NFT Investing For Beginners: What Are They, How To Invest, and Which One’s To Invest In – If you are familiar with the trading business then you would probably have heard about NFTs or non-fungible tokens. In 2021 when Beeple – an NFT artist sold his digital asset “Everydays- the 5000 days for $69 million, the world was shaken by the wave of investing in NFTs.

This digital artwork has indeed managed to grab a lot of attention from investors, celebrities, and artists. However, as appealing and easy as NFT sounds, it can be a little intimidating for beginners. If you are planning to jump into the world of blockchains and NFT, we would advise you to get some knowledge about digital assets, buying NFTs, the NFT marketplaces, and more.

This guide will walk you through all the aspects of these non-fungible tokens and help you decide whether NFT is worth investing in or not. 

What is an NFT?

First off, before we get into details it is crucial to understand the actual meaning of NFTs. 

An NFT or non-fungible token is a digital asset, which is unique and can not be exchanged for an asset of equal value. These assets function like tokens that represent ownership of artworks both physically and digitally. The sole ownership of the NFT is established by issuing a digital certificate to the buyer of the asset in the form of a token. 

As NFTs are essentially a non-transferable form of asset, they offer rarity and can not be manipulated. Furthermore, these assets are based on blockchain security which adds to their security and rarity.  

NFTs represent digital assets, like

  • Videos
  • Artwork
  • Music
  • Video game data 
  • GIFs
  • Tweets
  • Virtual collectibles, and a lot more 

Read to know more about the best NFTs to invest in  

How do NFTs function? 

Similar to cryptocurrencies, NFTs are also based on blockchain technology. Most NFTs function on the Ethereum blockchain and cryptocurrency – Ether. When an investor buys any NFT their transaction is registered on a network of computers, and the investor is provided with a unique code. Every NFT has a unique digital signature, so one can not be exchanged for another. 

NFTs on the marketplace can either be bought at a fixed price or put up for auctions. Many NFTs that are created by celebrities are put up for auction for their fans. Likewise, all investors can choose an auction if they wish to. 

Some people buy NFTs to fulfill a social status or just as a hobby, while others invest in NFTs only to speculate on the prices without actually buying them, to earn profits. They buy an NFT which has a chance of increasing in value in the future and hold until they can sell for a higher price.

What is NFT investing?

NFTs as previously mentioned are digital tokens that can not be exchanged for the value of another. Since these assets are digital they are bought and sold online. The platform where you can trade NFTs is known as an NFT investment platform like Opensea. 

An investor in an NFT investment platform can either buy NFT tokens, sell them or even mint or create their own NFT tokens. Let us understand more about the process of creating NFTs 

What is the process of creating NFTs?

The process of creating NFTs in the marketplace is known as minting. Minting allows traders of all kinds to create their own tokens out of either physical or digital assets. You can mint anything and everything including artwork, digital paintings, audio files, handwritten notes, trading cards, virtual outfits, and a lot more. To mint, the NFT one has to pay a fee, which is known as the gas fee. The fee depends on the blockchain, the take taken to mint the NFT, and other factors which you read about on forex broker reviews.

How to start investing in NFTs? 

Now that we have understood the meaning and workings of NFTs let us get into a detailed step-by-step guide on how to invest in NFTs. in this section, we will cover 

  • How to buy NFT
  • How to sell NFT, 
  • How to create or mint NFT

How to buy NFT?

Create a Crypto wallet and add funds 

Investing in NFT on marketplaces like Opensea and Binance, you will need ETH to trade the digital assets if your NFT investment platform is based on the Ethereum blockchain. After you have created a crypto wallet, you can buy ETH by clicking the buy icon on the wallet with your debit or credit card. Click here to find out the best crypto wallets in 2022. 

Browse the marketplace for NFT collections 

Once you have completed the registration process, you can start navigating the marketplace and find various NFT collections to trade from. You can also check if there are any offers on the token by clicking on the ‘Offers’ button.

When you find something of your choice, you have two options, either to buy immediately or you can make an offer and participate in the auction of the digital asset. 

The Buy Now button allows you to purchase immediately, while the Make an offer tab allows you to bid on the asset. 

Connect your wallet with the marketplace before purchasing

Once you have decided which NFT you want to buy, click on the ‘Buy Now option. Next, your marketplace will prompt you to connect your crypto wallet to your marketplace. If the wallet is already connected, you need to select your wallet and you will be proceeded to make your purchase. 

You can take a look at some of the best NFTs to invest in here. 

Make your purchase

Now, all you have to do is click on the buy button and buy the NFT token. You will get all the information related to your NFT tokens like the official name of the artwork, the collection it belongs to, the subtotal, and the total. 

If you are satisfied with the details, click on confirm and your crypto wallet will be on the screen. It will display the estimated gas fees and the amount of time it will take to complete the transaction will be displayed here.

