Buying your first NFT: here’s everything you need to know

A deep dive into how to create NFTs, which factors should be considered before buying or selling NFTs, and a look at the best NFT marketplaces.

By Rarespot Staff
Updated
7 mins read

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Blockchain-based NFTs or non-fungible tokens witnessed a massive surge in sales starting from early 2021. Total NFT sales volume soared up to $2 billion in the first half of 2021 compared to the total sales of $250 million in 2020. According to recent statistics, the total number of buyers in the first quarter of 2021 was 73,000 which was much higher compared to the number of sellers which was 33,000. There were 150,000 active wallets in the first half of 2021 which was 1.5 times more than 2020. In August, OpenSea, one of the most popular NFT marketplaces, showed a record sales volume of $1.9 billion compared to a monthly sales volume of 8 million in January 2021.

The statistics indicate the rising popularity of NFTs which has created a scarcity in the demand and supply chain as more buyers are entering the market and showing interest in non-fungible assets.

How to buy NFTs?

The growing popularity of NFTs has led to an increasing interest in buying NFTs with the intention of investment and purchase. In the first section, let’s look at the initial steps to buy your first-ever NFT and then dive deep into the additional factors that can be considered at the time of purchase.

Step 1: Create an NFT wallet

First and foremost, you need an NFT wallet where you can securely store your NFTs. Since Ethereum is the most popular network, you can choose a wallet that stores ERC-721 tokens which are NFT token standards for Ethereum. MetaMask is by far the most popular crypto wallet for storing NFTs. Apart from that, you can use other wallets like Coinbase or Trust wallet. These wallets can be easily downloaded into your iOS or Android phones.

Step 2: Link your wallet to the NFT Marketplace

Once you have transferred some tokens into your wallet, you need to create an account and link your wallet to a marketplace where you want to buy NFTs. While choosing the marketplace you need to consider whether the marketplace offers a wide range of NFT products, the popularity of the marketplace, and whether it is fit for your brand. To connect your wallet to the NFT marketplace, it will ask for a password and you will be automatically linked to the market. It may also ask for a signature to authenticate the ownership.

Step 3: Buy the NFT

Once you are logged in, you can surf the different collections on the marketplaces. To acquire more details, you can also look at more features like product image, description, and create a banner. In many other platforms, you can check for other attributes, discount codes, or contents that are only visible to the purchaser.

Factors to consider before buying NFTs

With the growing popularity of NFTs, several sellers now depict their artwork and sell it across different marketplaces. It is advisable for buyers that are investing in these pieces to consider some of these factors in order to optimize your experience of acquiring your first NFT piece.

  • Marketplace. It is advisable for buyers to research different marketplaces in order to understand which NFT interests them the most. In addition to this, buyers can also check the popular artists that have listed their artwork on the marketplaces. Furthermore, as a buyer, you can also choose an industry-specific marketplace for trading NFTs.

  • Purpose. Among NFT buyers, we could consider two main categories. The buyers who invest in NFTs with the intention of receiving returns and the buyers who purchase NFTs with the purpose of owning digital collectibles. Whenever investing in NFTs, buyers may want to consider other factors such as the floor price, total market cap, and trading volume of NFTs. For those who are looking at NFTs as an investment vehicle, they can look at the ROI or return on investment on their NFT asset.

  • Social Media Metrics. One of the metrics that gives an idea on the prominence of an NFT project is their social media metrics. Buyers can take a look at the latest news and updates on NFTs, and keep a track of social media platforms like Twitter, Telegram, and Discord.

  • Fees. Some NFT marketplaces charge a fee for the transaction. This fee is called a “gas fee”. Marketplaces charge transaction fees that can be anything between 2.5 to 15%. It is a good idea for traders to learn about the fees before selecting their preferred marketplace.

  • Legal Rights. Buyers can choose to look at the terms of the smart contracts or the legal rights of the NFT transactions. This includes overseeing whether there is any possibility for copyright violation or plagiarism.

  • Security. NFT marketplaces are hackable. Both buyers and sellers must follow safety protocols before investing. For more details on how to secure your NFTs, please refer to this article.

NFT Marketplaces

Below mentioned are some of the leading NFT marketplaces to consider.

  • OpenSea has been described as the world’s largest marketplace for trading NFTs. The platform is based on the Ethereum blockchain and supports a lot of Ethereum wallets like MetaMask, Coinbase, Trust, etc. The platform claims to have more than 113,000 users and is one of the best places to sell collectibles, domain names that are censorship-resistant, virtual artwork, sports, and trading cards. The platform has featured more than 700 projects including CryptoKitties, Decentraland, Axies, etc.
  • Rarible is quite similar to OpenSea and allows artists to sell digital artwork. Buyers can bid on the prices and the ownership of the asset goes to the highest bidder. This is a community-owned NFT platform where “owners” hold RARI, an ERC-20 token, the official token of the platform. Every week 75,000 RARI tokens are distributed among the users. RARI token holders can take part in the community governance protocol and earn rewards on the platform. The platform is popular for selling digital artwork, music albums, movies, and books.
  • Sorare is the best place to sell limited-edition NFT soccer cards. Around 140 sports clubs have participated in the marketplace including Chelsea, Liverpool, Inter Milan, Ajax, PSG, etc. It is the favorite destination for sports fans to buy sports cards from their favorite players. Built on the Ethereum blockchain, the marketplace was launched in 2018. According to Crunchbase, the platform sold around $1.8 million in digital cards in December 2020. You do not have to pay any commission for trading at Sorare.
  • Foundation is an invitation-only platform for artists. To sell NFTs, artists must receive an invitation from fellow participants of the platform. Sellers or creators have to pay gas fees for taking part in the trade. Foundation specializes in selling NFT digital artworks. The platform aims to build a creative community for digital creators, collectors, and crypto enthusiasts. At Foundation, artists can earn 10% royalty for any subsequent sales on the NFT assets.
  • SuperRare is also based on the Ethereum blockchain and traders must collect Ether coins to participate in the platform. The main focus of SuperRare is to provide a marketplace for selling rare single-edition artworks. SuperRare works just like an Instagram profile, where you list the images of your product and list prices in tile formats. The marketplace is built on the social network. SuperRare is built on the Ethereum network and Ether is the official token of the platform.

Final thoughts

While non-fungible tokens have gained rapid popularity, it is important to understand several factors and the purpose of your intent before choosing to indulge in the market.

At the same time, artists, musicians, sports personalities, and celebrities are coming forward to leverage the benefits of this virtual environment to earn ownership of digital collectibles. We can see more and more promising projects to enter into the NFT market and even big companies have started investing in this financial instrument. Furthermore, the long-term value of assets can no longer be ignored, a reason why many artists and musicians can earn royalties — a steady stream of income even when they have sold their original works on the platform.