The latest craze to hit the music industry is non-fungible tokens (NFTs), a type of digital collectible from your favourite artists, musicians and creators. Names like Kings of Leon, Tycho, ODESZA, Aphex Twin and Deadmau5 are already selling NFTs to purchase.
While NFTs are becoming increasingly popular during 2021, the concept has been around as early as 2012 – early on in the life of Bitcoin, blockchain and cryptocurrencies.
There are many use cases for NFTs today. Any real or intangible commodity can become an NFT including:
- Video Footage
- Tokenized real-world assets
What exactly is an NFT?
As mentioned above, NFT stands for non-fungible tokens. They are generally based on the Ethereum blockchain network, however Binance Smart Chain, NEO, Tron, EOS, Polkadot, Tezos and others are becoming great alternatives.
Each blockchain has its own tokens, marketplaces to purchase NFTs and wallet services to perform transactions. For example, OpenSea is an Ethereum-based NFT marketplace, which means you will need Ethereum in a compatible wallet in order to purchase your desired NFT.
By purchasing an NFT from an artist, you own an original, authenticated piece of work. While it can be copied, you will still be the original owner. Think about it like collectible digital baseball cards.
How to purchase an NFT
If you’re unfamiliar with blockchain and cryptocurrencies, it can be quite a daunting process purchasing your first NFT. While each marketplace has a different process, we will go through the general steps below.
Open account on NFT marketplace
First things first, you will want to create an account on an NFT marketplace, or several marketplaces depending on the type of NFTs you want to purchase. A good place to get started is OpenSea, Foundation, Rarible, SuperRare and Nifty Gateway for examples of what you can purchase.
Fund your account
In order to purchase an NFT, you will be required to have the cryptocurrency used on that marketplace. OpenSea uses ERC-20 tokens (Ethereum), so you will need to purchase Ethereum from an exchange like Coinbase, Luno or eToro. OpenSea recommends using the MetaMask wallet, which you can also directly purchase Ethereum from (depending on your location).
Once you have purchased Ethereum (or another cryptocurrency) from your desired exchange listed above, send it to your marketplace account.
Buy your desired NFT
Once you’ve gone through the process of registering an account, purchasing crypto through an exchange and sending it to the marketplace, buying an NFT is quite simple.
An NFT will usually be available in auction or fixed price format. If you’re bidding on an NFT, take note of the price that you’re paying and set a limit.
If the listing has a “Buy Now” button, that is the amount you can expect to pay for the NFT.
However, at checkout you will also need to confirm the “gas fee”, which is required to transfer the NFT to your account. The amount fluctuates and tends to be lower on weekends, when the network is less busy.