How to buy an NFT: A complete guide
Introduction to NFTs
Non-fungible tokens (NFTs) have revolutionized the world of digital ownership and taken the concept of collectibility to new, virtual levels. These unique digital assets, which are built using blockchain technology, continue to open up creative opportunities for entrepreneurs, digital artists, and collectors alike.
NFTs allow individuals to represent ownership of any intangible or real-world asset in a transparent and decentralized way. From domain names and video game items, to trading cards and real estate, these crypto assets are changing the concept of digital ownership across hundreds of established industries.
This new market has attracted attention and capital from everyday collectors and celebrities alike. Snoop Dogg, Jimmy Fallon, Tom Brady, and Steve Aoki are just some examples of A-list stars that have engaged with the exciting possibilities opened by NFTs.
The NFT space is moving fast and changing several industries in the process. If you are interested in learning more about how NFTs work and how they can be used, check out the Kraken Learn Center article, What is a non-fungible token (NFT)?
How to buy an NFT
If you're interested in purchasing these unique blockchain tokens, there are several avenues available to you. While each method comes with its own unique tradeoffs, some methods open traders to different risks that you should understand before making your decision.
The most common ways to buy an NFT are:
- Buying them from secondary NFT marketplaces, like Kraken NFT
- Participating in public mints and NFT pre-sales
- Peer-to-peer trading
Purchasing NFTs on secondary NFT marketplaces
For NFT collections that have already dropped and are actively traded, secondary marketplaces are the most common and easiest to buy and sell NFTs. Many in the NFT space see secondary marketplaces as the safest, most secure, and easiest way to get started with NFTs.
In short, NFT marketplaces are similar to crypto exchanges in that they match NFT buyers with NFT sellers around the world.
Kraken NFT is one such example of a secondary NFT marketplace for buying and selling digital collectibles. Many secondary NFT marketplaces offer a variety of different payment options, which allows you to:
- Buy an NFT with cash
- Buy an NFT with cryptocurrency
- Buy an NFT with a credit card or debit card
After doing your own research and finding the right NFT for you, you’ll also need to find an NFT marketplace you can trust. After that, the buying process can be just as straightforward as any other online purchase.
Follow the steps below to buy an NFT on a secondary NFT marketplace.
- Create an account:
- Sign up for an account on the marketplace of your choice. Provide the necessary information and complete any verification steps that may be required.
- The sign up process varies depending on which NFT marketplace you choose to use.
- Connect your crypto wallet:
- Many decentralized marketplaces simply require you to connect your software wallet to the platform to begin trading. You will often find a "connect" button located in the top right-hand corner of the marketplace home page. After clicking it, you will be presented with a range of supported options. Coinbase Wallet and MetaMask are popular wallet options.
- It’s worth noting that Kraken NFT does not require you to connect your crypto wallet in order to buy an NFT.
- Fund your wallet:
- For many marketplaces, you will need to hold a specific type of cryptocurrency in your wallet. This cryptocurrency is often associated with the NFT’s blockchain network. You’ll need this asset to both purchase the NFT and cover transaction costs associated with maintaining the network, known as gas fees.
- You can buy this cryptocurrency from a range of crypto platforms, mobile apps, and peer-to-peer services, such as Kraken. But, on some marketplaces such as Kraken NFT, you can purchase an NFT with any of the hundreds of cryptocurrencies and fiat currencies we offer. This simplifies the NFT buying process and allows you to pay your way for your NFT.
- Make the purchase:
- If you're satisfied with the NFT and its price, click the "Buy" button or follow the platform's purchasing process.
- Next, confirm the transaction details and authorize the payment from your wallet. Rather than using the cryptocurrency in your wallet, you can also purchase an NFT using a credit card.
- Alternatively, you can place a lower bid than the asking price on a specific NFT, or any NFT in a collection (collection bid). The owner of the NFT can then choose to accept your bid.
After making their purchase, many NFT buyers choose to transfer their assets into cold storage using options such as a Ledger, KeepKey, or Trezor wallet for safe-keeping. There are also hot wallet options such as Coinbase Wallet and MetaMask Wallet, but these are considered less secure.
