Understanding NFTs: What are NFTs and How To Buy Them
So what are NFTs, exactly? Let’s find out, shall we?
Understanding NFTs: What are NFTs and How To Buy Them
NFTs were a big buzzword last year, with many people buying an ape, dog, cat, or some weird drawing just because it was an NFT. Maybe you also wanted to get yourself one of those jpegs but wondered if they were worth it. Before you rush off to buy one for yourself, though, you must understand what it’s all about. So what are NFTs, exactly? Let’s find out, shall we?
What are NFTs?
NFTs are Non-Fungible Tokens. Non-fungible things are those you cannot exchange for each other, even if they are the same. A simple example of non-fungible items are fingerprints. Everyone has a fingerprint, but you cannot use your fingerprint to unlock your friend's phone. In the same way, you simply cannot 'trade' an NFT for another because they are unique, each with a different value. It is this uniqueness that makes NFTs different from other kinds of digital assets. But is that all?
Not quite. Apart from NFTs being totally unique and non-exchangeable, they are also different from other forms of crypto assets. NFTs are represented by a form of digital media like pictures, video clips, or digital wearables. However, NFT collections like Bored Apes, Crypto Punks, and Solana Money Boys are all examples of the popular types of NFTs that many people know about.
These kinds of NFTs are called PFPs or profile pictures; usually a stand-alone animated character in the background. PFPs are usually part of a collection, which can be made up of thousands of PFPs or a few dozen. This concept of digital collectibles is yet another way NFTs are different from other cryptocurrencies.
Why do people pay money for NFTs?
You may wonder why people are willing to spend hundreds or even millions of dollars for something they can’t physically have. Do NFTS even have any use in the real world? Well, yes, they do! Let us give you a few examples:
They can be an all-access pass.
When was the last time you got a VIP seat to see your favorite artist perform? With some NFTs, you could get exclusive access to your favorite artist, get to dine, and even shop with them! Migos rapper TakeOff, for example, offered holders of his Apes In Space NFT exclusive access to the first Metaverse hip-hop concert. One lucky holder even got the opportunity to chill with him in “space”.
They’re memories you can keep forever.
There are some things we cannot let go of, like the first love letter we received or a bracelet from an old friend. NFTs can help you preserve precious memories like how the Lennon Connection: The NFT Collection did. This NFT collection, which includes Julian Lennon’s private collection of John Lennon and Beatles memorabilia, sold out in hours.
They can be converted into 3D pieces.
You can get your NFT as a 3D piece to keep on your shelf or show it off to your friends. Holders of Invisible Friends NFT have the chance to mint their NFTs as real-life toys. The Invisible Friends NFT is just one of the many NFT collections that offer this privilege to holders. Another collection, Nike Cryptokicks, converted users' NFTs to real-life wearable sneakers
They offer you a chance to own virtual property.
It might take you years to pay off the mortgage for your dream home, but you can own virtual property for far less with NFTs. Virtual real estate is hot right now, with the biggest virtual land companies selling around $1.9 billion of land! As more people enter the Metaverse and transition into Web3, you can be sure the demand for virtual real estate will shoot up, giving you a great opportunity.
Why are NFTs worth millions?
An NFT's worth primarily depends on the amount users are willing to pay for it. Take for example, The Bored Ape collection. It is still one of the most expensive NFT collections of all time. And when celebrities like Neymar and Justin Bieber started getting some Apes for themselves, prices went through the roof.
Buying NFTs is just like buying art: two dots in the middle of a blank canvas might not make much sense to you, but to another, it could be worth a bag of cash. We are talking about The Merge by digital artist, PAK. It is the most expensive NFT in the world, valued at about 91.8 million dollars at the time of sale. But why would three white dots be worth so much? Because it was so hyped when it debuted, that’s why.
NFTs are available at different prices. It all depends on how much you are willing to spend. Do you have a lot of cash to spare, or do you just want to test the waters? You get to decide how much you want to spend. As a rule of thumb, it is good to start out with cheaper NFTs.
We’ve talked about the most expensive NFTS. Now let’s go to the other extreme. What is the cheapest NFT? Well, you can get free NFTs without spending even a dollar! That's right, some NFTs are so cheap, you just need to pay the network fee while minting.
What is Minting in NFTs?
Minting an NFT is like getting it on its debut day, straight from the oven if you are a buyer. If you are selling one, then it means creating your art for the first time on the blockchain. In both cases, minting is the first time an NFT is released on the blockchain.
