Non-fungible tokens (NFT) have become a fast-spreading phenomenon since their introduction in early 2021. These digital assets, anything from art and music to tacos and chimp faces, sell like exotic paintings from the 17th century. The craze has gone so wild that even people outside the crypto and blockchain space have flocked to their nearest search engines to understand how to buy NFT. The result is the wobbling trend shown in the picture below.
The So-Called NFT Mania
Consequently, the NFT market is on fire. Lebron James, the legendary basketball player, sold his dunking video as a digitized asset for $200,000. Grimes, Elon Musk’s significant other, sold her digital art for over $6 million in just one day.
And remember the popular neon cat meme? Yes, it was sold as an NFT for $590,000. The super-popular Disaster Girl meme was sold for $500,000 by the woman featured in it as a young girl.
But one of the most interesting things about NFTs is that none of these assets have anything tangible attached to them. It’s just a JPEG or a PNG or some other digital format on your screen. For instance, Twitter CEO Jack Dorsey sold his first tweet for a whopping $2.9 million. That is the power of collectibles—they might not make sense to everyday Joes, but enthusiasts are willing to pay millions for their uniqueness.
NFTs do sound like pure hype to some. Boomers compare it with the notorious Tulip Mania. GenX calls them beanie babies. Meanwhile, millennials believe it is the repeat of the 2017 initial coin offering crash.
But is there more to NFTs than meets the eye? Maybe it is a new paradigm or a new investment class altogether. That is what CoinStats wants to find out. And by the end of this article, we’ll be one step closer to the truth and understand whether it’s worth it for people to know how to buy NFT tokens.
So let’s start with the basics.
What Is NFT
People use popular blockchain tokens to issue their own. For example, they use currencies such as Ethereum’s ETH, Cardano’s ADA, Polkadot’s DOT, and many other cryptocurrencies to put them into a smart contract. Then they issue their digital asset from the smart contract, which they will call something unique and special, such as CoinStats coins, etc.
So, in the end, the issued asset still takes its valuation from ETH, ADA, DOT, etc. Later, people attach artworks and similar perks to their tokens and put them in a marketplace to trade. As a result, interested collectors can purchase digital assets because they are backed by valuable cryptocurrencies which are liquid enough to be converted back to the US dollar, Euro, etc.
This is a simple way to explain how NFTs work. But the reason why these tokens have value is the same as for any other artwork: Because they are rare, and people want to own them.
But one must ask, couldn’t NFT creators create more of the same artwork since they are digital? Well, no, the creator will not be able to step in and duplicate the same artwork for the very same reason Bitcoin has a maximum supply cap of 21 million tokens; no one can step in and create more of the same NFT because it’s on a blockchain.
And if the creator launches the same NFT all over again, he or she risks making it less scarce, which tends to reduce its value in the long run. That being said, there will always be a slight variation that separates the duplicated NFT from the original one, whether that’s the ticker symbol or the launch date. Its uniqueness would be provable and verifiable by looking at the blockchain, even though the artworks could look 100% identical.
That may sound silly, but digital collectors do care about these types of little things. For example, the digital edition of a Pokemon card called Charizard with a FIRST EDITION stamp was released in 1999. It now sells for several hundred thousand dollars and even though an identical version of the card exists, it sells for way, way less.
This is why NFTs have value. One can create a similar artwork with 99% of the traits of the original asset, but it will never be exactly the same. NFTs are valuable because creators attach a special physical asset or experience to them or sell them at special events.
Is It Worth Knowing How to Buy NFT Tokens?
Before people decide to find out how or where to buy NFTs, they must ask themselves whether it is even worth putting hundreds and millions of dollars into a digital collectible. For instance, does buying an NFT token merely make creators rich bringing no value to the buyer? Let’s understand.
The most important thing to understand is that it depends on what people buy. We’ve created a list of criteria that will hopefully help its users understand which NFTs are valuable and which are worthless.
The First Criterion: Popularity
Funny but apprehensively true. An NFT creator needs to be popular, someone/something that is famous and has a strong brand. The bigger the creator is, the safer one’s NFT investment.
For example, if you buy an NFT associated with, say, Harry Potter, then it will always have some long-term value in the eyes of billions of Potterheads around the world.
The Second Criterion: First Factor
The “First” factor means any NFT that is the first one by some popular creator or from the industry he or she represents. Essentially, CryptoKitties became so valuable because they were one of the first NFTs ever created.
From the look of it, CryptoKitties will always have a significant value attached to them. It’s the same reason why the Pokemon card is selling for hundreds of thousands of dollars—because these artworks are historical, the first of their kind.
The “first” factor always creates a degree of buzz and excitement around it. And if you can get in on that hype, you can start treating your NFTs as an investment asset that you can sell to someone else later.
