Think you’re ready to buy your first NFTs?
Not if you’ve skipped the basics of what non-fungible tokens are and the potential risks of buying and owning one!
If you’ve read up on your NFT 101 AND you’re sure that you’re not running on FOMO, then lemme give you the step-by-step process on how to buy your first NFT.
1. Create an NFT-compatible wallet
As explained in my “Beginner’s Guide to Crypto Wallets” course, while crypto wallets can show ownership and balances, they don’t literally store your coins and tokens.
Instead, crypto wallets store the keys that will grant you access to your digital assets.
And what do we do with keys?
We don’t lose them!
We also don’t give keys to anyone unless we trust the person 110% not to rob us blind.
This is why it’s important to know your basic wallet options as well as the protection they provide.
A hot wallet, for example, may provide easier access to your digital assets than a hardware-based cold wallet would but it’s also more vulnerable to scams that may drain your balances.
Of course, the wallets’ protection levels won’t matter if you don’t guard the private keys or seed phrase that serves as the “password” to your hot or cold wallets.Having trouble keeping up with NFT wallet lingo?
Think of NFTs as your ticket to an exclusive concert. The ticket represents your ownership of a slot in the concert’s audience so you really don’t want to lose it.
You can either take a picture of your ticket and store all the details on your phone (soft wallet) or keep the hard copy of the ticket (hard wallet) and place it in a safe place in your house.
Either way, you shouldn’t give your phone password or house keys (seed phrase or private key) to ANYBODY unless you want to risk somebody stealing your ticket and using your slot before you do.
When buying blockchain-based NFTs, you should also aim for wallets that are compatible with:
- The blockchain where your NFTs are created and processed
- The crypto or fiat currency your NFT is priced in
- The platform that offers the NFT you’re buying
Not all wallets store NFTs and not all wallets are compatible with some blockchains, so you should double-check before you create one.
Newbies can start by getting a Metamask wallet as it supports NFTs and some of the more commonly used blockchains and cryptocurrencies.
It’s easy to access on Google Chrome where you can add Metamask as an extension.
You’re then asked to create a wallet that will yield the only SEED PHRASE – composed of about 12 to 24 words – that will unlock your wallet.
Write your seed phrase on a piece of paper or store it somewhere where nobody can see it, not even apps that have access to your clipboards.
Once you’ve put in your seed phrase, you should have access to a wallet showing balances across different networks:
2. Connect your wallet to an NFT marketplace
Is your wallet compatible with your preferred marketplace?
Only one way to find out.
Popular NFT marketplaces like OpenSea and Rarible list the compatible wallets almost as soon as you visit their sites.
Some mobile apps also use QR codes to connect wallets.
While the NFT scene is pretty new, marketplaces will generally fall into three categories:
An open marketplace allows anyone to buy, sell, or mint (create) NFTs.
A closed marketplace is a bit more exclusive, only allowing select artists to sell and trade their goods.
A proprietary marketplace sells NFTs that are either trademarked or copyrighted by the company operating it.
Once you’ve confirmed that your wallet can store NFTs from your preferred marketplace, you can start securing your funds.
3. Secure funds
Big NFT marketplaces usually allow the use of credit cards or even debit cards to purchase NFTs.
For everything else, there’s M̶a̶s̶t̶e̶r̶c̶a̶r̶d̶ ETH.
Ethereum isn’t the only blockchain on the NFT scene but it’s the most widely used in NFT marketplaces.Ethereum’s token ether (ETH) is also one of the most accessible cryptocurrencies found in centralized and decentralized exchanges.
The easiest way to get your hands on some ETH is to buy it from a centralized exchange.
Binance, Coinbase, and Gemini are some of the biggest centralized crypto exchanges.
Just keep in mind that coins and tokens stored in exchange wallets mean that the exchanges have your private keys.
You can lose access to your balances if the exchange gets hacked or if the exchange locks your account for any reason.
When it comes to exchanges, best think “Not your keys, not your coins.”
This is why you should transfer your ETH balance to your non-exchange wallet as soon as you buy your ETH.
To transfer your ETH from your exchange wallet to the wallet that’s connected to the NFT marketplace, you should:
Withdraw ETH from your exchange wallet
Navigate to your crypto exchange’s wallet and click the Withdraw button.
Select ETH wallet in the “Withdraw from” field.
Send ETH to your non-exchange wallet’s public address.
This is the 42-character hexadecimal address on your account.
You can copy the address to the clipboard, scan the account’s QR code, or manually input all 42 characters for extra security.
Wait a couple of minutes until the non-exchange wallet is reflecting the ETH transfer.
You can check Etherscan.io to get updates on your transaction.
Don’t forget that the withdrawal will incur gas and transaction fees!
This means that the balance on your non-exchange wallet will be less than the amount you’ve withdrawn from the exchange.Depending on the NFT listing and conditions, buying NFTs can also mean paying gas fees to the Ethereum network and maybe transaction fees to the marketplace.
Make allowances if you want to send a whole or specific amount to your non-exchange wallet.
Are you now seeing ETH reflected on the wallet you’re using for the NFT marketplace?
If yes, then CONGRATS! You just got your FUNDING SECURED!
4. Choose your NFT
Now that you’ve connected your NFT wallet to the exchange and have the $$$, how do you know which NFTs you should buy?
Should you buy the most bored-looking ape?
How about the Reddit avatar that looks bougie af?
A good place to start would be “creators” that you’re already familiar with. Maybe your favorite pop stars and trading idols have their own recos.
Browsing your social media *cough* Twitter *cough* feeds for trending hashtags or topics can also give hints on what’s popular in the NFT world.
Last but not least, marketplaces themselves provide trending works, artists, and collections that you can start with.
Once you’ve chosen your NFT, then you gotta pay attention to how you can buy it.
Most NFT listings operate on a TIMED AUCTION that’s not unlike eBay’s items. The NFT will either go to the highest bidder, or the seller can choose to accept any offer during the auction.
Other NFTs can simply be BOUGHT DIRECTLY for their listed price.
Meanwhile, some marketplaces allow buyers to OFFER for listings that are currently not on sale, or offer prices that are marginally lower than the listed price.
Once you’ve chosen an NFT, the marketplace will usually prompt you to double-check the purchase details.
Transaction details can include:
- The public address of the NFT payment recipient
- Total NFT price
- Estimated gas fees
- Total purchase price
Take note that NFT prices and gas fees can change every few seconds. Make allowances for price AND gas fee fluctuations!
Once you’ve okayed the transaction, the NFT marketplace can take a few seconds to a few minutes to reflect your purchase.
OpenSea, for example, shows your NFT purchases on your account profile.
Wanna check your brand spankin’ new asset on your Metamask wallet?
You can view your coin balances and assets (including NFTs) at https://portfolio.metamask.io/ or on your MetaMask mobile app.