What are NFTs and how do they work?
NFTs (Non-Fungible Tokens) are digital assets that run on the blockchain. Each NFT has a unique identification code and metadata that makes it different from other NFTs.
NFTs are non-fungible, which means that they cannot be exchanged or traded without loss or gain in value. This makes NFTs different from fungible assets such as cryptocurrencies (like Bitcoin and Ethereum). Cryptocurrencies can be exchanged at equivalency. For example, 1 Bitcoin can be exchanged for another Bitcoin without loss or gain in value. This makes it possible to use cryptocurrency as a medium to facilitate commercial transactions.
You can use NFTs to represent real-world objects such as real estate and artworks. Tokenizing tangible assets such as these make it easy to buy, sell, and trade them and reduces the chances of fraud.
NFTs can also be used to represent the identities of people, property rights, and more.
Why do People Buy NFT?
Now that you know the meaning of NFTs, your next question could be:
Why do people buy NFT?
There are many reasons why someone would buy NFT. Some of these reasons include the following:
#1: To empower artists
Nowadays, artists are turning to the use of NFTs to sell their artwork. NFTs have given artists greater control over their work and created an opportunity for them to make more profit. The reason is that the artist can deal directly with the customer without relying on an intermediary. Artists can also earn royalties from the sale of their work and make more money from secondary sales of their NFTs. Thus, you can buy NFT to support the artist behind that NFT.
#2: Collectibility
This is the second reason why people buy NFT. NFTs are unique cryptographic assets, and many people like them for this. Each NFT is unique, and some people desire to keep NFTs as a collectible. Thus, if you desire to keep a collectible of digital assets, NFTs are a great option for you. This is also the reason why most artists are creating the scarcity of their NFTs as it increases collectibility.
#3: Investment
Some people buy and sell NFT as a way of making money. The value of an NFT can increase with time. Any person can see and interact with NFTs, but an NFT can only be owned by one person at a time.
However, the NFT value is subject to fluctuations based on market conditions. Thus, NFTs can be sold for thousands or even millions.
So, what is the most expensive NFT sold?
Beeple’s “Everydays: The First 5000 Days” is the most expensive NFT that has ever been sold. The NFT was sold for $69.3 million in an online auction.
#4: Community
Some people buy NFT for comradeship and a sense of community. Some collectors see buying NFT as a way of getting an identity.
Some NFT creators have created a vibrant community from their NFT projects and there is much to learn from these communities. Since the blockchain allows people to see those collecting their NFTs, NFT creators can come up with special offerings that can only be accessed by NFT owners.
How to Buy NFT
NFT marketplaces are online platforms that provide you with the best place to buy NFT. There are different NFT marketplaces from which you can choose to buy NFT. Examples include OpenSea, Foundation, SuperRare, and Foundation. The OpenSea NFT marketplace is the best place to buy NFT. It’s a simple platform and anyone can easily get started.
NFTs are sold at either a fixed price or through an auction. The price of an NFT is also subject to fluctuations based on demand. If an NFT is in high demand, its price will soar.
The following are the steps on how to buy NFT:
Step 1: Create an Account with an NFT marketplace
Choose an NFT marketplace where to buy the NFT and sign up for an account with it. You can do this for free.
Step 2: Create a crypto wallet
NFTs are bought with cryptocurrency. The crypto wallet will help you to store your cryptocurrency coins. MetaMask is the most popular crypto wallet to buy NFT with. Coinbase wallet is also another option for this.
Step 3: Fund the crypto wallet
Your crypto wallet should be funded with crypto coins to buy NFT. Most NFTs run on the Ethereum blockchain and only accept ETH payments. Buy ETH from crypto exchanges such as Coinbase and transfer it to your crypto wallet.
Step 4: Connect the crypto wallet to the NFT marketplace
You should now link the funded crypto wallet to your NFT marketplace account. Most NFT marketplaces have the “Connect” button that lets you do this easily.
Step 5: Buy NFT
It’s now time to buy NFT. Browse the NFT marketplace for the NFT you desire to buy and buy it. The NFT marketplace will deduct crypto from your connected cryptocurrency wallet. You will then become the new owner of the NFT.
