Non-fungible tokens — unique, verifiable digital assets that live on the blockchain — are being bought, sold, and collected by athletes and celebrities like Stephon Curry, Jay-Z, Tony Hawk, Ellen Degeneres, Snoop Dogg, Naomi Osaka, Tom Brady, and more. Even the NBA released its own line of NFT trading cards and collectibles called Top Shot.
With the kind of hype associated with these names and organizations, it’s no surprise people are excited about the potential for NFTs to reshape the world. If you’re new to the space and wondering how you can buy your first NFT and start a collection, you’ve come to the right place.
Step 1: Setting Up Your Crypto Wallet
NFTs transform digital artwork and other collectibles into unique, verifiable digital assets that can be bought, sold, and traded on blockchains like Ethereum and Solana. Unlike Bitcoin or fiat money, which can be exchanged at a rate of 1:1, each NFT is distinct, like a piece of art hanging on a museum wall.
The non-fungibility of NFTs creates scarcity in the digital asset class but also means individual buyers must be interested in an NFT and purchase it for it to be liquidated.
To get started with NFTs, the first thing you need to do is set up your crypto wallet. Much like how a regular wallet stores cash and cards, a crypto wallet is a place to store digital currency when you’re not using it.
While there are several types of crypto wallets to choose from, a non-custodial wallet is usually necessary to purchase NFTs. Non-custodial crypto wallets give you full ownership over your private keys and digital assets.
- Decide which non-custodial wallet you want to use.
- Download the program or mobile app.
- Set up your account and security features.
- Save your password and security phrase offline in a secure place.
- Deposit or transfer cryptocurrency into your wallet.
Remember that saving your security phrase is a crucial part of setting up your wallet. You should save your phrase offline on a hard drive or write it down and literally keep it in a safe. Think of your security phrase like the keys to a vault; if you lose it, you lose access to your wallet and everything in it.
Step 2: Loading Money onto Your Crypto Wallet
After choosing and downloading a non-custodial crypto wallet, you must load a cryptocurrency onto it to buy or bid on an NFT. If you’re purchasing an NFT that’s on the Ethereum blockchain, then you’ll need the Ether token in your wallet to make the purchase. The leading Ethereum wallet is MetaMask.
If you’re interested in purchasing on the Solana blockchain, you will need to purchase the SOL token. Phantom and Sollet wallets are two non-custodial wallets that support SOL.
To load a cryptocurrency onto your wallet, you can use a credit or debit card or transfer the cryptocurrency from an exchange like Coinbase.
Step 3: Choosing an NFT Marketplace
Now that your wallet is loaded, you can start thinking about where to buy your first NFT. There are currently three types of NFT marketplaces, although it’s possible other models will evolve in the future. The three types of NFT marketplaces include “open,” “curated,” and “proprietary” marketplaces.
On an open NFT marketplace, anyone can create, buy, or sell NFTs, and there is no need to apply or be accepted. Below are some of the most popular open NFT marketplaces:
- OpenSea. Built on the Ethereum blockchain, this platform is the largest marketplace for NFTs and #1 leader in sales and transactions. During two days in August of 2021, the site saw a trading volume of $95 million. Since launching in 2017, they’ve had over 12 million assets listed on the marketplace, including digital art, gaming items, collectibles, and other digital assets. Besides being able to create, sell, and buy NFTs easily, users can also post NFTs that were not minted on OpenSea. It is free to sign up.
- Rarible. Another popular open marketplace where a variety of digital art, videos, music, books, movies, and collectibles can be bought, sold, or created. One of the benefits of creating an NFT on Rarible is that there are no minting fees, and NFTs minted on Rarible can also be bought and sold on OpenSea. However, Rarible only lists NFTs that are minted by the site, and users who wish to purchase an NFT must use Rarible’s own cryptocurrency ($RARI). Rarible, built on the Ethereum Blockchain, has recently partnered with notable companies such as Adobe and Yum! Brands.
- Mintable. This platform is backed by billionaire Mark Cuban and runs on the Ethereum blockchain. It aims to be a platform for all sorts of creators, including musicians, photographers, and digital artists. To purchase NFTs on Mintable, you need to connect your crypto wallet and bid or buy using Ether.
- Solanart. If you’re looking for an alternative to Ethereum, this NFT marketplace is the first to run off the Solana Blockchain. The price of minting an NFT on Solanart is significantly cheaper than OpenSea, and if SOL continues to rise in value and popularity, this marketplace could prove to be a strong competitor to OpenSea.
The next type of marketplace is called “curated.” Curated marketplaces refer to marketplaces where the NFTs that are posted, minted, and sold are determined by the platform.
