How to avoid scams and purchase NFTs in 2023: Your personal guide
Everyone has heard of Non-Fungible Tokens (NFTs).
However, the process of purchasing NFTs could be more straightforward. From
Bored Ape Yacht Club NFTs to Opensea's $1.7 million making millions to Beeple
to the $620 million hacker robbery of Axie Infinity, this high-risk market's
intense highs and lows are the outcomes of experiences. It has been known to
scare even investors. Discover how to purchase NFTs and everything you must know to guide
the darker waters safely.
Open an exchange account and cryptocurrency wallet.
Open a crypto exchange account.
The first step to purchasing NFTs is to open an account
with a cryptocurrency platform or exchange.
First, comprehending the distinction between cryptocurrency exchanges, wallets, and
marketplaces are indispensable. These terms often need clarification.
Exchange
● Functions as an intermediary that can buy and sell
various cryptocurrencies
● Issue and hold public and possibly private keys
● Protect your account's access to cryptocurrencies.
● Provide support for account functions such as
password resets
An exchange is an online platform that acts as an
intermediary through which you can buy and sell different cryptocurrencies. For
NFTs purchase, you must create an account on your chosen venue. Other companies
offer additional services, so it is essential to know how they work in public
and private keys, cryptocurrency wallets,
transaction fees, on-chain and off-chain services, and customer support.
Open crypto wallet
● Save public and private keys.
● Protects digital assets, including crypto coins and
tokens such as NFTs
● Provides independent access to funds and crypto
assets via seed phrases
● Your responsibility is to store your seed phrase
(phrase, recovery phrase).
● Phrases and Keys Are Different
Despite their name, crypto wallets do not store coins
or tokens. What they store are keys that grant access to digital assets. You
will be given a unique seed phrase (sometimes called a phrase or recovery
phrase) to access your wallet. Protecting the seed phrase is essential. This is
because, just like a physical wallet, if you lose it, you lose everything. You
have complete control and responsibility for your wallet and private keys since
they can be hosted on an exchange or employed unassisted. With an exchange-hosted
digital wallet, the exchange acts like a third party or intermediary in
transferring cryptocurrencies, much like a bank. The company holds your private
key and is responsible for the security of your assets. Simultaneously, if you
desire to purchase, sell and trade her NFTs without third-party involvement,
you need a wallet tied directly to the blockchain. This way, people can
directly transfer currency using public keys. There are two types of wallets:
Hot wallet
● Software, a web-based wallet
● It can be delivered as a desktop app, an in-browser
extension, or both
● Convenient and easy access via website or app
● More vulnerable to cyberattacks than cold wallets
Cold wallet
● Hardware wallet, physical device
● Safest option
● High risk of loss and no backup available if the seed
phrase is lost
René Süss is the co-founder of the Hint of Mint
marketplace, and he recommends purchasing a cold wallet because you have to buy
it directly from the company that manufactures them. He also ensured that the
preferred crypto wallet is consistent with the Ethereum blockchain, the network
where numerous NFTs are marketed, and Ether (ETH, Ethereum), the native
cryptocurrency of the Ethereum blockchain. MetaMask wallet is the most
prevalent accustomed wallet in most markets, but there are other options.
Buy Ethereum
Coin vs. token
Understanding the distinction between a coin and a
token may take much work. Crypto coins belong to their blockchain, are
exchangeable, and are stores of value. This means it retains value and does not
depreciate. In this respect, virtual currencies function similarly to physical
coins. Tokens are not blockchain-specific, unlike cryptocurrencies such as
Bitcoin. Instead, it relies on smart contracts, programs stored within the
blockchain that validate and validate transactions. Tokens work in the same way
as arcade tokens and carnival tickets. Tokens have value and can be exchanged
for assets (such as prizes or food).