If you want to learn more about different types of crypto wallets, you can check out our Learn Center article What are custodial and non-custodial crypto wallets?
What to consider before buying an NFT
For those interested in making their first NFT purchase, it’s wise to collect some information on the types of NFTs you wish to buy. There are many factors to consider, but here are a selection of important points to begin with.
Across the Ethereum, Solana and Polygon blockchains, there are millions of exciting digital items to explore. Collections range in artistic styles from anime-inspired collections like uwucrew and DigiDaigaku to pixel-art collections like Nakamigos and Solana Monkey Business.
You will often find popular digital artists within each niche style that have large followings and special communities established around their NFT collections. These groups allow like-minded collectors with similar tastes in artistic styles to connect and network.
Not every NFT collection looks the same — and not every NFT collection offers the same functionality either. While some NFT collections were created solely with artistic expression in mind, others were created to do much more.
Different NFT collections offer different perks and benefits for their holders. Communities of NFT holders regularly meet up for in-person networking events, competitions, scavenger hunts, and more. The Bored Ape Yacht Club (BAYC) NFT collection is a well-known example, but there are dozens more like it. If you are interested in learning more about the various benefits of joining an NFT community, check out our blog post Why buy an NFT: Community membership.
It is no secret that some NFTs have fetched tens of millions of dollars at auction, but these are the exceptions to the norm. Just as a vast majority of stamps that are in circulation cost less than $100, so too are there millions of affordable NFTs to get your hands on.
When getting started buying your first NFT, consider your price range so you can find the right NFT within your budget. Check out marketplace listings to see what the cheapest current listed price is for NFTs in each collection.
With thousands of NFTs available today for less than $100, the myth that NFTs are only for wealthy collectors has been definitively busted.
Every NFT is a unique combination of different traits. Each of these traits has its own level of rarity within a given NFT collection. These traits can range from common features that appear in thousands of NFTs within a collection, to one-of-one traits.
With so much variation and so many potential combinations within a collection, it can be difficult to fully appreciate what makes an NFT truly unique.
Rarity rankings allow you to understand what truly makes each NFT unique and how rare different traits are within the larger collection. You can learn more about rarity rankings and how they influence the desirability and price of NFTs in our Kraken Learn Center article What is an NFT rarity ranking?
Whether you are buying an NFT using a secondary marketplace, directly from the original creator during the public mint or directly trading with an individual, NFT sales come with fees. Part of these fees may be a percentage of the sale price that the marketplace collects to generate revenue for their services. Other parts of this fee will be blockchain gas fees that are charged by nodes to cover computational costs. Still others could be “creator earnings” that the NFT creator earns from each marketplace sale.
Participating in public mints and NFT pre-sales
Public mints and NFT pre-sales allow collectors to purchase NFTs directly from creators. These are regarded as the most desirable NFT sales anyone can participate in as traders are able to mint brand new NFTs at the earliest stage of their existence.
Here's how you can participate in public mints and NFT pre-sales:
- Get whitelisted: In order to purchase an NFT from a new collection, individuals often need to reserve their place on a whitelist or allow list. By following artists, creators, and projects on their social media accounts and dedicated NFT platforms, you will be among the first to know when details will be announced. These platforms will help you stay updated on upcoming public mints and NFT pre-sales. Many creators announce these events in advance, providing details such as a date, time, and tasks that may be required to join a whitelist. Whitelists are meant to guarantee buyers a slot in the presale and a chance to mint an NFT.
- Prepare your wallet: Set up a compatible crypto wallet and make sure it is funded with the required cryptocurrency. The cryptocurrency that you can use to get the NFT is typically specified beforehand by the project. Cryptocurrency wallets such as MetaMask allow you to purchase crypto directly using credit cards or debit cards. Otherwise, you can use a cryptocurrency exchange such as Kraken to change your local government currency into the cryptocurrency specified by the project team.
