The world of NFTs can be overwhelming: with dozens of marketplaces and hundreds of thousands of listed NFTs, it can be challenging to think about how to buy an NFT. Moreover, the kind of marketplace you purchase an NFT from will depend on the kind of NFT you are looking to acquire, and your financial priorities.
What are NFTs?
NFTs, or non-fungible tokens, are digital asset that have exploded in popularity over the recent years. Not only is the market for NFTs now a multi-million dollar industry, but it is a diverse market that offers variety across the NFT landscape.
NFTs are as diverse as they are plentiful, with most NFTs falling within the realm of visual art including images, photographs, and video. In addition, NFTs, mainly digitally created ones, are often minted in specific quantities, thereby generating rarity around a determined set of assets.
NFTs have ranged from iconic moments from social media to screenshots, but what makes NFTs significant is that they have a digital signature, meaning that while they might be replicated, there is only one original.
How to Buy an NFT
The process of buying an NFT is similar to acquiring what could be considered the real-world component of an NFT. Just as you might go to an art auction to purchase a physical piece of art for your home, an NFT is minted in a marketplace where it can be sold and traded for a price determined by the lister.
Most NFTs are purchased using the cryptocurrency Ethereum (ETH), but with hundreds of cryptocurrencies available for use, most NFTs accept more than one currency. Unfortunately, not all marketplaces accept all kinds of currencies, so if you are thinking about investing in cryptocurrency and might be interested in buying NFTs, be sure to check which marketplaces accept which currencies.
Considerations When Selecting an NFT Marketplace
Before purchasing an NFT, it’s essential to consider the pros and cons of each marketplace and how those might align with your goals for investing in and owning digital assets. Below is a concise breakdown of the types of marketplaces and how each function differently.
Types of Marketplaces
There are several different kinds of markets that list and sell NFTs, and it’s essential to know the distinction between them. The majority of markets give royalties to the original creator while also charging processing fees to the buyer. These fees vary across marketplaces, so be sure to investigate which one works best for you. The four major kinds of markets are broken down below to help you navigate your financial and investment goals.
An NFT open marketplace is generally open and accessible to the majority of buyers and sellers interested in NFTs. These tend to be more significant markets than some more curated or invite-only markets, with more listings and breadth of sales.
The popular platform OpenSea is probably the biggest NFT marketplace and is an excellent example of an open marketplace (which it references in its title). NFTs are listed from a wide selection of sources, and buyers can navigate the marketplace in various ways depending on what they are interested in purchasing.
Much like they sound, collectible marketplaces are less focused on offering a wide variety of listings but are more specifically focused on collectible offerings. These might range from sports and music virtual memorabilia to profile pictures, one of the more popular NFT categories.
These marketplaces are a more specific marketplace for NFTs that are often centered around a curated theme, a niche interest, or simply are curated because they are invite-only. Exclusivity and rarity are critical to the NFT game, and curated marketplaces like Foundation or SuperRare, unlike OpenSea, are markets that function by invitation-only.
Game marketplaces are markets designed explicitly with gaming in mind. Much like online stores built within online video games, game marketplaces are geared towards providing NFTs exclusively catered to online gaming and gamers.
Whatever market you are interested in, be sure that you research the accepted forms of currency and any feed associated with purchasing an NFT through that marketplace. Open markets offer a wider variety and price range for NFTs, whereas collectible and curated markets provide more specific offerings, generally at a higher price range.
The Bottom Line
The marketplace you select to buy an NFT will depend on your motivations and financial goals. Are you looking to collect exclusive collectibles? Are you interested in the real-world connections between NFTs and building community? You are curious about how the digital marketplaces function.