often takes the form of virtual art. Someone you may have heard of: these Boring monkeys,Jack Dorsey’s first tweetand some from celebrities as Dolly Parton, Snoop Dogg and Madonna.

Internet creators use them as a source of income from fans. And many buy them to sell them later at a profit. (Hi, investment mania.) But even if they are secured through blockchain technologythey are still a fairly risky investment.

Have it. Now tell me how to invest in an NFT.

It’s much easier than you might think. Just follow these three steps:

1. Open a digital wallet.

It’s like a bank account for your online currency. And you need one to access your NFTs. And crypto. PS: Skim more about digital wallets and how (and where) to buy, store and use crypto.

And do not be surprised if you need to load that wallet with Ether currency before you can make your first purchase. Because most NFT sales happen on the Ethereum platform.

2. Join a marketplace.

Open an account with an online marketplace where NFTs are sold. Think that: Open sea or Axie. The exact process is different depending on the marketplace. For example, OpenSea only accepts certain digital wallets. So be sure to read up on the details before signing up.

3. Make your purchase.

When your wallet is ready, start browsing the marketplace for your first purchase. There is a lot to choose from, so take your time.

Some items can be purchased immediately. But you have to bid on others through an auction. When you buy an NFT, you receive a digital token to confirm that it is yours.

And how do I sell an NFT?

Once you have found a few NFTs you like, you have the opportunity to put them up for sale in the marketplace – and hopefully make money. Tip: Make sure the marketplace supports the same blockchain that your NFT was created on.

Any risks I should know about before investing in NFTs?

Like any other investment, NFTs can be risky. Unlike other investment options, they do not offer much liquidity. Because buyers usually prefer to hold on to their NFTs rather than trade with them. And it is difficult to determine what makes a good deal. Example: Is a Michael Jackson NFT worth swapping for a Lebron James NFT? In addition, NFT values can fluctuate at any time based on hype. So the market can get a little difficult. Therefore, NFTs should only make up a small part of your investment portfolio.

Oh, and they can be risky for the planet too. One NFT transaction uses as much electricity as the average home uses in one and a half days. Not the most environmentally friendly investment.

theSkimm

NFTs are a beginner-friendly investment option (if you have a little extra money you can afford to lose). And the investment process is pretty easy to understand. But that does not mean they are risk free.