How to invest in NFT

Non-fungible tokens, also known as NFTs seem to be gaining more ground as the awareness of their existence and benefits is on the increase.

NFTs, or non-fungible tokens, have been a welcome addition to the cryptocurrency industry. NFTs make it easy to tokenize real and digital assets, creating a thriving new ecosystem where market players can exchange art, music, in-game items, and more.

NFTs Explained.

An NFT is a digital asset that is used to represent real-world artifacts such as art, music, in-game items, and films. They're bought and sold online, and they're usually encrypted with the same underlying software as many cryptocurrencies.

Because each token is one-of-a-kind, it is non-fungible. Collectors of many kinds, especially sport trading card collectors, have taken to them.

According to Arry Yu, managing director of Yellow Umbrella Ventures and chair of the Washington Technology Industry Association Cascadia Blockchain Council, “Essentially, NFTs create digital scarcity”.

This is in sharp contrast to the vast majority of digital products, which are nearly always available in endless quantities. If a certain asset is in demand, cutting down the supply should theoretically increase its value.

NFTs have been around since 2014, but they're gaining popularity currently as a popular way to buy and sell digital art. Since November 2017, a whopping $174 million has been spent on NFTs.

The blockchain, which is the decentralized network that underpins various cryptocurrencies, is where NFTs are stored.

Although Bitcoin was the first to popularize blockchain technology, many other intriguing networks have grown up since then, all aiming to build on the foundations that Bitcoin laid down. One of these networks, Ethereum, has risen to the top of the NFT space, while Solana, Cardano, and the Binance Smart Chain are also heavily active.

How NFTs work.

NFTs are stored on a blockchain, which is a decentralized public ledger that keeps track of transactions. Most people are familiar with blockchain as the underlying technology that allows cryptocurrencies to exist.

An NFT is made up of digital objects that represent both tangible and intangible objects, such as arts, videos, and sports highlights, GIFs, collectibles, designer sneakers, collectibles and music.

NFTs and Cryptocurrency

The term "non-fungible token" refers to a token that is not fungible. It's usually programmed in the same way as cryptocurrencies like Bitcoin or Ethereum, but that's where the comparison ends.

Cryptocurrencies and actual cash are both "fungible," meaning they may be traded or exchanged for one another.

They're also worth the same amount of money—one dollar is always worth another dollar and one Bitcoin is always worth another Bitcoin. The fungibility of cryptocurrency makes it a secure way to execute blockchain transactions.

NFTs, on the other hand, are unique. Each one contains a digital signature that prevents NFTs from being substituted for or equaled, hence, making it non-fungible.

How to invest in NFTs

Seeing how intriguing NFTs are and how it is gradually gaining much acceptance, it is wise to know how to go about making an investment in such.

Here are a few steps to take to invest in NFTs.

First Step: Search for available NFTs.

Just like every investment, it should not be any different with NFTs, people should have sufficient knowledge about what they are investing in.

You should select an NFT that you believe has the potential to increase in value. The NFT might be anything from art to music to film to a video game component.

NFTs can be found by searching Google or Twitter. Rarity.tools and NFTcatcher.io offer a list of Ethereum and Solana NFTs that will be published soon.

As you make an observation of soon-to-be-published NFTs, take note of the date of the sale, the cryptocurrency requirements, and the number of NFTs being sold. 

This allows you to better comprehend the scarcity of the option you've chosen.

There are some other key things you should look out for when considering the NFT, they include:

• The team behind the NFT: Why you should consider this is because a renowned team helps to push the value of the NFT.

• Consider if it is on-chain or off-chain: Off-chain relies on centralized servers, which means that if the server goes down, the image will be lost. For off-chain, you should really tread carefully and be cautious, so you do not lose your NFT, which is most valuable to you.

• Do not isolate yourself: Participate in the NFT's Discord and Telegram forums to discover more about the project and to get a sense of what others are talking about this specific line of NFTs.

Second Step: To buy cryptocurrency, choose a broker or an exchange.

After you are certain of the NFT to invest in, you will need to buy a cryptocurrency. 

Why do you need to buy cryptocurrency?

To obtain the NFT, you must first purchase the coin. The majority of NFTs are acquired with Ethereum, with a few outliers.

A dedicated crypto brokerage or exchange, such as Coinbase (COIN), Robinhood (HOOD), Gemini, Binance.US, or Kraken, can help you buy Ethereum and other cryptocurrencies.

To enable the buying and selling of cryptocurrencies, either a company or a person acts as a middleman. And that is why you have various crypto brokerages.

An exchange is a place where buyers and sellers carry out trading activities based on prevailing market situations.

When purchasing cryptocurrencies, bear in mind that charges are an important factor to consider.

For a trade of $10 or less, Coinbase, for instance, charges $0.99. The larger the trade, the higher the cost.

For crypto exchanges, SoFi Active Invest charges up to 1.25 percent.

A fixed fee per trade or a percentage of an account's 30-day trading volume are two options for fees. Examine costs based on transaction sizes to obtain an idea of how much you'll spend.

Third Step: Choose a Marketplace to Buy Your NFT.

The NFT is bought and traded in a  marketplace. You enroll and link your crypto wallet once you've found the marketplace where your NFT will be traded. Every marketplace has its own set of requirements for crypto wallets.

The item will either be sold at a fixed price or through a token auction by an NFT marketplace.

There are various marketplaces that should be noted, they include;

• Larva labs

• OpenSea

• Rarible

• Axie Marketplace

• NBA Top Shot Marketplace

When you are ready to make your purchase in a particular marketplace of your choice, check that you have enough crypto to complete the transaction, including any costs.

The cost of purchasing and transferring cryptocurrency, as well as the costs of converting one cryptocurrency to another and gas fees, are examples of costs that may be incurred.

The fees paid to miners in return for the computer power they employ to record transactions on the blockchain are known as gas fees.

It is therefore important to note that the posted price or the most recent offer for an NFT does not represent the overall cost of the item. For instance, as a result of gas expenses, the total cost of an NFT priced at the equivalent of $70 in Ethereum might reach $140 to $220.

The Usefulness of Crypto Wallets

The NFT is held in a crypto wallet on the same blockchain, on a different blockchain, or in decentralized storage after purchase.

Some crypto wallets which accommodate NFTs are;

• Trust Wallet

• Alpha Wallet

• MetaMask

• Cybavo

These wallets allow you to store both your cryptocurrency and the NFTs you buy on the market.

NFT can only be viewed on a screen, which is frequently done as part of a website, this is due to its digital format.

Even if you own the NFT, you usually do not own the copyright to the original item, which means you can't reproduce it or prosecute someone for copyright infringement.