By selecting Edit, you can adjust the gas fees but the lower the gas fees, the slower the transaction will be. When you’re ready to buy, click on Confirm and wait for your transaction to process. 

How to sell an NFT?

Set up your account 

Firstly, you need to login into your marketplace account like Opensea. Once you have logged in go to your Profile and browse through your NFT collection and then select the NFT you would like to sell.

Go to the listing page 

Click on the  ‘Sell’ option and then you will be taken to the listing page. A listing is where you choose the price, type of auction, duration of the sale, and type of buyer for your NFT. 

Primarily, there are two types of auctions ‘Fixed Price’ and ‘Timed Auction’. A ‘Fixed Price’ sale as the name suggests is one where the price remains fixed whereas a Timed auction is limited for several days and the price may change according to the bid. The auction can be open for 1 day, 3 days, or 1 week, by default however, you can choose any duration you’d like.

Pay the fees 

Lastly,  You will find two types of fees listed a 2.5% ‘Service Fee’ and a 5.0% ‘Creator Royalty’ fee. Pay the fees charged by the platform and complete your NFT listing. After completing all the steps, you will have to approve a signature request to finalize your NFT listing. And you will be able to display your NFT for other investors to buy it.

How to mint NFTs?

Decide what you want to create 

The first step to minting an NFT is to decide on a concept that will sell in the marketplace. It can be a short video, any personal photographs, paintings, your writings, handicrafts, and even music that you have created. 

Select a marketplace 

There are various platforms available to mint NFTs. OpenSea is one of the most popular NFT marketplaces. To create an NFT you are required to pay an initial fee or the transaction fee. The fee depends on the platform you choose to trade NFTs. 

Upload your asset

To mint an NFT you need to link the NFT to your artwork. To start the NFT creation process, you need to go to the upload section of your marketplace and upload the media that you will be selling. You can either upload directly on the platform or create a link to an externally hosted media file.

Give a name to your NFT 

Once you have uploaded the files, give a name to your NFT, and write a description. You can make your NFT as appealing as you want by adding unique perks to it like an invite to a private Discord channel or discount codes to merchandise. 

Create the NFT

The last step is to simply select the “Create.” option on your marketplace and after this, your file will be uploaded, and the NFT will be created. 

How to invest in NFTs without buying NFTs?

Although buying and selling NFTs exposes investors to profits from a specific asset. But if you wish to gain profits without actually owning the asset, a good way of doing this is by investing in NFT companies. 

These companies allow you to invest in NFTs without buying NFTs. they give an indirect exposure to the NFT sector, and enable equity investors to speculate on the sector’s growth. This is quite similar to trading in the stock market, but instead of speculating on the prices of stocks, you speculate the value of NFTs. 

NFT companies that have developed their NFTs can sell them on popular marketplaces. Now if you are wondering about the factors that affect NFT prices, investors are still trying to figure that out as the market is relatively new. 

However, factors like a change in the value of the shares of the company affect the prices of NFTs of the companies as well. Speculating, NFT prices are not very popular in the marketplace currently and only a few companies offer the same. 

Why are people investing in NFTs? 

1. Decentralized marketplace

NFTs eliminate the possibility of involving middlemen. The marketplace acts as a direct platform that allows artists or creators to interact directly with their customers. Having no middlemen also benefits the creators as they can earn a commission each time they sell a collectible.

2. Rarity 

As we have already mentioned above, the NFT tokens are unique and therefore can not be forged. They are one-of-a-kind and so only one of them can exist. An artist or a seller issues a limited number of  NFTs of their artwork so that they remain exclusive to a certain group of people as opposed to thousands. 

3. Have a resale value 

If after purchasing an NFT, you do not wish to keep it anymore or want to make more profit, you have an option of reselling them or renting the NFT for some time. Investing in NFTs for their resale value can lead to huge profits. Some of these collectibles have been resold for more than thousands of dollars, as compared to their actual selling price which was less. 

4. Storage value 

NFTs are based on blockchain technology and whenever a creator mints or buys an NFT, it gets recorded in the public ledger. This means that it can neither get erased, misplaced nor be removed from the blockchain. They are meant to last forever as their data will always remain as is. 

5. Security

The blockchains are decentralized in nature, which means that the data they hold is hosted in different nodes around the globe. There is always an identical record of the database at each of the nodes. Even when the network is down, there is always going to be a record of it somewhere.

The NFT technology gives an assurance that no matter what happens to the blockchain itself, your data is always going to be there. 

Final Thoughts

While NFTs are the new rage in the market and seem to be quite appealing, we recommend you conduct thorough research before investing in NFTs. even though they are a great investment opportunity, before you rush out to invest greater amounts of money, it’s important to be aware of what they are and how they work.

If you are wondering whether or not NFTs are worth investing then we would recommend you to read our guide on How To Know Which NFT To Buy.

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