Non-fungible tokens
(NFTs) are transforming how people collect and own
items online. By the end of last year, this digital asset grew notably
popular that the NFT market’s worth reached around $40 billion.
If you’re planning to
make your first NFT purchase, there are a few essential things that you need to
take care of.
Research
Research is always
vital when you’re considering investing in a new asset. Whether it’s shares in
a company, an artwork, cryptocurrency, or NFT, research helps you grasp
important aspects of a potential investment.
With NFTs, you need to
look into several aspects, including:
· Gas and other
transaction fees
· The blockchain that
mints the NFT
· Valuation
· Authenticity and fraud
risks
· Carbon cost
A Solid Reason
NFTs are digital proof
of ownership of a number of tangible and intangible products, from art to music
to sports collectibles to in-game items. With the broad range of things you can
buy as an NFT, it’s crucial that you determine the NFT you’re buying and the
reason for purchasing it.
If you decided to own
an NFT just because most investors are buying or talking about it, you might
need more reasons than that. Otherwise, you could end up following the crowd
all the time without a good idea about the NFT and a clear reason why you’re
buying it in the first place.
If you’re going to
purchase an NFT, make sure you’re buying based on your personal interests and
have considered the key differences that make every NFT sector unique. For
example, an art collector has different needs from a basketball fan looking to
own an NFT of one of the greatest sporting moments.
A Digital Wallet
You need an NFT wallet
to pay for and store your digital coins. You can start with a software wallet,
but if you end up buying NFTs regularly, a hardware wallet that protects your
NFTs offline may be ideal. You can also find many useful information online to
help you get started on creating a wallet.
Once you’ve set up your
account, you’ll receive some type of master password called the seed phrase,
which you need to keep somewhere safe as this would allow you to access your
NFTs if you lost or don’t remember your password.
Note that the NFT
wallet should work properly with the trading platform and blockchain network
you will be using. You also need to check whether the two-factor authentication
is available.
Platform and Blockchain
Network
Many NFT marketplaces
allow individuals to browse, create, and buy and sell NFTs. But you need to
focus on finding a platform that trades the NFTs you plan to own.
You should also see
what blockchain network that platform is using. The Ethereum blockchain
supports a significant number of NFTs and is the most common out there,
although Solana and Tezos have also entered the NFT venture.
Choosing the blockchain
matters because buying NFTs with fiat currencies like US dollars can be pretty
tricky. So while you need to have cryptocurrency, it needs to be the correct
cryptocurrency.
Considering the risk of
fraud in NFTs, several platforms have implemented measures to ensure the NFT is genuine. No investor would want to
purchase an NFT only to find out that it was not authentic, and the original
creator does not even know that his work has been made as an NFT.