How to create an NFT
Creating an NFT requires three things: a platform for minting, a wallet, and a marketplace where you are going to sell your asset once it is created. Remember, anything can be an NFT. You can upload a picture of your grandma or draw a spaceship on your computer and make it into an NFT. The difference between a normal picture and one that's an NFT is: the normal picture is not on the blockchain while the NFT has been minted and is now on the blockchain.
To make NFT art, choose the file you want to convert into an NFT. After that, get a crypto wallet where you can keep your NFT and keep the cryptocurrency you’ll be paid with for your NFT. Last but definitely not least, you’d need a minting platform. Examples of some solid minting platforms you can check out are OpenSea, Rarible, and Foundation
Since you know what minting is, the next question is: how do you get an NFT without minting it? If you do not get an NFT on mint day, you have to buy them from other users on places called secondary marketplaces or simply NFT marketplaces.
How to buy NFTs
NFTs are bought and sold in places called NFT marketplaces. There are dozens of marketplaces you can visit, depending on the type of NFT you want to buy and the blockchain an NFT is on. NFTs are tokens on the blockchain and a marketplace usually analyzes on one blockchain. There are different kinds of blockchains like Ethereum, Solana, and Avalanche. An artist or company can choose what blockchain network they want to create an NFT on.
For example, if you want to buy a Bored Ape NFT, you have to go to OpenSea. Why? It is the biggest NFT marketplace for Ethereum NFTs, and since Bored Ape NFTs are on the Ethereum blockchain, you would find the Bored Ape collection there. If someone told you to check out Solana NFTs, on the other hand, you should be looking at Magic Eden, the biggest Solana NFT marketplace.
But these are not the only NFT marketplaces where you can buy NFTs as a beginner. Marketplaces like Superworld NFT Salon, Rarible, and Nifty Gateway are great for beginners too, because of their simple user interface (UI).
How to make money from NFTs
NFT minting and buying are simple processes. When you get the hang of them, you can use this knowledge to make money from NFTs. You just need the right strategies.
Making money from NFTs is not a get-rich-quick scheme, though. Do not expect to make cash overnight from your NFTs because you may be disappointed. Instead, aim to make money gradually from your pieces. You can make money from NFTs in three ways:
- Selling your own NFTs:
After creating your NFT pieces, you can sell them for any amount on an NFT marketplace. Many marketplaces will charge you a small fee for minting and listing your pieces. Some also have the option of royalties, where you get to earn a certain percentage each time someone buys your collection. There is no limit to the amount of money you can make from selling NFTs; you can set your NFTs at any price! Be careful though一you do not want to set your prices too high.
- Flipping NFTs:
Flipping NFTs means buying an NFT for a relatively low price and selling it for a higher price to make some extra cash. To flip NFTs, you need to know what collections to buy and how long to hold them before selling them. As a newbie, it is best to join Alpha groups that give out regular calls. These groups can point you in the right direction on what collection to buy and at the best price for more cash. You can usually join these groups for free. However, to get access to these groups, you usually need to buy their NFTs first.
- Passive income from your NFTs:
NFTs are digital assets that can earn you a passive income too. Some NFT collections may even give you free tokens as a reward for keeping them instead of selling them. You can exchange these tokens for real money. The more original NFTs you have, the more free ones you get. Other NFTs like virtual real estate, can generate a passive income through avenues like rent and leases. But first, let us explain how these virtual real estates are in the next section
What is virtual real estate, and how does it work?
Virtual real estate consists of properties on the blockchain, represented as NFTs. They cannot be physically seen. As a buyer, you can decide to purchase a piece of digital land and build whatever you want on it, buy a building and rent it out or convert it to a mall. You choose how you want to monetize your property.
So how do you not get lost in virtual real estate? Your digital property has coordinates like your house has an address. These coordinates show you exactly where your piece of the digital estate stands in a particular virtual world. To attend a concert or an event in the Metaverse, the organizer will tell you what virtual land the event will be held and provide you with coordinates (sometimes directions) on how to get there.
Buying Virtual Properties
Just like NFTs, you need a wallet, some crypto, and a place where you can view and buy a variety of virtual properties. If you are looking to get a piece of virtual real estate, then a place like Superworld is terrific for you. It is simple and straightforward and allows you to buy a property in minutes.
NFTs are a fun way to explore the world of digital assets and gradually enter into Web3. NFTs could be much bigger in the future, so it's important that you have the right information to launch you into an exciting adventure. For more stories about NFTs and the Metaverse, the latest news and trends in virtual real estate, and useful guides like this, check out the Superworld blog.