In the beginning, it was challenging to take Non-Fungible Tokens or NFTs seriously. It seemed impossible to pay for something that only exists in the digital space and would rack up a tremendous value. Well, they have, and NFT investors are revolutionizing the crypto market.
In January 2022, founders of OpenSea, Alex Atallah and Devin Finzer, increased their New York-based company’s value by around $13.3 billion. OpenSea is a blockchain startup, and Blockchain is a digital ledger of transactions distributed across the entire network of bitcoin and other cryptocurrencies.
Now that investors are raking in millions, even billions of dollars, for buying and selling NFTs, we created a beginner’s guide to purchasing your first NFT using one of the original and most popular marketplaces, OpenSea.
Create a Digital Wallet
Buying a Non-Fungible Token should be as easy as buying a pair of shoes since it all takes place online. Yet, that is not the case for NFTs. To buy an NFT, you first need to open a crypto wallet, load the wallet with cryptocurrency, then use it to purchase your NFT.
OpenSea uses the cryptocurrency called Ethereum or ETH. Coinbase wallet is currently the most popular app. Set up a Coinbase account and transfer your cryptocurrency into your new wallet. The app will also allow you to purchase cryptocurrency with traditional currencies like euros or USD. Please take note that it may take a few days for your ETH coin to appear in your wallet.
An alternative to Coinbase is MetaMask. MetaMask only features support for tokens and digital assets on the Ethereum ecosystem. However, Coinbase hosts a wide variety of blockchain assets, including Bitcoin, Litecoin, Bitcoin Cash, Ethereum Classic, XRP, Stellar Lumens, Dogecoin, and Ethereum.
Find Your NFT
Using OpenSea, you can browse their collections after creating a profile and connecting your crypto wallet. If you click on “explore,” you can see thousands of NFTs currently available. You can filter your search and designate categories such as trending, collectibles, or virtual worlds.
When you purchase an NFT, you buy a token that provides proof of ownership to a digital asset. You own the NFT on a blockchain and can verify its ownership with a private key. This technology makes the NFT uniquely yours.
The rarer and higher the demand for the NFT, the more valuable they become. Similar to the art industry. It is a good idea to check the price history, and you will be able to see what the previous person paid for the asset in addition to what they are charging now. This information is essential if you want to get into the trading aspect of the marketplace. It is like buying a car but knowing exactly the price they originally paid.
Buying an NFT
Sellers have two options for posting their NFTs. They can either set a fixed price or set up an auction where multiple buyers can bid on the product. Therefore, when you locate an asset you want to purchase, you will either buy it outright or place a bid. OpenSea charges buyers a 2% fee and sellers 2.5% for each purchase, also known as “gas fees.”
When you buy an asset directly, you will want to click on the “Buy Now” button. You are then prompted to review the details of your purchase before hitting “Checkout.” You will want to read this carefully to ensure you are not transferring money to a scammer selling a non-original product.
To participate in the auction, simply click the “Make Offer” selection. You must specify the max amount you are willing to spend on the asset along with an expiration date. The NFT is transferred into your wallet and appears under the “Collected” tab on your profile page when the exchange is complete.
Determining NFT Authenticity
How do you know if your NFT is authentic? Here is where the Blockchain comes into play. Each asset sold lives on the Blockchain, and you can easily verify the authenticity by viewing the transaction hash. A transaction hash is a unique string of characters given to every transaction verified and added to the Blockchain. These characters represent data, including creation date, number of variants, and other bidders and buyers.
In addition, it is an excellent idea to reverse-image search on Google and check the socials on the creator. Creators tend to be pretty active on social media advertising the newest releases. It is good to skim the comment sections to see what others are saying about the creator’s work.
Check other marketplaces to ensure the artist isn’t trying to sell the asset multiple times. A legitimate creator tends to choose one Blockchain and stick to it.
Avoid assets that are priced much lower than their appreciated value. These are almost always copies and not the original product. You don’t want to pay for copied or plagiarized work.
Summary
Some of us have a harder time wrapping our heads around paying real money for something that doesn’t genuinely exist. But currently clocking a $41 billion industry, at the very least, investors are paying attention.
But where the money flows, there will always be fraud. This week, hackers stole millions of dollars worth of assets from OpenSea NFT. This theft is leading to multiple lawsuits filed against the NFT marketplace, thus proving this new industry can be fraught with peril.
Overall, the NFT market is hugely speculative and driven entirely by “scarcity” and the new trend of the day. The future of these marketplaces is still unknown, and there is no guarantee the NFT you buy will appreciate with time. However, if you want to support an independent artist and have a good appetite for losses, NFTs can be an exciting collectible for your space in the Metaverse.
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