How to Buy and Sell NFTs
Imagine a world where purchasing and selling digital artwork using cryptocurrency was unimaginable. However, the advent of NFTs completely transformed the landscape of modern art.
Today, artists have the ability to create their own NFTs, store them on blockchains, and engage in transactions using cryptocurrencies.
The NFT market is rapidly expanding. If you possess prior knowledge or experience in the realm of cryptocurrencies, trading NFTs will likely come naturally to you. However, if you are new to this field, it is crucial to first familiarise yourself with the fundamentals.
Here we will walk you through the basics of buying and selling NFTs, providing you with valuable insights and information.
Understanding NFTs
An NFT represents a digital asset that can take various forms, including PNG, JPEG, MP4, and more. These tokens are created with a distinctive identification that is directly linked to a blockchain address. Once stored on the blockchain, certified owners have the ability to engage in the buying and selling of other NFTs within the marketplace.
Understanding NFTs
The process of making your NFT available on the blockchain is referred to as minting. Once your NFT is prepared, you record its metadata on the blockchain, which includes details such as the NFT's name, creator, description, and other relevant information.
The Uses of NFTs
Within the NFT market, there are primarily two routes you can pursue: creating and selling NFTs or buying and selling them on secondary markets.
For artists, there are various marketplaces available where they can directly create NFTs using the platform's tools or upload existing tangible assets to be tokenized.
On the other hand, for collectors, these marketplaces provide a streamlined process for exploring and engaging in the trading of NFTs.
Buying and Selling NFTs
The easiest way to begin with NFT trading is by buying and selling existing digital assets that have already been created, rather than creating your own. This approach requires less time and effort compared to the process of creating NFTs from scratch.
How to Purchase an NFT?
To start off, let's explore the process of purchasing already existing NFTs.
1. Select the Platform
NFTs can be found on various platforms and NFT marketplaces. While some platforms may require registration and completion of KYC procedures before buying NFTs, there are also platforms that allow you to skip the registration process. When selecting a platform based on your personal preferences, it is important to consider factors such as security, transparency, availability of 24/7 customer support, and user-friendliness.
2. Create an Account
As previously mentioned, certain platforms may necessitate registration, prompting you to follow the on-screen instructions to create an account. It is crucial to remember the email address and password you used during registration to avoid any potential complications.
3. Create Wallet
What is the most important thing while making purchases? Of course money. Every NFT marketplace and platform typically requires users to create a separate wallet and link it to their account. In some cases, certain marketplaces even provide their own wallets, where users need to deposit funds.
For instance, ftNFT has its own integrated wallet that is automatically connected to user accounts, simplifying the process as users only need to deposit money into their existing wallet.
4. KYC (Know-Your-Customer)
After completing the steps listed above, users may be prompted to undergo KYC and identity verification procedures. However, it is important to note that this step is optional, as certain leading NFT marketplaces no longer require KYC.
5. Choose the NFT
Next, it is time to select an NFT or NFT collection that aligns with your interests. With thousands of options available online, this decision may require some time and consideration. It is advisable to choose an NFT with a reputable standing within the community, as tokens that receive positive feedback are more likely to hold their value over time. Additionally, it is important to evaluate the value and examine the available data. Conducting thorough research can provide insights into the potential growth prospects of the NFT or collection in question.
How to Sell an NFT?
To sell an NFT, the first step is to arrange an auction for the NFT. The specific process may vary across platforms, but generally, once your NFT is listed on a platform, selling it is as simple as clicking a "sell" button.
For instance, as a creator, you will typically have the option to set a price for your NFT, auction it off to potential buyers, or accept an offer from a buyer.
The fees associated with listing your NFT for sale can vary depending on the blockchain supported by the NFT platform. Once the NFT is listed, the seller will receive a notification and the funds will be transferred to their crypto wallet.
Creating and Selling NFTs
Engaging in the creation and sale of NFTs is another popular option in the NFT trading landscape. It is crucial to focus on creating NFTs that would resonate with the NFT community. This includes conducting market research and identifying the target audience for your NFTs.
Once you have determined the type of NFT you want to create, the next step involves selecting a suitable blockchain. There are several blockchains available in the market, such as Ethereum, Solana, Ripple. It is essential to ensure that the chosen blockchain is supported by the marketplace you have selected. The choice of the marketplace also holds significance, with emphasis placed on intuitive user interfaces, security, transparency, and user-friendliness. Consider exploring reputable NFT marketplaces that have already gained recognition.
