New to NFTs? Read Our 3-Step Guide to NFT Collection and Investment

date_range December 30, 2021
person Zoe Perl
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There’s no feeling in the world that matches the one you get when blockchain news is blowing up your screen, only to leave you asking: “What is going on?” At this point, it’s hard to avoid NFTs. And the more you read about them, the less you understand.

The aforementioned feeling happened when I read about Grimes and her NFT quest worth millions, and again when reading an interesting article about Nyan Cat being sold as an NFT. When I read that the founder of Twitter sold an autographed tweet as an NFT, I was hooked; I had to get to the bottom of this mystery product.

We keep seeing celebrities releasing their own NFTs, high price sales splashing front pages, but before adding more confusion to the table, let’s go back to basics for a second. If you plan on collecting NFTs, Magic Square is here to give a thorough guide and clear up any of your confusion. 

Just as we thought that digital assets couldn’t get any more complex, NFTs rose to fame and added a dash of artistry to the table, making them alluring to the public. The most popular NFTs at this moment in time and space include artwork and music. 

NFT collection

What Are NFTs – A Tiny Summary

NFT stands for “non-fungible token”, which translates to “unique token”. Each NFT is one-of-a-kind, irreplaceable, uncopiable. Bitcoin, which many of you probably have come across by now, is fungible – my bitcoin looks identical to yours, which is identical to every other bitcoin in existence. NFTs are the complete opposite.

Most NFTs are hosted on the Ethereum blockchain, which supports these digital tokens by storing extra information. This is what makes them work differently than other coins like ETH, for example. It’s important to note that different blockchains can also implement their own NFT versions.

But hold your horses! This is just NFT by definition. The best way to truly understand these digital works of art is to collect them. Magic Square has your back. Follow these simple steps if you want to embark on a journey of knowing and collecting NFTs.

Step 1 – Create a Digital Wallet

You need to obtain a digital wallet before even thinking of calling yourself an NFT collector. Buying, selling, and creating NFTs begins with your ERC-721 supported wallet.

Digital wallets are widely used in the crypto industry, but not just to hold digital value for NFT purchasing; they also hold the actual NFTs. This is the most crucial part of owning NFTs, so obtaining a digital wallet should be your first step towards the NFT universe.

Step 2 – Adding Funds to Your Digital Wallet

It might be obvious, but we’ll mention it anyway – to buy an NFT token, you need to fill your wallet with crypto. But here’s the catch. The price of the NFT isn’t the only thing that needs to be calculated. You are also responsible for paying gas fees, or the cost associated with your transaction and the space it takes up on the Ethereum blockchain. 

The gas fees tend to cost somewhere between $5-50, depending on the number of people that want to carry out a transaction at that moment, which might seem like a lot of fees, and it is. That’s why you see lots of NFTs popping up on other chains like Solana, for example, which charges a tiny fraction of the Ethereum fees. But, if you’re going to use Ethereum, the next logical question at this point is, How much ETH should I put in my digital wallet?

The answer depends on how seriously you want to devote yourself to collecting. If your idea is to own an NFT that is part of an extensive, famous collection (CryptoPunks, Bored Ape Yacht Club, Gutter Cat, etc.), you’ll need no less than 3 ETH. On the other hand, if you’re not as serious, you could use a tenth of that amount.

The bare minimum: you should own at least $100 worth of ETH, which is enough for a lower price NFT, or a free one, along with the gas fees. You can transfer your ETH from almost any crypto wallet or exchange. If you don’t have any crypto in your wallet yet, you can purchase the currencies of your choice on any exchange such as Coinbase, Tezos, Binance, etc.

Step 3 – Buying an NFT

We’ve reached the final step, and our future NFT glory is almost here. Now that we own a digital wallet and have crypto to spend, we can easily buy our very first NFT. Be sure to do your research and browse the marketplaces thoroughly. You can search on Foundation, OpenSea, SuperRare, etc. 

Get something authentic that catches your eye and fits your NFT-owning persona. If you happen to be price-sensitive, you can also set the listings by price and pick one that suits you and your budget. 

Whichever marketplace you choose, you must create an account with them. If you have your digital wallet, which you probably do if you follow our step-by-step list, then you can sync your wallet to your marketplace account. 

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