The Third Criteria: Touchability
Having an NFT that is attached to a real, tangible physical asset increases its prospects of becoming an investment. For example, a Pokemon NFT that one can use to claim ownership of a physical deliverable Pokemon card adds an additional layer of attraction to the digital collectible industry.
Sometimes buying an NFT that has an experience attached to it—an opportunity to meet or collaborate with the creator, for example—adds a lot of value to it. Digital rights, for example, are tangible assets that can be attached to NFTs.
The Fourth/Last Criteria: Scarcity
Obviously, a collectible has to be rare enough to have value in the first place. If it՛s not, there is no point buying it because everyone has it, like, say, the Bluray edition of the first Jurassic Park movie. But to have Steven Speilberg’s marvelous film on a VHS tape is pretty darn rare (kindly contact the author if you have one).
Now the four criteria above are not bullet points on how to buy NFTs. They are just the brainchild of the author who collects dinosaur toys. But nonetheless, they could assist NFT maniacs in determining what digital art piece is worth their hard-earned buck.
Where to Buy NFT: A Curated List
There are numerous options when it comes to buying NFTs. Like any other product, NFTs also have specific marketplaces, where artists list them for sale and collectors can purchase them.
CoinStats has put together a helpful list:
OpenSea has emerged as one of the most popular NFT marketplaces out there. Founded in 2017 by Devin Finzer and Alex Atallah’s software development team, the portal recently hit a record $1 billion in weekly sales, with total value submitted to its smart contract being more than 450,000 Ethereum, or about $1.4 billion.
Yahoo Finance reported that “for the entire month of August, the platform generated $2.93 billion in trading volume driven by over 2 million transactions from close to 190,000 users.”
The OpenSea marketplace features filterable price and sales status, listing everything from virtual real estate and digital pets to sound loops from The Weeknd. It also has a dedicated stats tab—almost like a stock ticker—that ranks sellers by volume, average sale price, and the number of sold assets.
Location: New York, New York
Categories: Digital art, music, games, domain names, virtual worlds, sports, collectibles.
Many call Mintable the eBay of NFTs. The marketplace has received backing from Marc Benioff-owned Time Ventures and billionaire investor Mark Cuban.
Ethereum and Zilliqa blockchains back the Mintable marketplace, with in-house MetaMask integration enabling buyers to set up crypto wallets. Creators can create free “gasless” NFTs, short-run printable series, or traditional transaction-based items.
On the other hand, buyers can purchase listed NFT items or bid in auctions.
Categories: Digital art, photography, videos, games, templates, domain names.
NBA Top Shot
DapperLabs launched NBA Top Shot, an NBA-licensed game that enables fans to collect and trade digital “moments” from their basketball matches, in early 2020. The limited-edition sets can sell for anywhere between $9 and $230 on an open marketplace.
These moments feature video highlights, player stats, and box scores. After buying them, fans can display their curated collections and follow their favorite teams. NBA Top Shot also enables users to trade assets secured on their respective private blockchains.
Location: Vancouver, Canada
Category: Sports collectibles
Vietnamese startup Sky Mavis launched Axie Infinity, a Pokemon-inspired video game that allows players to collect, breed, and trade digital pets and build farming kingdoms. After its launch in 2020, it became one of the fastest-growing marketplaces, single-handedly beating volumes of top blockchains like Bitcoin and Ethereum.
Axie Infinity’s daily active users surged from 30,000 in April to more than a million in August. The Ethereum-based project has recorded more than $30 millions’ worth of Ether transfers every day over the past month. The popularity went so far that the Philippines’ Department of Finance and the Bureau of Internal Revenue had to remind players that their Axie Infinity incomes are subject to income tax.
Axie encrypts characters and land plots as NFTs. Collectors and gamers can then buy them via the online marketplace. This is where you’ll see pets selling for hundreds of dollars and virtual land plots earning more than $20,000.
Location: Ho Chi Minh City, Vietnam
Category: Video games
Launched in February 2021, Foundation is known for hosting NFT sales of the viral internet meme Nyan Cat and Pak’s Finite Records. It has also enabled Pussy Riot’s NadyaTolokonnikova, Edward Snowden, and Aphex Twins to sell their works via auction.
The Foundation arranges creators’ work in a grid of cards and lists the trending auctions on the top of the page alongside featured artists. The marketplace lists the works alongside their reserve prices, so buyers can place their bids accordingly within 24 hours with a 15-minute extension.
Location: Los Angeles, California
Category: Digital art
Other marketplaces to browse: Rarible, Decentraland, Zora, Nifty Gateway, Venly, Valuables, Zeptagram, GROW.HOUSE, MakersPlace, The Sandbox, etc.
So that’s it, folks. NFTs make perfect sense to those who are already into collectibles. Investors who don’t find a digital item worthy of attracting capital should just ignore the craze. But those who do believe in the long-term valuation of rare, scarce assets will greatly enjoy dipping their toes in the emerging NFT sector.