This process of selecting NFTs and artists is similar to the way traditional art galleries select art to be exhibited. The idea is that by curating the marketplace, you can increase exclusivity and keep the quality of the NFTs to a high standard.
Below are some of the most popular curated NFT marketplaces:
- NiftyGateway. This platform, owned by Winklevoss twins, collaborates with famous artists, brands, and athletes to create crypto assets and digital art called Nifties. NG has facilitated and collaborated with some of the most popular digital artists, including Beeple and Grimes. Furthermore, NFTs can be purchased on this platform using U.S. dollars. However, when you purchase an NFT here, they are stored by Nifty Gateway and Gemini blockchain, not in your own wallet.
- Foundation. This platform has sold over $100 million in NFTs since launching in early 2021. It is a community-led marketplace where artists can invite new artists to join and mint their first NFTs. Once you have a crypto wallet funded with Ethereum, you can begin making purchases on this app. Although this app can be more complicated than some of the others, if you want to browse a top collection of digital artwork, it’s a great place to start.
- SuperRare. On this platform, you can buy and sell NFTs from some of the world’s most famous artists. Artists are invited to create on SuperRare, and although any artist can apply, they have very high standards for entry.
The last type of NFT marketplace is called a proprietary marketplace. A proprietary marketplace refers to when the NFTs that are minted and sold are created by the marketplace operator. In proprietary marketplaces, third parties are not invited to sell NFTs. Some of the most popular proprietary NFT marketplaces include:
- NBA Top Shot. The NBA and WNBA have entered the NFT world with their own closed NFT marketplace that runs on the Flow blockchain, built by Dapper Labs. The market contains video clips, highlights, and collectibles that can be bought cheaply on the NBA Top Shot marketplace using dollars or crypto. There are two basic card packs: a base set that costs $9 and themed packs that have a range of prices.
- Larva Labs. The company behind CryptoPunks, which practically launched the NFT craze in 2017, releases a variety of projects on this built-in marketplace. Although all CryptoPunks are sold out and need to be purchased on secondary marketplaces such as OpenSea, other notable projects such as Meebits can still be purchased here.
- VeeFriends. This project was created by the famous social media influencer Gary Vaynerchuk and consists of collectible digital art minted on the Ethereum blockchain. Purchasing an NFT grants access to VeeCon, a multi-day event, and each NFT comes with different levels of activities and access. NFTs can be purchased directly through VeeFriends or on secondary marketplaces such as OpenSea and Rarible.
There is no shortage of NFT marketplaces to choose from, and likely more will arrive in the months and years to come. If you’re new to NFTs, it’s a good idea to browse the different marketplaces and see what you like or dislike about each one before deciding where to purchase your first NFT.
Minting vs Buying on a Secondary Marketplace
Knowing when to buy an NFT is also important. When you buy an NFT on a secondary marketplace, these digital assets have been purchased once and are being resold.
That means the price on a secondary market could be much higher or lower than buying the NFT at “mint.” Minting refers to the process of transforming a digital file into a digital asset that lives on the blockchain, so to “mint” an NFT is to essentially create one.
Here are some of the benefits of minting an NFT:
- Royalties. With some NFT projects, minting an NFT when it drops can mean that as the owner you’ll be included in some percentage of royalties from future resales.
- Rarity. When you mint an NFT, you are given a random NFT from the collection. If you get lucky and receive one of the rarer NFTs, you could be the new owner of a valuable digital asset.
- Discounts. Minting an NFT requires that you pay attention to the project. By following the projects on their Twitter and Discord channels you can often find discounts on the minting price and other deals or giveaways.
- The price. Bored Ape Yacht Club (BAYC) sold out their collection for a minting price of .08 Ether (around $190). The current floor price for a Bored Ape is around 46 Ether (over $200,000). Of course, most NFTs won’t have the same success as BAYC, but by purchasing NFTs at mint you can get in on the ground floor of a project and often get the best price.
Although the minting process can be a little more complicated than buying NFTs on the secondary market, minting your own NFTs is one of the best ways to become part of the NFT community.
Tracking Upcoming NFT Drops
If you decide to give minting a try, there are several ways to find upcoming NFT drops. One way is by visiting our homepage and browsing Upcoming Projects. Rarity Sniper, besides ranking the rarity of existing NFT collections, lists upcoming projects and includes links to their website, Twitter, and Discord channels.
With this information, you can find new projects you’re interested in and see when they’re dropping their collections. When you find a project you like, follow their Discord channel and Twitter to get an idea of how active the community is and what the future plans and project road map looks like.
