What is an NFT & How to Invest?

what is a NFT
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The popularity of cryptocurrency has soared over the last few years, but it's not just cryptocurrency that people are investing in nowadays. NFTs are becoming increasingly popular in the digital world, but what are they, and how do you invest in them?

An NFT is a non-fungible token, meaning it’s one-of-a-kind, and nothing can replace it. It’s a digital file stored on the blockchain and can be in the form of a video file, picture, audio file, or others. Anyone can view the NFT contents, but each NFT can only have one owner: the buyer.

This article will explain what an NFT is in more detail and how to invest in and buy one. Be sure to keep reading to learn more about it.

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What is an NFT?

An NFT is a digital token, and only one person can own the original version. All NFTs are authentic; that's why some of them sell for such high prices.

Similar to digital versions of Pokémon cards, they have value because they're rare or unique, so people bid money and trade them.  When you buy an NFT, you're the sole owner of it, and you're the only one who owns the original copy.

But that doesn't mean no one else has access to the contents. NFTs are digital assets, so in many cases, people buy them solely for bragging rights! 

Today, companies and celebrities have begun adopting the idea of NFTs. The NBA, for example, has its own marketplace: NBA Top Shot. Here, people can browse and buy basketball-related NFTs. 

The idea of an NFT began as early as 2012 when researchers began discussing the concept of non-fungible colored Bitcoins. Years later, the NFTs that we know today was formed.

NFTs are some of the latest creations based on blockchain technology and are still a relatively new investment opportunity for crypto enthusiasts.

There's no sign of them going away anytime soon!

Is an NFT the Same as Cryptocurrency?

An NFT is not the same as cryptocurrency. NFTs are non-fungible, meaning they’re one-of-a-kind; no two NFTs are the same. Cryptocurrency, on the other hand, is fungible. 

All Bitcoins are exact replicas of each other; one Bitcoin will always be equal to one Bitcoin.  You can think of an NFT as a digital form of art. Take the Mona Lisa, for example. 

There’s only one original Mona Lisa painting, and that painting can only have one owner at a time. Anyone can view it in the museum and take pictures of it, but they don't own it. 

NFT's are just like this, except they’re digital rather than physical. In the future, they may even be used to authenticate things such as birth certs and other types of contracts.

How to Invest in an NFT

Now that you understand what an NFT is, you may want to get your hands on one. Below is an easy guide on buying or investing in your first NFT.

Here are the steps:

1. Choose a Marketplace

Decide where you want to buy your NFT. There are a few marketplaces to choose from, but the most common one is OpenSea because it’s easy to use and was one of the first NFT marketplaces to exist. 

Other popular NFT marketplaces include Axie Infinity and Rarible.

You'll be required to create a profile and connect your wallet. The best wallets to choose from are Ethereum-compatible wallets because most NFTs are on the Ethereum network.

2. Browse for Tokens

Once you're set up on the marketplace, you can begin browsing the many different NFTs. You’ll likely need to bid on the token you want, and the highest bidder will get it.

When browsing, you’ll see that there are so many different tokens to choose from, so be sure to spend time browsing.  You don't have to start bidding on the first token you see.

3. Bid and Buy an NFT

Once you've decided on an NFT, you can bid on it. If you win the bid, the NFT is all yours! Since you’ve already connected your wallet to the marketplace, making the payment will be quick and straightforward.

It's essential to be aware that you may need to pay transaction fees, depending on which marketplace you use. 

4. Keep or Sell the NFT

Once you own an NFT, you can do whatever you want with it. You can brag about it, keep it a secret, gift it to someone, or sell it; it's up to you. If you decide to keep it, you don’t need to do anything else.

If you want to sell it, you can go to platforms like OpenSea. You can also mint the NFT.  NFTs can be pretty expensive, depending on which NFTs you own.

By selling your NFT, you may be able to make some profits, although not guaranteed.

How Do You Sell an NFT?

You can sell an NFT on an exchange like how you buy it. The exact instructions will vary depending on the marketplace you use, but in most cases, you'll upload your NFT to the marketplace and follow the instructions.

You can add a description, give pricing recommendations, and then let people bid.

Should I Buy an NFT?

You should buy an NFT if you're interested in art and want to own something unique or if you're interested in the technology behind NFTs. You shouldn't buy an NFT if your primary goal is to make a profit because that isn't always guaranteed.

It's important to remember that the future of NFTs is never certain, so buying one in the hopes that its value will increase is risky. 

The pricing and value of NFTs are driven by demand, and demand can change. You may end up selling your NFT for a lower price than you paid, or you may realize that no one wants to buy it at all. 

However, if you can get past the uncertainty, you can undoubtedly enjoy NFTs. You might find one that means something to you or one that looks cool that you want to own.

Whatever the case may be, it's up to you to decide whether to invest or not.

Conclusion

NFTs are a very new and exciting thing, but they can be challenging to understand at first. They get their value from being one-of-a-kind tokens, and their demand can dwindle at any moment.

Before investing in an NFT, be sure to choose the right one for you and make sure you understand the risks involved.  Most importantly, enjoy yourself as you discover this new digital phenomenon.

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