Most well-known and trusted marketplaces showcase NFTs
built on the Ethereum blockchain. For this reason, it is quite essential to
guarantee your desired exchange and wallet are compatible with and work with
Ethereum. However, the main problem with Ethereum is the high gas fees that
come with it and slow transaction speeds due to network usage. That being said,
Ethereum-based NFT is one of many options. Just like the Polygon platform was
created on the Ethereum blockchain to propose higher scalability and lower
fees. Other proof-of-stake (PoS) blockchains are supporting NFTs, such as
Solana, Flow, Tezos, and Cardano, and are also closing in on Ethereum's lead.
However, Ethereum is still considered the pioneering NFT platform and the most
widely used token for purchasing NFTs.
Transfer Ethereum to Crypto Wallet
After choosing an exchange and purchasing ETH, the
subsequent step is to transfer it to the wallet. How you do this is determined
by the exchange you buy ETH from, the wallet you use, and the market you buy
NFTs from. For example, if you buy a cold storage wallet since it is part of
the hardware, you will need to link it to third-party connections to NFT
marketplaces like MetaMask or Coinbase Wallet. These are the most widely used
wallets on the NFT Marketplace.
Link your crypto wallet to the NFT marketplace.
NFTs started in the world of digital art, but today
there are many different types of NFTs available for purchase, including:
● Digital art
● Music
● Digital goods
● Sports highlights
● Video game
● Photo-shoot
● Fashion
● Trading cards
● Event ticket
● Domain name
● Meme
● NFTs with utilities (physical items attached to NFTs)
The NFT market landscape is constantly changing, but
most fall into one of three categories:
Open Marketplace
Anyone can sell, buy and mint his NFTs. NFTs Minting is converting digital
works into crypto assets on the blockchain. These marketplaces typically offer
the option to create in-house, but creators can also create their work.
Closed Marketplaces
These marketplaces are more exclusive. Artists have to
apply, and the marketplace usually does the casting process. Sales and
transactions are more restricted.
Proprietary Marketplace
This marketplace sells NFTs trademarked or copyrighted
by the company that operates them.
To receive announcements about NFT drops, consider
creating an account and subscribing to various marketplaces. Social media is a
vital communication tool, and big data is shared on diverse platforms such as
Twitter, Discord, Rarity Sniper, and Rarity Tools for investors. Should
his coveted NFT drop, be ready to act quickly. Once the account is created on
the marketplace, he will need to connect his wallet to the marketplace that
sells his NFTs. This process generally works the same across sites. Some
marketplaces also offer a way to set up a new wallet from within their website
or use their wallet. Using the marketplace's wallet may entail reductions in
discounts and additional gas charges incurred by using external wallets. All
websites provide step-by-step guides. Read these guides, usually in its tab or
FAQ section.
OpenSea
OpenSea is currently one of his most significant and
versatile NFT marketplaces. We offer NFTs in various fields, such as art,
music, sports, games, fashion, and collectibles. Opensea's many learning
resources make it accessible and easy to use.
NBA top shot
NBA Top Shots is an NFT Marketplace that offers a
digital NFT collection of key NBA video highlights from games and individual
players. One of the attractions of NBA Top Shot is its large community of
followers. Numerous competitions and challenges bring a social dimension to
this market. They provide numerous guides and support to make the market easy
to use.
Nifty Gateway
Nifty Gateway has established itself as a marketplace
for curated and exclusive collections by renowned multimedia and fine art,
mixed media, video, and animation artists. They propose an expansive variety of
NFT drops to lure buyers looking to gather or trade art with long-term
significance.
Super rare
SuperRare focuses on unique artwork for single editions
rather than the broad NFT genre. SuperRare is much like a traditional auction
house featuring well-known artists and expensive artwork. SuperRare also has an
active secondary market. Their help center provides guides for navigating the
marketplace, but this section needs to be more complete than other
marketplaces.
Mintable
Like its name, Mintable focuses on making the casting
process more affordable, offering two options: gasless and conventional
casting. This feature may appeal more to creators who often bear the cost of
creation.
Foundation
Foundation is a community-driven marketplace. This
means that you must receive an invitation to become a member. Then you can
request others. In this intention, Foundation is less convenient than other
marketplaces but delivers quality digital art and video NFTs by renowned and
unrecognized artists.
