Introduction
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.
Wallet Options
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.
If there are clear trends, then there is a chance that these tokens may fall into that pattern again in the future. However, this market is still nascent so many tokens could rise or drop at any time.
Understanding the product and its value
When it comes to tokenization, many people focus on the price of individual tokens or assets that are created for this use case. While having a high token price is certainly an indicator of popularity, it doesn’t always mean that there is widespread adoption yet.
You should always look at the product that is being tokenized to see if it’s useful or has potential. Read reviews, check out discussions in communities, etc… This will help you get a better idea of whether or not this project has major traction and if there is room for growth.
Even though there are many high-profile projects in this space, the NFT market is still in its infancy. This means that many of these tokens will not have wide uses for some time.
Methods of Purchase
There are three main methods for purchasing tokens/NFTs on Ethereum that we’ll be covering here today. Each have their own pros and cons, so you should decide which one is right for you.
Before purchasing tokens for any kind of reason, it’s important to understand what you are getting into. Tokenization is a new way to represent value in the digital world, so there are a few differences from what you might be used to when dealing with more traditional financial instruments.
You should always use a wallet that is supported by the platform in question. This is important because you will not have access to your tokens if they are stored on an exchange or somewhere else where they cannot be accessed directly.
In some cases, you can actually lose tokens if they are not held in a wallet where the key is properly managed! Always make sure that you cannot lose access to your tokens by using approved wallets or storage solutions.
Method 1 – MyEtherWallet [Effort: Moderate]
MyEtherWallet (MEW) MyEtherWallet is one of the most popular Ethereum-based wallets around today. It’s completely free to use, but you do need to download it separately.