Additionally, it is important to recognize the need for social presence and awareness for your NFT project. Utilizing various social platforms is beneficial, but starting with platforms like Twitter and Discord can be a good initial step in building a presence and connecting with potential buyers and the NFT community.
Secondary Market NFT Trading
Now that you have familiarised yourself with the process of creating and selling NFTs, it is time to enter the world of NFT trading on the secondary market.
Mastering the Art of NFT Research
When engaging in buying and selling NFTs on the secondary market, it is advisable to consider the following points during your research.
The Art
NFTs cover various forms of digital art, including photographs, paintings, music, films, and more. During the research, it is extremely important to assess the popularity of a work of art at the current moment. Pay attention to the artist, as his reputation can greatly affect the value of NFTs. Also, consider factors such as the quality, uniqueness, and overall value of the NFT in question.
The Team
The team behind the launch of the NFT collections is of great importance. It is important to look into their past professional experience, the types of NFTs they have introduced and their success in the market.
The Roadmap
The NFT roadmap serves as the collection's business plan, providing a step-by-step plan for how the team intends to launch the collection, move towards success, and what can be expected after the minting process.
The Community
Take the time to explore the social media pages, if available, and assess the authenticity of the followers and reviews. Genuine feedback froreputation m real people within the market is essential for understanding the value and of the collection.
Partners of the Collection
The success of the NFT collection can be bolstered by its partnerships. You need to research and collect information about the supporters of the collection. These partners can range from established Web2 companies to other significant organisations.
Whitelist vs. Secondary Market
It will also be important for you to understand the secondary market trading circle, mainly consisting of the following processes.
Whitelist Mint
If your primary objective is to quickly buy and sell NFTs for profit, participating in a Whitelist Mint (pre-sale) presents an ideal opportunity. In theory, Whitelist Minting offers the advantage of acquiring NFTs at the lowest price during the initial phase. This method allows for minting at an opportune time zone, minimising the impact of high gas fees compared to the Public Mint. However, gaining access to Private NFT minting can be challenging as it requires being on the whitelist. To secure a spot on the whitelist, it is crucial to understand the specific requirements set by different websites, as each platform may have its own criteria for granting whitelist access.
Public Mint
If you are unable to secure a spot on the whitelist, there is still the option of participating in the public mint. Keep in mind that public minting may come at a slightly higher cost compared to private minting. However, there is no guarantee that you will be able to mint your desired NFTs, as the number of available spots may be limited and can be claimed within seconds.
The secondary market plays a significant role, especially immediately after the public minting, as individuals seek to sell their NFTs for quick profits or to secure their initial investments.
Gas wars, where participants compete for limited resources, are a common occurrence during hyped NFT collection public minting events. If you wish to avoid gas wars but still want to acquire an NFT quickly, the secondary market provides a suitable option. However, it's important to note that prices may rise after the collection is fully minted, so it's essential to closely monitor the desired collection.
The reveal process adds an element of excitement, particularly for those seeking rare or one-of-a-kind NFTs. The specific reveal dates can vary from one collection to another. Some projects may choose to reveal the collection immediately after the mint, while others may set a fixed date for the public reveal.
Following this logic, it becomes evident that before going public, the collection is considered highly rare and unique, resulting in higher prices. After the reveal, prices tend to decrease as people sell common NFTs and seek to acquire rare ones or may not engage in buying back at all.
Conclusion
It is generally a good idea to list your NFTs for sale when the gas fees are low, making sure you have already paid the fees in advance to avoid high gas prices when selling. Setting the right price for your NFT is critical and should be based on collection performance and market conditions. Understanding the rarity of your NFT is essential, and you can use apps or websites to check the rarity, as well as study the prices of similar NFTs from comparable collections.
This article serves as an introduction to NFT trading and aims to provide guidance and provide a hassle-free and rewarding experience. While there are many strategies and guides available online, it is important to do your own research (DYOR) and explore various resources to better understand NFT trading.
Please note, the information provided above should not be taken as investment or financial advice. It is important to conduct your own in-depth research before making any decisions or taking actions regarding NFTs.