Rarible
Rarible is identical to Opensea but is the minor scale.
You can buy, sell, and trade various NFTs across multiple genres. They make
this marketplace accessible and relatively easy to use, not just the Ethereum
network. Rarible aspires to evolve into a full-fledged DAO or decentralized
autonomous organization. They launched their governance token ($RARI) to allow
holders to voice their ideas about future developments and projects.
Purchase NFTs
Well-known NFTs sell out quickly, so you must ensure
your wallet is connected and funded before the NFT goes down. It is important
to remember that purchasing an NFT does not constitute a purchase of copyright
unless it is part of a direct contract between the purchaser and the creator.
Different marketplaces may have different restrictions on purchased NFTs.
Security
Before purchasing NFTs, it is crucial to understand how
to keep your information and cryptocurrency safe. You need to be secure in this
space. Before making a purchase, you should determine what security measures
you need. There are always scams out there. It is recommended to use two-factor
authentication and make small transactions. Common scams in this area include:
Phishing Scams: Fake links or pop-ups promoting
new NFT projects, drops on social media platforms, etc.
Catfishing: Fake marketplace websites, social
media accounts, and celebrity impersonations promoting NFT drops and
collections.
Pump-and-dump scheme: Hype is built around his
NFTs or collection of NFTs, so it sells for a premium, but the upper-tier
investors quickly lose cash, and the lower-tier investors will be left with a
worthless asset.
Counterfeiting NFTs: Some people sell other
people's work as their own.
Most experts recommend using critical cybersecurity
practices like strong passwords and two-factor authentication. Additionally,
while storing cryptocurrencies on exchanges is convenient, we recommend storing
them in cold wallets and hardware devices where keys and assets are stored
offline.
What are NFTs used for?
Because NFTs serve multiple purposes, there are many
reasons to buy NFTs.
Decorate Your Home: Various digital displays and
frames showcase your NFTs.
Investment Purpose: Many NFTs can increase in
value over time. Especially his NFTs of famous artists and collections.
Trading: NFTs have a burgeoning secondary
market. Traders aim to generate a return on their initial investment using
various trading strategies, such as buying floors (buying at the lowest price)
and buying ceilings (buying rare or valuable NFTs).
Use it on the Internet: Many people use his NFT
as their profile picture or avatar. Additionally, NFTs can be displayed in the
metaverse, either in a virtual gallery, conference room, or private space.
How to choose the right NFT?
The market is still relatively immature and favorably
speculative. This indicates that we still need to have the complete
picture to judge the long-term value of NFTs. We encourage you to think about
your budget, situation, and personal objectives and ask yourself what you
desire to obtain out of the NFT space.
● Single Edition: The artist made only one NFT,
also called 1/1 NFT or 1x1 NFT.
● Multi-Edition: The artist has created a
collection or series of related artwork.
● Her NFT for resale in an active secondary market: The
person who purchased the NFT resells their NFT to another person.
● Utility NFTs: Utility NFTs come with physical items
such as event tickets and home digital photo displays.
Sometimes you buy photos, but most NFTs are the best
and have a built-in utility. Participate in a community or business ecosystem
with community, social aspects, games, and events. There are also NFT projects
with additional income and passive income mechanisms.
Advantages and disadvantages of NFTs
Pros
● Provides actual proof of identity and ownership of
digital assets
● Investing in NFTs is open and accessible to everyone
● Decentralized blockchain technology enhances security
and control over stored data
● Gain entry to an extensive community and additional
investment opportunities
Cons
● Still a relatively immature and unstable market
● Security issues as the market are vulnerable to
hacking and fraud.
● Pump-and-dump and cache-grab schemes
● Cryptomining, the competitive procedure employed to
validate and secure transactions on the Ethereum chain, demands enormous
computing power and is energy intensive. Note that his Ethereum 2.0 aims to
make transactions more sustainable and will be fully released in 2023.
Comments
Post a Comment