Now that we have reviewed the terminology related to Non-Fungible Tokens (“NFTs”), you might be wondering how to purchase one. Below are some simple steps that you can take to purchase an NFT, although the complexity may ultimately depend on the NFT you purchase.
1. Understand NFTs
- Having background knowledge helps you protect yourself and understand your rights. Our prior article (Mar 4 issue) provides some additional background on NFTs.
2. Choose an NFT.
- This can be difficult, and much is left to subjective value. Some questions to ask are whether the purchase will be: for enjoyment or investment; part of an initial drop or from a secondary marketplace; or required to be made in a particular cryptocurrency.
- Choosing an NFT you like can be helpful whether the purchase is for enjoyment or for investment. You may also want to research the artists, join Discord (a chatting application), or explore social media to learn more.
3. Decide how to purchase.
- The majority of NFTs can only be purchased with cryptocurrency (such as Bitcoin or Ethereum).
- There are several NFT marketplaces to purchase from. Where you purchase may inform the currency and wallet you use. For example, OpenSea, a popular NFT marketplace, is built on the Ethereum blockchain, so you would have to set up a compatible wallet.
- Each marketplace has its own terms that will govern the purchase and your ownership and use of the NFT. We will discuss these items in a subsequent article.
4. Set up/connect a wallet.
- Once you confirm the marketplace and currency, you must set up a cryptocurrency wallet on a separate website and exchange USD for tokens. A common wallet is Coinbase Wallet. After you set up your wallet, you must return to the marketplace and link/connect the wallet.
- The prices of NFTs range from free to thousands of dollars. To purchase a rare NFT or from a project just being minted, make sure you have enough money in your wallet ahead of time. Don’t forget about gas fees!
- After you complete your purchase and it is transferred to your wallet, you can appreciate/display it in your collection, trade, or resell it. If you resell, make sure that your wallet is paired with the correct resale marketplace.