Non-transferable tokens - or simply NFTs - are digital assets that allow you to prove ownership of value. It can be an intangible object, such as a virtual drawing, or something physical, such as real estate or artwork.
In this beginner's guide, we explain everything you need to know about NFT tokens on the market. You'll also learn how you can buy your first ever NFT non-transferable token today.
What is NFT ? - NFT explanation
In many ways, NFTs are not very different from traditional digital currencies, such as Bitcoin, Ethereum or Dogecoin. The reason for this is that NFTs are represented as digital assets and operate on top of the blockchain network.
This allows NFTs to be transferred from wallet to wallet in a fast, secure and inexpensive manner. Operating on the blockchain network also provides transparent verification capabilities for NFTs.
However, what sets NFTs apart from the aforementioned digital currencies is the fact that each token can be identified by a unique transaction digest. Simply put, this means that no two NFTs are the same.
Buy cheap NFTs in the app Crypto.com
This is why NFTs are ideal for storing real value. On the other hand, cryptocurrencies like Bitcoin are fungible - meaning that if you were to swap 1 BTC for another 1 BTC, nothing much would change. This means that you still have 1 BTC worth 1 BTC in your wallet.
In contrast, in the case of NFTs, no tokens are linked to other digital assets in circulation, which is why they are referred to as non-exchangeable tokens.
How do NFT tokens work?
Now that we've covered the basics, we can now delve a little deeper into how NFTs work.
Most importantly, if you're thinking of buying NFT yourself, it's important that you thoroughly understand how this niche blockchain sector works before risking any money.
Replaceable vs. Non-Replaceable
Although we briefly explained the difference between fungible and immutable tokens in the section above, we will now discuss it in much more detail.
In short, the physical dollars and cents we use every day to make purchases are fungible.
For example:
- Suppose you have a 20$ bill, but need change for a vending machine that only accepts 1$ bills.
- Therefore, you ask someone to exchange your $20 bill for small denominations.
- In return, you get a bill of 10$, 5$ and 5 x 1$.
- In the end, even though you now have different bills than the original $20 bill, in terms of value nothing has changed
- This is because you still have a total of $20 available.
As you can see from the example above, cash is a fungible asset class. The same is true of virtually all cryptocurrencies currently in circulation.
However, as we have already established, NFTs are asset classes that are not fungible. This means that you cannot swap one NFT for another and expect them to retain the same value - because each token is unique.
For example:
- Suppose an artist creates a new physical image.
- The artist then decides to create an NFT that represents the value of this image.
- This means that the NFT is unique to a particular image only, so it cannot be imitated or copied.
- Again, this is because each NFT can be verified for authenticity through a unique transaction digest
Naturally, and as we will discuss in more detail shortly, NFTs can represent almost anything of perceived value. Whether it's a virtual painting, a house, a car, or a sporting event, NFTs allow you to store property digitally.
Blockchain protocol
All the best NFT tokens are hosted on the blockchain protocol. To date, many NFT developers prefer the Ethereum blockchain, not least because it supports ERC-721 tokens. In short, this specific subset of the Ethereum blockchain is ideal for NFT because each ERC-721 token is unique.
As a result, several other blockchain networks have since begun to support NFT - for example Binance Smart Chain. Many argue that the latter is more suitable for buying and selling top NFT tokens, not least because Ethereum's transaction fees are often very high.
NFT coin minting or NFT minting
When looking for the best NFT tokens to buy, you often come across the term "minting." In its most basic form, "minting" simply refers to the process of creating a new NFT token that does not yet exist.
This means that when you buy NFT tokens, you are purchasing a digital asset that has already been created by someone else.
Importantly, if you have something unique that you'd like to represent with a unique cryptocurrency, it's worth taking a closer look at minting NFT.
For example:
- You may have created a groundbreaking study on an independent basis and want to protect your results.
- You can do this easily by minting NFT on a blockchain network such as Ethereum or Binance Smart Chain.
- Thus, your NFT verifies beyond any doubt that you are the true owner of the said study.
And once the NFT token is minted - which often takes just a few minutes - you can trade it on the open market. In fact, you can even mint the NFT token in such a way that you receive royalties on any sales made by third parties.
Fractionated NFT
You probably know that standard cryptocurrencies, such as Bitcoin and Ethereum, can be broken down into smaller units - so you don't have to buy the entire token to access the market.
For example, if bitcoin is trading at $40,000 per token and you invest $400, you own 1% of one BTC.
Many people don't realize that the process of dividing digital tokens into small units can also be done with NFT. In fact, this is one of their biggest advantages, as it allows many people to own something of value.
- A basic example would be a $1 million property that is represented as NFT.
- You are the sole owner of this property, and thus the corresponding NFT token.
