NFTs (Non-fungible Tokens) can be a confusing area to get into. It’s important to know how they work and the advantages of using them in your projects, which we will cover later on in this article. However, for now, we want to focus on how you actually purchase them!
A large number of these tokens are issued on Ethereum, which is currently the largest blockchain for issuing new tokens. This means that it’s important to have a wallet set up and ready before you attempt to purchase any NFT. It’s not as simple as going out and buying ETH, signing a transaction, and sending it to the address listed.
Researching before buying
It’s important to be aware that many of these tokens are traded on secondary markets. This means you will not always be able to purchase them directly from the issuer or parent contract. Also, this market is still in its infancy and there isn’t a “set” price for many tokens.
In order to do this, it’s vital that you look at the token contract and all source code before sending any funds. It is possible that malicious actors could add an extra step into your purchase flow in order to extract more value from unsuspecting users.
There are a number of options available when it comes to wallets that can hold ERC-721 tokens. We recommend using the following list as the best starting points, ordered by preference: (1) MyEtherWallet (2) Trust Wallet (3) Coinbase Wallet and (4) Centralized Exchanges.
When you are signing up to any wallet, make sure that they are compatible with ERC-721 tokens. Questions you should ask before purchasing the wallets is whether or not they support Ethereum. MyEtherWallet makes it clear on their site that they support many tokens, but Trust Wallet only explicitly states that they support Ethereum based tokens.
Don’t purchase for too high of a price if you expect the price to go down
If you are looking to make a quick return on investment, then this may not be the right space for you. There are many large movements in token prices that can happen very quickly, but there is also an incredible amount of volatility.
Many of these tokens are in the early stages of their life, so it’s likely to be a bumpy ride for some time. You should always do your research before purchasing tokens and understand if this is really the space you want to get into.
As long as you take precautions like checking all source codes and not sending any funds until you are fully ready, you should be able to make your token purchase without any issues.
Be patient! If the price dips, it’s likely not going to return for some time so you can buy more tokens when they are cheap.
How to purchase tokens on an exchange
If the token you want is traded on an exchange, this will be your safest bet. Many of these exchanges are designed specifically for users who want to trade NFTs and they offer various tools to make it easier.
Token prices and risk
When purchasing tokens, there are a few things to remember. As we mentioned earlier in the article, this market is still very new and it’s likely that most of these tokens will not have an easy time finding a stable price point.
You should always look at the history of token pricing prior to making any purchases. This will give you an idea of how risky the purchase is and if it’s likely to be profitable in the short term or not.