Author: Marissa Hayden
What are NFTs?
Non-fungible means that something is unique and not able to be exchanged for a different identical item. For example, one piece of artwork cannot be exchanged for another, because they both have unique properties that will change their value. However, fungible items like cash or coins can be exchanged for another – one dollar is always equal to another.
So, what exactly is a non-fungible token? Non-fungible tokens are digital assets that are designed to signify the ownership of a unique digital item. It’s worth noting that an NFT only represents ownership, the owner may not have the original digital asset in their possession. NFTs are mostly known for their association with digital art, but they can technically represent anything that is digital, such as music, videos and digital trading cards.
NFTs are housed on a blockchain, typically Ethereum, however, you can also find them on Ergo and Algorand. They are generally in the format of a smart contract, which is a self-executing contract where the terms of the agreement between buyer and seller have been written into lines of code.
To date, the most expensive NFT to be sold was Beeple’s Everydays: The First 5000 Days, a piece of digital artwork that sold for US$69.3 million.
→Related article: What is an NFT: the New Trend in Crypto?
Where to buy Cryptocurrency in NZ
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|Provider||Link to Provider||Fiat Currencies||Bitcoin||Other Currencies||Est.|
|NZD, AUD, USD||Yes||24||2013|
|Easy Crypto||NZD, AUD||Yes||100+||2018|
This information is not an endorsement by Canstar of cryptocurrency or any specific provider. Canstar is providing factual information supplied by providers. Cryptocurrencies are speculative, complex and involve significant risks. Canstar is not providing a recommendation for your individual circumstances or in relation to any particular product or provider.
How to buy NFTs
If you are interested in exploring the world of NFTs and potentially owning one yourself, here’s how it can be done.
Step 1: Buy crypto
As most NFTs are based on the Ethereum blockchain you will need to purchase Ether (Ethereum cryptocurrency) in order to buy an NFT. If you already have an account with a cryptocurrency exchange, it should be easy enough to buy Ether. If you have yet to open an account with the crypto exchange, here’s our step-by-step guide to buying cryptocurrency.
→Related article: How To Buy Cryptocurrency in New Zealand
Step 2: Top up your crypto wallet with tokens
Once you’ve purchased Ether, you will need to transfer your coins into a digital wallet. You’ll need an Ethereum-compatible crypto wallet to purchase most NFTs. If you are not sure about wallets, here’s an explainer on how they work and what is available:
Step 3: Decide on an NFT marketplace
OpenSea is the largest and most popular NFT marketplace, but it’s not the only one. Here are some other marketplaces that you can use.
- Nifty Gateway
- NFT ShowRoom
- Axie Marketplace
Bear in mind, each one will function slightly differently and may require different things in order for you to make a purchase on their platform. So make sure you choose wisely and select one that is compatible with the wallet that you are using and the currency you have.
Once you’ve decided on one, you can connect your wallet and start exploring the market.
Step 4: Find the right NFTs to buy
A good place to start when deciding on an NFT is to work within your own interests. For two reasons, if you are interested in something you may already have some good knowledge of it, and it will be easier to research it so you can learn more. Secondly, you are better off buying something you like, rather than something you don’t.
Research is hugely important. Some things you should try to learn about an NFT is:
- Who the creator is
- The community of people who may be interested in the NFT
Step 5: Buy the NFT
NFTs are sold in a virtual auction. In order to purchase one, you will need to have the highest bid. Each NFT marketplace will operate these virtual auctions differently, so before bidding it’s a good idea to check how the auction will work on the platform that you’re using.
Should you buy NFTs?
Whether or not you should buy an NFT comes down to your own personal circumstances and reasons behind your potential purchase. If you are buying an NFT as a collector and are genuinely interested in being the owner of a particular digital item, you may not need to think so much about the potential resale value. However, buying an NFT as an investor is a lot riskier. Just like any investment, there is no guarantee that you will make a return, particularly with NFTs where, just like artwork, the value is subjective.
If you do decide to place a bid on an NFT it is best not to spend more than you can comfortably afford to lose.
About the reviewer of this page
This report was reviewed by Canstar Content Producer, Andrew Broadley. Andrew is an experienced writer with a wide range of industry experience. Starting out, he cut his teeth working as a writer for print and online magazines, and he has worked in both journalism and editorial roles. His content has covered lifestyle and culture, marketing and, more recently, finance for Canstar.