NFTs, or Non-Fungible Tokens, have been taking the world by storm since their rise to fame in 2021. In fact, they were declared the Word of the Day for 2021 by Collins Dictionary. Since then, NFTs have been instrumental in revolutionizing several industries. From art to gaming, NFTs have been integrated into sectors, enhancing the experience for creators and collectors alike.
But for all their popularity, the concept of NFTs is still more than a little vague to several people. In fact, the lack of education surrounding NFTs may be why some people are still reluctant to invest in them. So here we have everything you need to know about NFTs if you are considering them. From what NFTs are to how to buy and protect them, this guide has got you covered.
NFTs explained
Before we hurl ourselves headlong into the journey of NFTs, we would first take a look at what NFTs are. An NFT is a digital token or certificate, representing immutable ownership of a digital asset. These assets can be images, videos, audio, GIFs, and so much more. Some NFTs also come with added perks and are called utility NFTs. These are significantly rising to the fore and are quickly becoming a favorite among fans of art and sports.
These NFTs are minted using blockchain technology which ensures that they are safe and well-protected from any kind of attack. NFTs are absolutely one of a kind and cannot simply be traded as one would with fiat currency of equal value. While ownership is one of the biggest draws of an NFT, it can also be sold to interested parties on secondary marketplaces. Now, renting NFTs is a concept that is gaining popularity as it allows for all the benefits of NFTs without the commitment of owning them.
Buying your NFTs
Now to the most important part – how to buy your NFTs. Before you dip your toes into NFTs, we caution you to do your due research regarding the marketplace, their background, team, and goals. If you want to try play-to-earn games, make sure you get a clear idea of how their reward system works. Once this is done and you are ready to invest in NFTs, you can follow these steps to get your hands on the NFT of your choice.
- Sign up for a crypto platform: First things first. Create your own account on a crypto trading platform or exchange. These platforms allow you to trade different currencies with ease. Again, ensure that the platform you are signing up with is completely legitimate.
- Get a crypto wallet: Crypto wallets, contrary to what they sound like, is actually meant for storing your digital assets. Take all the necessary steps to secure your crypto wallet and make sure your credentials are unique and known only to you.
- Take it to the NFT marketplace: The next step, of course, is to link your crypto wallet to your account on the NFT marketplace. Some marketplaces allow you to create a wallet on their own website, and these wallets may come with reduced gas fees or discounts.
- Buy your NFT: Now for the final step: buying your NFT. Make sure you are connected to the internet and that you have sufficient funds for the NFT. If you want to buy from an NFT drop, make sure that you are early since some launches get sold out in a matter of seconds.
And that’s it. Now, you are the proud owner of an amazing NFT which you can collect, or later, sell on a secondary marketplace, or even rent out on an NFT gaming marketplace!
Protecting your NFTs
Now, it is common knowledge that investing does not just stop there. You need to actively take measures to protect them. We have already discussed some aspects one must consider before investing in an NFT marketplace. Usually, their whitepaper is a good place to start as it provides all the details of their products and services. Next, head to their social media. Twitter and Discord are particularly popular with NFT projects and you can scope out what other users think.
That was with regard to choosing a marketplace. Now, before you buy your NFT, make sure that your wallet itself is secure.
- The first step is a no-brainer. Create a unique password. We have heard this million, if not billions of times. But for good reason.
- Next, crypto wallets come with a 12 to 24-word seed phrase. Make sure that you never divulge yours to anyone.
- Make sure that any link you click is safe and verifiable. Several scammers parade NFT giveaways around but actually use them to con people of their money. If you cannot verify the source of a giveaway, never participate. NFT airdrops, too, are a popular scam. So make sure you never accept random airdrops from people claiming to give away NFTs.
The blockchain technology that is used for transactions pertaining to NFTs is generally secure and transparent, leaving little to no room for fraudulent transactions. Any such transactions, too, can be easily tracked down. However, like with any piece of technology, it is good to exercise caution, especially since wily scammers can often find a way around the system.
Signing Off
Despite being on a downswing of late, with the entry of brands like Disney and Meta into Web 3, it is possible that NFTs may soon be bigger than ever. With this being the case, knowing how NFTs work can help you invest when the time is right, and more importantly, allow you to keep your assets protected. After all, forewarned is forearmed!
