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What are NFTs used for?

Although we talk about how to buy NFT tokens and consider them as an asset, NFTs are actually proof of ownership.

When you buy a digital asset from someone else, the NFT comes to you as proof of that ownership. While the world of digital art and music has received a lot of attention — as well as sports moments —

NFTs can be used for just about anything

It’s possible to produce NFTs to represent digital goods and items in video games and virtual land simulations. It’s even possible to use NFTs to manage ownership of real-world items. Wineries are using NFTs as digital provenance for collectors, and it’s possible to represent real estate and cars with NFTs. Even tweets and memes can be sold as NFTs.

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How to create NFTs

Creating NFT art and other items is fairly straightforward. It’s important to note, however, that NFTs exist on the blockchain on which they’re created. Ethereum is one of the most popular platforms for NFTs right now, but you can also create them using Binance Smart Chain, EOS, Polkadot, Tezos, Dapper Lab's Flow, and others.

When you create an NFT, you can only sell it on a blockchain that supports the assets used to create it. So, you need a wallet that supports those assets as well. Next, you can go to a marketplace that allows you to create NFTs and connect your wallet. On some marketplaces, it’s as simple as clicking on a “Create” button and uploading your file, whether it’s an image, GIF, 3D model or some other item. Each platform will have its own way of creating NFTs, so make sure you check the details.

You can add traits, offer special discounts for services or attach other values to the NFT.  You can also price your NFT, including any royalties you want to get if a buyer decides to sell the NFT again. Once it’s created, you can sell it.

What is the cost of creating an NFT?

Some platforms allow you to create NFTs for free, while others charge a fee. On an Ethereum-based marketplace, you might have to pay for “gas,” which is a fee charged to perform certain functions on the blockchain. The gas costs more during times when there’s more activity on the blockchain and less when there's not as much happening. Usually, you need to pay these fees with tokens accepted by the platform.

How to buy & sell NFTs

How to buy NFTs

If you want to learn how to buy NFT tokens instead of just creating and selling them, the process is similar.

  1. First, decide on a marketplace and find out which coins are accepted as payment. It’s important to know which tokens and wallets are compatible with the marketplace because you’ll need to connect your wallet and make sure it’s funded with the right tokens.
  2. Next, you need to understand how NFTs are sold on the platform. For example, at NBA Top Shot, “card packs” are dropped and you have to be ready to buy them using your Dapper wallet. Some artwork is sold the same way on other platforms.
  3. Finally, when everything is in place, you can buy NFTs by transferring coins out of your wallet and using them to pay for the NFT.

How to create a digital wallet to buy NFTs

digital wallet is needed to buy digital assets. One of the most versatile wallets is offered by Coinbase. Other wallet services like MetaMask and Trust Wallet also make it easy to buy NFTs. If you’re buying something on a specific blockchain platform, find out what wallet they offer. You can then sign up, create your keys, then fund the wallet by using fiat currency or another cryptocurrency to buy the needed coins for the platform.

Where to buy and sell NFTs

If you’re looking for where to buy NFT crypto, you start with a marketplace. Some of the common marketplaces for NFTs include:

  • OpenSea
  • NFT ShowRoom
  • Rarible
  • Nifty Gateway
  • BakerySwap
  • VIV3
  • SuperRare

Some of these marketplaces, like OpenSea and Rarible, also make it easy to create your own NFTs to sell. For investors, the idea is to try to buy an NFT for a good price and sell it later at a higher price.

How to sell NFTs

Once your NFT is listed on a marketplace, it can be sold. You need to set a price or determine whether you want to use an auction. It’s also possible to set it up to receive royalties for NFTs sales, providing you with a commission when a new person buys the asset. This can be a way for artists to generate income streams without the need for an intermediary or a gallery.

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Pros and cons of buying NFTs

Pros

  • NFTs are completely unique and can’t be replicated like a JPEG or MPEG.
  • You can support creators because it allows them more control over their art.
  • NFTs could potentially increase in value, providing a profitable alternative investment.

Cons

  • There is no guarantee NFTs will catch on with the mainstream and you might be unable to sell your NFTs, resulting in a loss.
  • NFTs aren’t fungible, so they aren’t used as a widely accepted medium of exchange.
  • There’s a lot of price volatility with digital assets, so it’s hard to know when to buy and sell at a good price.

Are NFTs worth it?

Whether NFTs are worth it depends on your own situation and investment goals. If you want to own unique digital assets, NFTs can be a worthwhile investment — especially if you’re interested in collectibles and artwork. So if you can get an NFT at a good price, perhaps through a card drop, then sell it for a higher price, it can be a profitable investment.

If you lose money, NFTs may not be worth it, especially if you’re more interested in the investment aspect and less interested in the collectible aspect. Understanding your goals is an important part of deciding whether any investment or speculation is worth it.

The bottom line

NFTs offer interesting possibilities for the future, whether it’s an application in supply chain management or a way to produce artwork and music. NFTs can also serve as interesting potential alternative investments, similar to investing in art, comic books, and trading cards.

Before you find out where to buy NFT and spend money, it’s important to understand your investment goals and ensure that NFTs fit into your portfolio strategy. Additionally, carefully consider how much money you can afford to lose and think about whether it makes sense for you at this time. Because digital assets are so new, it’s important to only risk what you know you can lose.

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About the Author

Miranda Marquit

Miranda Marquit

Freelance Contributor

Miranda Marquit is a journalism-trained freelance writer and professional blogger specializing in personal finance.

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