- You want to release some of the capital on this property, so you decide to divide the NFT into 10 parts
- You keep 6 NFTs (60%), and decide to sell the remaining 4 NFTs on the open market.
Persons buying individual NFTs would thus own a certain percentage of the property - as long as the agreement is backed by the relevant contract law.
What are the types of NFT ?
Now that we've explained how NFTs work, we can look at the many different types of non-transferable digital assets available on the market.
By this we mean a collection of actual examples of NFT tokens that have been sold in recent years.
Physical property
Real estate is probably the most interesting aspect of the NFT market, not least because it includes both physical and virtual property.
Starting with the former, physical real estate is an excellent example of an asset that can be represented by an NFT token. After all, no two properties are the same, which means that each house or apartment is unique in its own way.
- A recent example of a traditional property that was sold in conjunction with an NFT took place in Florida.
- The 4-bedroom house sold for just over $653,000 - and was paid for with Ethereum.
- Moreover, the house is now represented as an NFT token on the Ethereum blockchain
- This means that theoretically, if an NFT owner wanted to sell all or part of his newly purchased property, this could be accomplished with a simple transaction between portfolios.
In this regard, perhaps an even greater application of NFT in the real estate sector is co-ownership. For example, suppose a development company wants to build a new luxury hotel .
Under normal circumstances, the developer would turn to traditional financial institutions to raise capital to finance the project. However, to open up investment opportunities for retail customers, the developer could represent ownership through NFT.
Each NFT can be tied to a certain percentage of ownership, which can then be traded on the open market.
Virtual real estate in the Metawerse
NFT and Metaverse are two terms that often come up in the same discussion. For those who are unaware, the Metaverse is a digital representation of the real world, and interest in this space will grow exponentially in the coming years.
An excellent example of this is Decentraland, a 3D game world that allows players to purchase virtual land and then build properties. Each plot of land is then represented by a unique NFT token, which can then be sold on the open market.
An example of how real estate-related NFTs are becoming popular in the Metaverse can be seen in the following situation:
- In November 2021, the plot in Ax Infinity, a game owned by Metaverse, was sold for more than $2.3 million.
- Just a month later, a plot of 100 virtual islands on the Sandbox platform - which is another popular Metaverse game - was sold for more than $4.3 million.
Given that NFT virtual real estate is now generating millions of dollars in sales, this is certainly a market worth paying attention to.
CryptoPunks and other digital collectibles
In your search for the best NFT tokens, you've probably come across CryptoPunks. In a nutshell, CryptoPunks is a collection of 10,000 digital characters that were created in 2007.
Each CryptoPunk is unique and secured with an NFT token. Although the appearance of each character looks like it was created in the 1970s, CryptoPunks are probably the most sought-after NFTs on this market.
For example, one CryptoPunk NFT was sold in February 2022 for 8,000 Ethereum tokens, which at the time equaled the cryptocurrency equivalent of more than $23 million, making it one of the most expensive NFTs on the market.
According to the founders of the CryptoPunk series, Larva Labs, this particular NFT was sold in 2017 by its original owner for just $1,646.
As CryptoPunks has caused thousands of other NFT collectible items to appear on the market, this space is becoming somewhat oversaturated.
Sports events
Another fast-growing area in the NFT market is "sports moments." By this we mean that major sports brands such as the NBA and ATP are now selling ownership rights to video clips of key sports events.
An example of one NFT token in terms of value is the $100,000 that NBA star Zion Williamson collected for a clip of a player blocking a shot.
Another example is the recent Australia Open, where individual tournament components were sold as NFTs - such as the center court and even a referee's chair.
The theory is that over time the value of such NFT sports memorabilia will steadily increase. Many sports stars, athletes and other celebrities have also supported NFT collections of other kinds.
NFT in games
Some of the NFT tokens currently on the market can be found in popular game titles. In many cases, these games are referred to as "play-to-earn" or simply P2E.
For example:
- As the name suggests, the newly launched P2E title Pirate X Pirate is a game based on pirates.
- The main concept is that users can build their own crew and earn digital tokens as they progress through the many worlds the game has to offer.
- To ensure the best chance of maximizing earnings, players can buy unique NFTs, which represent virtual ships.
Other examples of NFT games that can be played and monetized include. Axie Infinity, Decentraland i Sandbox. Ultimately, game developers encourage players to use their platforms through tradable NFTs that can be minted after completing certain tasks.
Why people are investing in NFT
There are many reasons why people choose to invest in the NFT tokens the market has to offer. These range from ordinary retail investors to millionaires who are celebrity owners of NFTs.
If you are wondering if this space is right for you, consider the benefits discussed below.
Store of value or "store of value"
One of the main reasons why more and more people are choosing to buy NFT tokens is that they can represent value.