When you’re ready to mint an NFT, you must go directly to the project website and connect your crypto wallet at the time of the mint. Minting an NFT yourself means you are the first owner of the NFT, and afterward, you can decide to keep your NFT or resell it on a secondary marketplace.
Also, remember that when you mint an NFT, you don’t get to choose the specific digital asset you receive. Instead, all buyers pay the same price, and the digital assets are assigned randomly when they are minted.
While this may sound disconcerting for folks who want control over the art they’re purchasing, if you get lucky and the collection turns out to be popular or you receive a digital asset with rare attributes or features, you could see large profits.
Step 4: Evaluating and Purchasing an NFT
So you’ve chosen a wallet, loaded it with crypto, and now you’re ready to buy or mint your first NFT. With thousands of NFT projects to wade through on OpenSea and other digital marketplaces, it can be difficult to know what to buy.
Furthermore, since NFTs are part of a new and rapidly evolving digital ecosystem, so much is still being worked out and discovered. That said, listed below are a few tips to keep in mind when shopping for NFTs:
- Sentiment. You should love or at least really like the digital art you’re buying. When you love the art you invest in, you’ll be willing to hold onto it through ups and downs in the market, and you’ll also feel good about helping artists you believe in.
- Engagement. The Discord and Twitter of the NFT project should be active and enthusiastic. The founders should be responsive to questions on these channels and have future plans for the project.
- Utility. Some NFTs are just for fun and that’s fine. But NFT projects that also provide utility such as social status, entrance into digital or physical spaces, or that are items in games or digital worlds, are worth giving a look. As decentralized metaverses continue to grow in popularity, the more uses your NFTs have, the better.
- Rarity. There are several factors that can determine an NFT’s rarity. For example, the first NFT by a renowned artist, a rare feature or attribute, or an NFT that was created by a famous celebrity could all make the price of an NFT skyrocket. You can check RaritySniper.com for a listing of collections where each digital asset is ranked by its rarity in relation to the whole collection.
- Seller’s history. Investigate the seller’s account to get an idea of how many sales they’ve made and the previous prices of those sales. If a seller hasn’t sold anything or the price they want for an NFT is unusually high, it may be a good idea to look elsewhere.
- Floor price. The floor price of an NFT is the lowest price of an NFT within a certain category or collection. When you find a new NFT project, be sure to check the floor price to see if it’s something you can afford.
Once you’ve done all your homework and decided which NFT you want to purchase, connect your non-custodial wallet to an NFT marketplace or project website and make the purchase. Congratulations! You’re now an NFT owner.
Step 5: Selling an NFT
After you purchase your first NFT, you can hold on to it or resell it on an open marketplace. If you decide to sell your NFT on Rarible’s marketplace, you will have three options. Your selling options include Fixed Price, Unlimited Auction, and Timed Auction.
The Fixed Price option allows you to set a price that someone can pay and buy immediately (think of it as one-click shopping). The Unlimited option will let people bid indefinitely until you accept an offer. And the Timed Auction lasts a set period that you can determine (ie. one week).
Once you choose an option, you must set the minimum price that you’re willing to accept for your NFT. Be careful not to set it so low that additional fees at the time of the sale eliminate your profit.
Finally, there is also a service charge on both ends of the transaction of 2.5% when using Rarible. Some sellers decide to take on the price of the service charge and pay the full 5% fee.
On OpenSea, there is a transaction fee of 2.5% paid after your NFT is sold as well as a one-time transaction known as a “gas fee” for first-time sellers. Gas fees vary depending on the traffic on the Ethereum network.
Because they can be quite expensive, you can use the Ethereum gas tracker to monitor the fees and wait for the lowest prices before buying or selling an NFT.
If the gas fees on the Ethereum blockchain are too high, you can try alternative marketplaces such as Solanart, which uses the Solana blockchain and the much cheaper SOL coin to cover gas. Other alternative blockchains include Tezos, Cardano (ADA), and Polkadot (DOT).
Getting Involved in the NFT Community
When you begin to collect, buy, sell, trade, and even create your own NFTs, it not only has the potential to be profitable — it’s also a lot of fun. Owning an NFT often comes with access to vibrant and enthusiastic communities, and for many creators and collectors, it has been a life-changing experience.
However, because NFTs are still new and it’s a speculative market, you should be careful where you spend your money. One good rule to keep in mind when purchasing your first NFT is to make sure you only invest money you can afford to lose.
Also, do as much homework as you can about the NFT project and its founders before investing. The more time you can put into researching an NFT project, the more likely you are to only buy NFTs with strong communities that you know, love, and believe in.