While the recent NFT trend has caught the attention of investors, they may not have the necessary knowledge about what these are and how they work. UK investors should set up a few things in advance before getting involved.
Often referred to as complex concepts, NFTs are pretty simple to understand. They are essentially digital tokens that can be stored in a blockchain and are unique assets that can be bought and sold. Continue reading this guide to learn more about this asset and how you can get involved.
Buying NFTs – How and Where?
You’ll know how it works when buying NFTs if you have used a platform like eBay. In most cases, the marketplaces that sell NFTs function similarly to an auction house. You bid on the asset and wait to see if you’re the lucky winner. Some sites also have ‘Buy Now’ options, where the asset price is fixed.
One of the main differences between NFT marketplaces and other platforms is that the prices are usually listed in Ether units instead of dollars. This ensures that the currency’s value constantly changes due to the market’s volatility. Most NFT marketplaces require you to use the Ether currency to purchase their assets. This is because most of the NFTs are part of the Ethereum blockchain.
Using a cryptocurrency wallet, you can transact with the Ether you purchased. The fee is charged each time the transaction takes place. This money goes to the miners responsible for powering the Ethereum blockchain.
There are a variety of NFT marketplaces to consider that cater to different needs. These include art and music tokens, domain names, and trading cards. Others only sell niche branded products, such as the NBA Top Shot or Axie Infinity, an online video game inspired by the North American basketball league. Some prominent platforms selling NFTs include SuperRare, OpenSea.io, Rarible, and Mintable.
Before you start using a cryptocurrency wallet, it’s important to note that each site has its own requirements. For instance, if you’re planning on buying a product from one of these marketplaces, you should ensure that the wallet supports all of its features. Some popular platforms that accept cryptocurrencies include Coinbase, Formatic, Portis, and MetaMask.
Creating an NFT
If you’re planning on creating or ‘minting’ an NFT, you’ll need an image, a video, and a music file to make it work. You can also pre-funded a wallet that’s compatible with your chosen blockchain. Choose from the variety of the same sites you’d buy an NFT from, such as OpenSea.io or Mintable.com. From there, you can start creating your own NFTs. However, keep in mind that each of these marketplaces has its unique way of doing things, and you must follow the instructions on their site should be simple enough.
Once you’ve created an NFT, you’ll need to choose the type of currency you want to mint and the sale price. You can also choose to mint multiple or single NFTs. Each platform has fees that are different from those charged by the others.
Selling an NFT
You can sell an NFT on a platform that accepts trading or mint it yourself to sell it. Like with the minting process, there will be various fees associated with the sale. These include the gas fee, as well as the final sale service fee that the marketplace dictates.
Reselling NFTs on the secondary market is similar to buying and selling any other asset. Before you sell an NFT, make sure that it’s in a compatible wallet and has the necessary details to be listed on the marketplace. Although your currency could sell for a higher price than initially purchased, its long-term value is not guaranteed.
When creating an NFT, the end of this process will be selling, so it will likely happen on the platform you’re using to make it. Depending on the service you’re using, you can set the price you want to sell or dictate the terms of the auction. In some cases, you can even receive royalties if the currency is sold in the future.
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