As we mentioned earlier, minting an NFT token so that it represents something of value - such as a sports moment or a piece of land - is now a simple process.
Either way, the NFT token you mint or buy will theoretically be worth whatever people are willing to pay for it when you finally decide to cash it in.
For example, we mentioned that the NFT CryptoPunks series is currently sold individually in the millions of dollars. People who buy CryptoPunk usually do so because they believe it will be worth more in the future.
The perfect solution for content creators
Content creators - such as artists, writers and musicians - often have to use third parties to sell their products. This usually means giving away a large percentage of future sales and royalties.
For example, a successful singer on YouTube may earn a handsome sum of money each month from advertising revenue. However, YouTube itself will take a significant portion of the remuneration, which often exceeds that of the content creator.
And this is where NFT tokens come into play - not least because creators no longer need to work with third parties to sell their content. On the contrary, ownership of any song, movie or image can now be represented by a unique NFT token.
Investment product
Needless to say, many people choose to buy NFT tokens as an investment product. This means that they pay a price today that is much lower than what the buyer thinks NFTs might be worth in the future.
- As an example of a successful investment in NFT, consider the purchase of 100 virtual islands in the Sandbox metaverse for $4.3 million.
- While this may seem like an obscene amount of money for a digital real estate investment, the buyer has already created virtual villas on each island - 90% of them sold in one day at $15,000 apiece.
- What's more, some of these virtual villas have since been relisted for sale for more than $100,000.
In theory, this means that the traditional development industry has moved into its own niche via the Metaverse.
This means that people want to buy NFT tokens, which represent virtual plots of land, and then build digital real estate with the intention of making a profit.
Conventional restrictions have been removed
Trying to invest in physical value in the real world can be difficult - not least because jurisdictional restrictions often apply.
For example, buyers from some parts of the world may find it difficult to purchase property in the US. Even if they have access to a plot of land, the purchase can be fraught with red tape, involving high fees and a cumbersome verification process.
However, thanks to the fact that these are non-transferable digital assets, there are essentially no restrictions on who can buy NFT tokens.
Low threshold for market entry
Another important reason why so many people want to buy NFT tokens is that the industry has opened up the investment space for those with small budgets.
Of course, this guide gives some real-life examples of people paying millions of dollars for single NFTs. However, some NFT tokens can be purchased for as little money as this.
- For example, we mentioned earlier that a number of NFTs were created during the Australian Open, which could then be purchased.
- One such example was the NFT's decade-by-decade set of linked tournament games for each 10-year period.
- For example, in the 1970s edition, the judges' chair was initially sold for just AUD 24.99 (about $19).
Most importantly, this means that even if you are willing to risk a small amount of money in this area, some of the best NFT tokens may be available with modest capital.
A powerful market
While estimates of the future total value of the NFT market vary quite a bit depending on the source, we can look at how much money has changed hands in recent years.
For example, in 2021 alone, Bloomberg reported NFT sales of nearly $41 billion. If the growth of the NFT industry is believed to continue over time, it could soon surpass $1 trillion.
Yuga Labs, the company that created the NFT Bored Ape Yacht Club collection, has been valued at $5 billion according to Yahoo Finance, following rumors of an investment by Silicon Valley venture capital firm Andreessen Horowitz.
On March 12, 2022, Yuga Labs acquired CryptoPunks and Meebits NFTs, thus taking over the management of these NFT projects. Currently, BAYC, Punks and Meebits rank #1, #2 and #6, respectively, among the most valuable NFTs by minimum price and cap.
NFT tokens can be used as security
Currently, there are many innovative companies that provide access to financing in exchange for the establishment of collateral in the form of an NFT token.
This works similarly to conventional secured loans, where the borrower deposits a certain amount of money to secure a financial agreement.
However, in the case of cryptocurrency loans, since the borrower issues an NFT that has real value, not only will the loan agreement be approved almost immediately, but no credit verification is required.
After all, if the borrower fails to repay the funds, the cryptocurrency lending company can simply sell the NFT to recoup its losses.
NFT vs Cryptocurrencies
The terms NFT and cryptocurrency are often used interchangeably. After all, both phenomena are represented in digital form and are built and stored on top of the blockchain protocol.
However, in the vast majority of cases, cryptocurrency assets are virtual currencies - meaning they can be used as a medium of exchange. Again, we return to the discussion of convertible tokens, such as Dogecoin.
This means that if you buy $100 worth of Dogecoin from two different brokers, there is no difference between the two sets of tokens you receive. This is because two individual Dogecoin tokens will always be worth the same - according to the current market value.
However, NFTs have a fundamentally different concept and application than cryptocurrencies. After all, each NFT token is unique. For example, if one NFT represents an entire plot in Decentraland, no other token can claim to do the same thing.
