All You Need To Know About Buying and Selling NFTs
It certainly seems like NFTs have come out of nowhere to take the cryptocurrency market by storm. If you don’t know what they are yet, then you can certainly be forgiven for that. This is because they have only moved into the public eye within the last few months. It all started with initial NFTs that spawned a great deal of success and since then, more and more people have been coming on board with NFTs. Because NFTs are so new, it is not always clear about how you can go about buying and selling them. This is particularly the case if you’re looking to trade consistently. That’s why we’ll be going into all you need to know about buying and selling NFTs.
Whether or not you believe that NFTs are a bubble, the overall application of the concept of being able to prove the ownership of a digital asset is huge. So, even if the overall concept of using them to trade does not work out, they still have great utility for the world at large. There are also those out there who believe that NFTs have great potential for use in the ‘collaboration economy’. This is the concept of turning something you’re passionate about into a revenue stream by making money from your audience.
What is an NFT?
If you’re already familiar with what an NFT is, then you can go ahead and skip this section of the article. If you’re not familiar with what it is, I will start with what it stands for. NFT stands for Non-Fungible Token, yes I’m speaking English. Strictly speaking, they are a type of cryptographic token that forms a unit of data stored on a blockchain to represent a specific piece of digital media. The key difference between these and the other tokens like Bitcoin, Ethereum, Litecoin and others is the fact that NFTs cannot be mutually interchanged.
It should also be noted that ownership of an NFT around a digital item is not a guarantee that copyright is transferred to the owner. The author or creator of the item could sell you an NFT and then continue selling NFTs of the same digital item. It should be taken into consideration that the NFT owner will not get access to the original file and is not able to exclusively access the item. This has led to some funny situations where people other than the author/artist have been selling NFTs of other people’s work. These are things you need to be aware of before you buy and sell.
Examples of Notable NFT Projects and Sales
Despite the fact that NFTs have not been on the scene for very long, there have already been examples of big, ambitious projects by companies and individuals to push them into the limelight. All the way from the premier basketball league on the planet, to the first-ever tweet that was posted on Twitter.
NBA Top Shot
NBA Top Shot is a blockchain project that has actually come from the synonymous National Basketball Association in the USA. The project itself was created by Dapper Labs and functions as a trading card system, with users being able to trade with each other. Instead of actual trading cards though, users will trade NBA highlight clips and digital artwork about their favourite players. There is scarcity for the ‘cards’ though as supply is limited and the ‘packs’ that you can get have been consistently selling out. If you need an idea of the scale of this, it was reported in February that a highlight by LA Lakers star LeBron James sold for $200,000 at an auction on the platform.
In fact, the popularity of NBA Top Shot has exploded and shown that the blueprint for NFTs can work. Over 250,000 different NBA fans have signed up to the platform and over $400 Million in trades have been on the platform. They make their money through these packs and through small transaction fees that they charge when users exchange their ‘cards’. So, NBA Top Shot is an example of one of the ways that you can buy and sell NFTs, particularly if you’re a basketball fan. Even if you’re not, a savvy trader could make some decent money from the platform.
Jack Dorsey
If you’ve not heard about this one yet, then I want you to hold onto your hat. If you’re not aware of who Jack Dorsey is, he was the founder of the popular social media site Twitter. When creating his account he posted his first-ever tweet. Since then, the tweet was bought back in March by a Malaysian businessman, he compared the purchase to that of the eminent Mona Lisa. Now the magic question, how much did it actually sell for? The answer is a cool $2.9 Million. If you haven’t realised it yet, the tweet was purchased in the form of an NFT and the marketplace on which it was sold took a 5% cut of the transaction.
Now you can see why the marketplaces are doing quite well for themselves when they take that fee from transactions, combined with the exploding number of NFT transactions.
How Can You Buy and Sell NFTs?
Choosing a Marketplace
The process of buying and selling NFTs might be quite a difficult one for you if you’ve never done it before. Thankfully, once you get an idea of what you’re looking for, it turns out that it isn’t too bad. If you want to buy and sell NFTs, or if you just want to have a look around at the market, then you’re going to need to visit an NFT marketplace. There are several out there already and it’s likely that there will be many more in the future, in the same way as has happened with cryptocurrency exchanges. Down below are examples of some of the more popular NFT marketplaces online.
