Majed Veysel shares four Steps to Take Before Buying Your First NFT.
1. Understand why you’re purchasing an NFT.
NFTs are digital certificates of ownership that may be applied to a wide variety of goods. Art, music, films, sports collectibles, gaming products, and other items fall. You must be sure about the sort of NFT you intend to purchase and why you intend to get it.
If you’re buying an NFT because everyone is talking about it, you might want to look further. Otherwise, it’s similar to buying a book simply because you want to own it, without regard for who authored it or what’s within. Choosing an NFT should be based on your interests, as there are significant variances across NFT industries. For example, suppose you’re a player who wants to purchase an NFT avatar. You will have quite different requirements than a die-hard basketball fan who wants to possess an NFT of a favorite athletic occasion. Also, an art collector who wants to venture into digital art would have distinct needs.
2. Research, research, and then some more
Each investment is unique, but the foundations of investing are frequently the same. You must comprehend what you are purchasing, whether it is a work of art, stock in a firm, bitcoin, or your first NFT.
You will have to pay fees. A gas cost must be paid when making a transaction on a blockchain network. These can fluctuate based on the web, cryptocurrency values, and network congestion levels. NFT platforms typically levy extra costs.
NFTs may be issued on a variety of blockchains. Ethereum is the most widely used NFT blockchain. However, NFTs may be created on various other intelligent contract cryptos. Most will be less expensive and less harmful to the environment than Ethereum (ETH).
A valuation can be complex. It’s exceedingly tough to measure the worth of an NFT because it typically boils down to perspective and what’s fashionable at the time. Like fashion or art, this is a trend-driven market. There is no assurance that anything in the limelight today will remain there tomorrow.
NFT fraud is a significant issue. In principle, NFTs allow digital artists to demonstrate the authenticity of their work and sell a digitally signed copy to someone. In actuality, however, artists protest that their work has been turned into NFTs without their permission. One platform executive compared cracking down on illegal works to a game of whack-a-mole.
The NFT sector consumes a significant amount of energy. Pay attention to the NFT sustainability discussion if you’re an ecologically conscientious investor. There may be an effective carbon cost to consider depending on which blockchain is utilized to mint your NFT.
3. Determine where you will purchase your NFT.
During your study, you will most likely come across various NFT markets. These are platforms for creating, buying, selling, and exploring NFTs. First, seek a venue that trades the sorts of NFTs you wish to purchase. Consider the blockchain network utilized; as previously said, Ethereum is the most popular, but Solana (SOL) and Tezos (XTZ) are also getting into the NFT game. This is significant since it is impossible to purchase NFTs using traditional currencies such as US dollars. You must not only hold cryptocurrency, but you must also own the correct cryptocurrency. Given the frequency of NFT fraud, examine what each platform does to verify that the NFT you purchase is correctly validated. You don’t want to acquire your first NFT to discover it’s a forgery and the original artist had no idea it was produced.
4. Make a wallet to pay for and keep your NFT.
Finally, you will require an NFT wallet. These are cryptocurrency wallets that also accept NFTs. It’s simple to set up a wallet, and there’s lots of helpful advice available online if you get lost. When you first set up your account, you’ll be given a master password in the form of a seed phrase. Keep it secure since it will allow you to access your NFTs if you forget your password.
You’ll need a wallet that works with the trading platform and blockchain network you selected earlier. Another important consideration is security; two-factor authentication is required. If you buy a lot of NFTs, you should think about getting a hardware wallet that keeps your NFTs offline. However, a software wallet connected to the internet will suffice for the time being.
We don’t know how the NFT industry will evolve, but these assets have the potential to transform how we own stuff online. However, there are several difficulties to address, such as the environmental cost and copyright violations. For the time being, the best way to approach NFTs is to follow your current hobbies. This will assist you in determining the quality and worth of the products you purchase. Be careful that the NFT sector is rife with speculation, hype, and blatant fraud. There is no assurance that NFT prices will grow indefinitely; many may decline. That is why you should only spend money you can afford to lose. If prices drop, it will not be financially disastrous. Most importantly, take your time and enjoy learning about a new digital world.
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