- Join the event: At the specified time, which is typically communicated on the project’s social media accounts, you will be able to access the platform or website where the public mint or pre-sale is taking place. From there, you simply follow the instructions provided by the creator or project team to participate in the event.
- Complete the purchase: During the public mint or pre-sale, you will typically have a specified period to purchase the NFT. These events may offer NFTs at a predetermined list price or via an auction-style mechanism. Follow the instructions on the platform to complete the purchase, making sure to authorize the payment from your digital wallet.
- Receive your NFT: Once the purchase is complete, either a decentralized algorithm or the project itself will directly mint and transfer the NFT to your wallet address. At this time, it is always a good idea to verify that you have indeed received the NFT in your wallet. That is how you will know the NFT is all yours!
Direct peer-to-peer transactions
Buying an NFT through a peer-to-peer transaction allows you to buy NFTs directly from existing holders.
However, as with any type of peer-to-peer transaction, they can pose serious fraud and asset safety risks.
The process is as easy as sending cryptocurrency or NFTs from one wallet to another. But, sellers can easily misrepresent the authenticity of the NFT they are selling or not uphold their side of the agreement once funds have been sent.
With peer-to-peer dealings, there is no intermediary to make sure the transaction goes smoothly. This is why secondary marketplaces such as Kraken NFT have become the most reliable way to buy NFTs. Trusted platforms verify the authenticity of all NFTs before they are available for you to trade and make sure all transactions are completed.
What to consider after buying an NFT
After purchasing an NFT, there are a number of important factors you’ll need to consider in order to protect your purchase.
NFT file storage
It’s important to understand that there are three parts to every NFT: the NFT token, the metadata, and the associated computer file.
The NFT is the blockchain-based, tradable token that allows individuals to track and transfer ownership of the underlying file. The metadata is the information related to the file, including traits, location, and other important data. The file itself represents the digital art, the audio clip, or whatever it is a person wants to digitally own.
In some cases, the metadata and files are stored safely either directly on-chain (such as the OnChainMonkey NFT collection) or via a peer-to-peer network such as InterPlanetary File System (IPFS). But unless it’s pinned or backed up using a decentralized storage platform such as nft.storage, the platform may delete the information if it times out.
In other cases, the NFT creator might opt to store metadata and/or the file on a subscription-based server, which could end up being removed if the creator fails to keep up their payments.
Ultimately, it’s important to personally secure these critical data points to prevent your newly purchased digital collectible disappearing from the internet.
Intellectual property rights
NFTs don’t just prove ownership rights over digital files, they can also convey intellectual property rights over them. In some cases, an NFT creator will license out or hand over intellectual property rights to holders. These can include rights such as allowing the holder to create and sell merchandise featuring their chosen NFT(s) — adding extra revenue-generating opportunities.
An example of this is the famous Profile Picture (PFP) NFT collection, CryptoPunks, created by Yuga Labs. In August 2022, the company issued an IP license agreement granting new rights to the collection’s exclusive holders.
The safest way to store any cryptoasset, whether it's an NFT or bitcoin (BTC), is to transfer it from an exchange to an external wallet. These are broadly known as cold wallets or hardware wallet devices. This type of physical item spends most of the time disconnected from the internet. In this state, it’s impossible for online hackers to gain access to the private keys stored inside and steal your NFTs.
Ledger, KeepKey, and Trezor are all examples of leading hardware wallet manufacturers.
To further bolster your security, it’s advisable to store hardware devices in fireproof safes, separately from the associated seed phrase information (also known as a recovery phrase). This additional step makes it harder to in-person attacks.
Read our beginner’s guide What is a crypto hardware wallet? for more information on how to set up a hardware wallet to keep your cryptoassets safe.
Ready to buy an NFT?
Overall, purchasing NFTs can be an exciting and rewarding experience.
By exploring popular NFTmarketplace sites and participating in public mints and pre-sales, you can expand your digital collection.
Remember to set up a secure crypto wallet and follow best practices to protect and store your non-fungible assets safely.
Embrace the world of NFTs and enjoy the unique and creative possibilities it offers.