How To Invest In NFT Tokens- A Beginner’s Guide
Non-Fungible Tokens (NFTs) made their presence first in 2017; since then it has matured over years. In 2021, NFTs saw a mammoth rise in popularity, and though India is not at the forefront, the trend is gaining traction every day. The NFT marketplace is a virtual economy platform working in a peer-to-peer model. It enables artists to exhibit and list their art in digital tokens where buyers/investors can purchase them in jpegs as the form of an asset. We can think of NFT marketplaces as our Amazon of the digital realm. In fact, it’s claimed during the latest Union Budget, it had announced that it’ll regulate a tax on all crypto, but it did encourage crypto investors to buy more. Thus, NFT marketplaces are fast approaching and attracting a mainstream crowd.
The various NFT projects are now beginning to get acknowledged as the future of the crypto world. In the era of file sharing and streaming, NFTs have provided the opportunity to own the art which various talented artists have produced. With cricketers, singers, and actors such as Amitabh Bachchan, rolling out their NFT, marketplaces are rapidly gaining momentum.
What is an NFT token?
How to Buy NFTs
First, you’ll need to get a digital wallet that allows you to store NFTs and cryptocurrencies. You’ll likely need to purchase some cryptocurrency, like Ether, depending on what currencies your NFT provider accepts. You can buy crypto using a credit card on platforms like Coinbase, Kraken, eToro, and even PayPal and Robinhood now. You’ll then be able to move it from the exchange to your wallet of choice.
You’ll want to keep fees in mind as you research options. Most exchanges charge at least a percentage of your transaction when you buy crypto.
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How To Invest In NFT Tokens- A Beginner’s Guide
To buy NFT of your favorite collectibles, you only need to follow three steps.
1. Create a digital wallet
Before you can invest in NFTs, you need to buy cryptocurrency. Why? Because you can only trade NFTs in cryptocurrency. Today, you can purchase cryptocurrencies like Ether on dedicated exchanges like WazirX or Binance.
Then, you will need to create a digital wallet compatible with the cryptocurrency you’ve bought. Using a simple registration process, you can set up the wallet – a digital address to store the currency on platforms like Metamask or Coindesk.
Once the wallet is functional, you must transfer the cryptocurrency to the wallet. This wallet will also double up as a storehouse for the NFTs you buy later.
2. Pick any NFT exchange marketplace
Today, there is no dearth of marketplaces where NFTs are traded daily. However, don’t buy into what NFT marketing services are advocating.
Perform adequate research on the marketplace by comparing and contrasting the NFT ownership verification process, transaction process, cryptocurrencies accepted, and investor reviews, among other factors. These will help you make an informed choice.
3. Shop for NFT tokens
Ultimately, once your account is set up, you can shop around the marketplace and buy the NFTs you desire. You will find different sorts of NFTs listed for either a fixed price or an auction. In the latter case, you will need to participate in the bidding to get the NFT. But you can use the cryptocurrency in your wallet to carry out the purchase in either case.
Once the buying or bidding process is successful, the amount will automatically get deducted from your wallet. The marketplace may charge a transaction fee for the same.
Benefits of Non-Fungible Tokens
Perhaps, the most apparent benefit of NFTs is market efficiency. Tokenizing a physical asset can streamline sales processes and remove intermediaries. NFTs representing digital or physical artwork on a blockchain can eliminate the need for agents and allow sellers to connect directly with their target audiences (assuming the artists know how to host their NFTs securely).
What to consider before you buy NFT
collect valuable NFTs, they increase in price, and you sell them for a profit. Or you invest in what seemed like a valuable NFT. But even after a few years, its price never increased, so nobody wanted to buy it.
NFTs work exactly how share trading works. However, since NFT prices are affected by factors like rarity, utility, and tangibility, their rise or fall is harder to predict.
if you decide to join the NFT craze, you may want to steer away from what NFT marketing services are saying and consider a few things. First off, the credibility of the token. Besides NFT prices, you should make sure the token has:
- A verifiable uniqueness
- A verifiable ownership
NFT prices are affected by scarcity. The rarer the item, the higher its value. So, if a particular NFT catches your eye, ensure the asset has a promising future before taking the leap.
Non-fungible tokens are also very useful in identity security. For example, personal information stored on an immutable blockchain cannot be accessed, stolen, or used by anyone that doesn’t have the keys.
NFTs can also democratize investing by fractionalizing physical assets like real estate. It is much easier to divide a digital real estate asset among multiple owners than a physical one. That tokenization ethic need not be constrained to real estate; it can extend to other assets, such as artwork. Thus, a painting need not always have a single owner. Instead, multiple people can purchase a share of it, transferring ownership of a fraction of the physical painting to them. Such arrangements could increase its worth and revenues because more people can purchase parts of expensive art than those who can buy entire pieces.
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