However, there is another important similarity between NFTs and cryptocurrencies - the market is often driven by speculation and information noise.
In other words, while many people have had great success with both NFT and cryptocurrencies in terms of value, there is no guarantee that this will continue.
In the case of CryptoPunks, for example, there is a high probability that someone who paid millions of dollars for a single token will discover that the value of that NFT series may be much lower in the future.
NFT token exchanges
NFT exchanges are not very different from cryptocurrency exchanges, as they are between buyers and sellers. This means that if you want to buy NFT tokens today, you must first choose the right market.
When it comes to choosing the best NFT exchange on which to register, there are certain things to consider, such as:
Reputation
Of course, the reputation of a particular NFT market should be taken into account. For example, how long has a particular platform been in operation, how many users does it have, and what kind of transaction volumes does it generate on a daily basis?
Choosing an NFT market without a solid track record can be a risky venture. After all, you need to be sure that your funds are safe and that the NFT token you want to buy is actually available on the platform in question.
Charges
NFT markets generate a significant portion of their revenue by charging transaction fees. These fees are often charged to both buyers and sellers, so it's worth considering before choosing a provider.
Typically, as a buyer, you pay a percentage of the total transaction amount. For example, if the NFT market charges 2%, and the token you choose costs $1,000, you will pay a fee of $20.
Payments and wallets
When you buy NFT tokens online, you usually have to finance your purchase with cryptocurrency. For example, if your chosen NFT was built on top of the Ethereum blockchain, it is likely that fees will have to be paid with ETH tokens.
What's more, NFT markets typically collect payments through a wallet connection.
For example, you may need to link your Trust Wallet or MetaMask with the NFT market, then, after authorizing the transaction, the platform will deduct the appropriate number of tokens.
Where to buy NFT
Given the above points, if you are wondering where to buy NFT today - you may want to consider Crypto.com. The following section explains why Crypto.com is potentially the best NFT exchange.
Crypto.com - The best place to buy NFTs
If you're learning how to buy NFT tokens for the first time, you'll appreciate that the Crypto.com platform was designed with beginners in mind. Founded in 2016, Crypto.com is now one of the world's largest cryptocurrency ecosystems, and its platform offers a broad suite of products and services.
In addition to transaction services, loans, savings accounts and a cryptocurrency card issued by Visa, the provider also offers a popular NFT marketplace. It includes thousands of unique NFTs - many of them tokens created by well-known brands. Among them are such brands as Aston Martin, UFC and Philadelphia 76ers. In terms of market value, Crypto.com offers NFTs ranging from just a few dollars to more than $1 million.
For example, NFT series such as Ryker, AlphaBot and OG Jack are available with auction bids starting as low as 1$. At the other end of the spectrum are the likes of PsychoKitty and Loaded Lion, with starting bids as high as $1 million. Regardless of how much you want to spend, what we really like about Crypto.com is that the platform allows you to purchase NFT tokens with fiat money.
This means that if you don't have any cryptocurrency tokens with you, you can pay for your NFT purchase with your debit/credit card. In terms of fees, you will not incur any costs for purchasing NFT tokens on Crypto.com. However, sellers are charged a processing fee of 5%. Another distinguishing feature is that if you use Crypto.com to sell NFTs, you can attach royalties. This means that you will receive a percentage of any future sales your NFT token generates.
What we like:
- Thousands of NFT tokens for sale
- Buy NFT tokens starting at just a few dollars
- Pay for your NFT purchase with a debit/credit card
- No fees charged to NFT buyers
- Crypto.com has a solid reputation in the cryptocurrency industry
How to buy NFT tokens
If you want to learn how to buy NFT tokens today - use the following quick guide to get started now Crypto.com
Step 1: Open a Crypto.com account
The first step is to open an account with Crypto.com. Initially, this will require you to provide some personal information and contact information. As a trusted platform, Crypto.com will also need to verify your identity. You can do this by submitting a copy of your government-issued ID.
Step 2: Deposit funds
Crypto.com allows you to purchase NFT tokens in several different ways. If you already have the cryptocurrency, you can transfer the tokens to your Crypto.com wallet. You can also connect a wallet such as MetaMask to Crypto.com. Alternatively, Crypto.com also allows you to deposit funds via debit/credit card or bank transfer.
Step 3: Search NFT
Go to Crypto.com's NFT exchange page. You will be presented with thousands of NFT tokens that can be traded. Use the filter buttons to find the best NFT token for you.
Step 4: Buy an NFT token
The final step is to purchase the NFT token of your choice. Click on the token you are interested in and follow the on-screen instructions to finalize the purchase.
The views and opinions expressed here are solely those of the author and should not be taken as financial advice either. Every investment and transactional activity involves risk, so you are advised to do your own research when making any trading, investment or financial decisions.