As I said, the niche of NFTs is still quite young and it’s likely that other marketplaces with valuable service offerings will begin to pop up. Despite this, as it stands, the above list is the ones that I know are personally solid. With sales of NFTs sharply increasing by 55% from the previous year’s numbers already, too many entrepreneurs will be enticed in by the promise of lucrative business opportunities.
Using a Marketplace
If you wanted an example of how to do it, on OpenSea, it goes a little something like this. On your marketplace, you will need to find your collection, which is your list of owned NFTs. Then, you’ll click on them and select ‘sell’. You’ll then be redirected to a pricing portal where you can put the terms of the sale and how you want to run that sale (ie. fixed price, auction, monthly). You can even programme royalties into your NFTs that will grant you residual income when they are resold. You can also select the ERC-20 tokens that you’ll receive for taking part in selling.
If you’re looking to buy NFTs on OpenSea, keeping in with the previous example, then you would need to explore around for NFTs that you like on the platform. Once you find one, you will be able to pay for it using Ether. It’s a simple case of clicking on the button saying ‘buy now’, ‘checkout’ and ‘submit’. Be aware though that you will need to have your cryptocurrency wallet connected before you buy anything and you will only be able to use Ether, despite the multi-wallet support they provide.
Cryptocurrency Wallets
You will need to make sure that you have a cryptocurrency wallet to buy and sell your NFTs. NBA Top Shot allows you to make your purchases with credit cards, however, not all NFT-related companies will allow you to do this. In terms of the cryptocurrencies that you need to use, that heavily depends on the exchange you’re using. It’s most common to use Ether and ERC-20, although some marketplaces make it a requirement to use the token of their native blockchain. This is why it is important to check the requirements before you dive in.
If you think that you’ll be wanting to use a number of different platforms, then you may even want to consider using several different cryptocurrency wallets. Of course, this comes with its own inherent risks as you will be at greater risk of losing access to a wallet if you’re focusing on managing so many. So, if you do end up getting more cryptocurrency wallets, just make sure you try to keep within the limits of what you can manage. You don’t want to end up losing your cryptos.
What Should You Be Careful of When Buying NFTs?
As I touched on briefly at the start, similarly with cryptocurrencies, there are a lot of things that you need to be careful of when you’re dealing with NFTs. For instance, think about the fact that anyone can create an NFT from anything. This is one of the benefits of NFTs, but it is also one of the biggest weaknesses. It can be quite difficult for the untrained eye to see which NFTs are worth collecting and which ones should be left alone. There is also the issue of the fact that the market is incredibly volatile, with price crashes and rises a common theme. You need to make sure that you understand what you’re investing in before you do it.
Another risk that you need to consider when working with NFTs is the fact that they aren’t as liquid as cryptocurrencies and other forms of investments like stocks. This is because they’re something more akin to collector’s items like baseball cards and things like that. What I mean by this is that you need to actually find a buyer for your NFTs when looking to sell them. This can put you in a difficult position if the market starts to crash and you then struggle to find a buyer. Despite this, this also stops people from making rash trades.
Conclusion
In conclusion, it can be seen that NFTs are here as the next global blockchain-related craze. It still remains to be seen whether they will exist in their current form for the long term, but the value of the technology cannot be understated. The ability to prove ownership of a digital item. There have already been a number of companies that have experimented with NFTs, like the National Basketball Association, Nike and the CEO of Twitter’s first-ever tweet was sold as an NFT! This faith shows that it has the potential to be more than just a flash in the pan in the long term, however, it is hard to tell whether they will reach that potential.
The success of NFTs is mostly reliant on two things. These are educating people and ensuring that they cannot be abused. For instance, one of the reasons that NFTs exploded is that people started talking about it. Now that it’s in the public eye, it’s the responsibility of leaders in the space to create awareness about the technological benefits of NFTs. Then, as we previously discussed, there is the issue of whether there is ‘true’ ownership and the question of whether people will be willing to pay for digital ownership if it’s not exclusive with some items.
In terms of how to buy and sell NFTs, you should look around at the major NFT marketplaces and see which ones have the most projects that interest you. Then, after you’ve done that, you can see which cryptocurrency wallet you need to make. Once you have your wallet and your account set up, you will be able to buy and sell NFTs to your heart’s content. You will be able to set the terms of your own sale, even though you will likely to be expected to pay a transaction fee, similarly with cryptocurrency exchanges.
