How To Invest In NFT
Are you looking to invest in NFTs but don’t know where to start? This step-by-step guide will show you how. We’ll cover everything from finding an exchange to buying your first tokens. So whether you’re a seasoned investor or a total beginner, read on for all the info you need.
How does NFT investing work?
There are two ways to invest in NFTs:
- Buying digital assets and then reselling them for a higher price
- Doing an initial coin offering (ICO). You can tell how popular a particular asset is by how many people have already invested in it.
What do you need to start investing?
- A cryptocurrency account, such as Coinbase or Exodus
- A wallet that can store your investments, such as Metamask or Coinami
Some money from your bank account to send to your cryptocurrency account I recommend starting with around $100. Before starting, you should also do some research on the different cryptocurrencies available and decide how much of your investment should be sent where. You will also need to set up how much you are comfortable losing. Remember, cryptocurrencies are very volatile and although this is an exciting time for the community, be careful about how much you invest!
The process of buying and selling NFTs
Now let’s get into how to buy and sell digital assets. The first step will be setting up your cryptocurrency account. Go ahead and connect your bank account information with your cryptocurrency account so that you can purchase digital assets using money from your bank account. Follow the directions below to see how I purchased $50 worth of crypto.
- Click on “Buy/Sell” in Coinbase
- Choose which currency you want to purchase (Bitcoin or Ethereum)
- Choose how much money you’d like to invest
- Go to your bank account and send over how much money you’d like
- Confirm that the amount has been sent successfully, then it will show up in your Coinbase wallet.
- Congrats! You have now made your first cryptocurrency purchase.
Make a transaction with NFTs
In order to make a transaction with NFTs, let’s start by setting up a wallet. Wallets are how you hold onto digital assets once they are purchased or earned from an ICO bonus. There are many different kinds of wallets available, but I’m going to cover how to use Metamask and Coinami for NFT transactions.
- 1) Download Metamask here: https://metamask.io/
- 2) Download Coinami here: https://coinami.com
- 3) When installing Metamask, you will need to choose a password to secure your wallet from outside access
- 4) Once the installation is complete, you should see a fox icon on your Chrome browser toolbar
- 5) Open up MetaMask and set how much gas for Ethereum transactions you are willing to pay per kb (the higher how much, the faster transaction times). You can also adjust how many ETH tokens it takes to create a new account if needed. Be careful not to run out of funds! This account uses an address that could be depleted if every transaction were only partially filled. I’ve provided a link below for more information on how wallets work. It’s good stuff! https://github.com/ethereum/wiki/wiki/JavaScript-API
Use Coinami to send and receive NFTs 1)
- Download Coinami here: https://coinami.com
- 2) When installing Coinami, make sure you choose how much gas you are willing to set aside per kb in order for your transactions to go through (the higher the number, the faster the transaction time). This account uses an address that could be depleted if every transaction were only partially filled. I’ve provided a link below for more information on how wallets work. It’s good stuff! https://github.com/ethereum/wiki/wiki/JavaScript-API
Now that you have your wallet up and running
Let’s talk about how to send NFTs between wallets.
There are 2 different ways to do this:
- Automatically send NFTs straight from the exchange into your wallet
- Manually send NFTs into your wallet by entering how much gas you are willing to set for each transaction
When sending automatically, there are 4 things that will need to be entered
- how much ether is being sent (in my case, I sent $50 worth of Ether)
- how much gas per kilometer you would like for this transaction to go through (a safe bet is 10 gwei with a 50k maximum – which will cost about 1 cent).
- how much gas you are willing to pay for this transaction (limit it to how much you are willing to pay at this time)
- how many Ether tokens it will take to create a new account for this transaction (if you don’t have enough left in your Ethereum wallet, this number will go down as some of your Ether is used up).
For manual transactions, there are also 4 things that need to be entered:
- how much gas per kilometer you would like for this transaction to go through (a safe bet is 10 gwei with a 50k maximum – which will cost about 1 cent).
- how much gas you are willing to pay for this transaction (limit it to how much you are willing to pay at the time)
- how many Ether tokens it will take to create a new account for this transaction (if you don’t have enough left in your Ethereum wallet, this number will go down as some of your Ether is used up).
- how much ether is being sent (in my case, I sent $50 worth of Ether)
Once all of the information has been entered, choose how many tokens you would like to send and click “Confirm”. Congrats! You’ve now made your first NFT transaction. If everything went through successfully, you should receive how many tokens you chose to send within a few minutes via Metamask.
Now that we know how to transact with NFTs,
Let’s take a look at what determines how valuable they are.
There are three different characteristics that make up the price of an NFT:
- how scarce they are
- how unique
- how much demand there is for them
1) How scarce they are
how many tokens of a particular kind exist vs how many people want to buy/sell them
2) How unique they are
how difficult it would be to create a new token that has all of the desirable traits
3) The amount of demand
there is for a particular token how much someone is willing to pay, and how happy people will be once they receive their desired item. A combination of these factors determines how valuable a particular NFT can be on the market.
As you can see, this one little virtual trading card could potentially be worth thousands as long as its owner continues to play games and rack up points.
So how do you find out how much a particular NFT is worth?
Once you’ve determined how valuable an NFT can be, you can use sites like Etherscan or Crypto Kitties to see how much they are going for on the market at any given time. If it’s not listed anywhere else and if no one has yet created a way to transfer your NFT from your wallet onto the market, this site might be a good starting point: https://www.myetherwallet.com/market_purchase_and_sell.html
There you have it! Now that you know how to invest in virtual trading cards startups, go out there and buy yourself some truly rare pieces of digital art! Good luck
saim