How to Buy and Sell NFTs The Motley Fool

In some cases, NFTs have fetched staggering sums, like the collage created by artist Beeple that sold for $69 million in 2021. However, interest in NFTs has cooled significantly amid the overall market downturn for cryptocurrency and related investments. NFTs can also democratize investing by fractionalizing physical assets. Fractionalized ownership through tokenization can extend to many assets.

Collectors value those “digital bragging rights” almost more than the item itself. Because of the risks involved in NFTs, you may want to consider investing in more traditional ETFs. The point of ETF investing is to build wealth over the long term, and the volatility of the NFT market doesn’t make it the best fit for that. Before you invest in crypto or NFTs, make sure you understand the fundamentals of stock market investing. There are no guarantees whatsoever when it comes to investing in anything – and in the case of NFT stocks, you’re even more out of promises. You’re not only betting on your individual NFT to inflate in value, you’re also betting on the cryptocurrency to continue to thrive — in most cases, for now, Ethereum.

Minting an NFT of a quick sketch and throwing it on an exchange probably won’t get you rich. The dominant network used for NFTs is Ethereum, though others including Solana and Cardano are also commonly used. Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. Here is a list of our partners and here’s how we make money. All this means, an NFT may resale for less than you paid for it.

  1. And to make it even more confusing, not all NFTs are originals.
  2. Modern finance systems consist of sophisticated trading and loan systems for different asset types, from real estate to lending contracts to artwork.
  3. On the other hand, we have the meme-cultural icon, the Nyan Cat GIF that, though nothing more than a GIF with an illustrious internet history, sold for over half a million dollars.
  4. Sports leagues including the NFL, MLB and NBA have all created digital collections memorializing things such as notable statistics and outstanding plays.
  5. However, NFTs can also be used to guarantee ownership of unique physical assets for everything from property to collectibles to physical works of art.
  6. You can add information to the blockchain, but you can’t remove or alter existing information.

But show them a list of GIFs and ask them which ones were most likely to go for half a million dollars, and they’d be stumped. Odds are, they’d have a much harder time telling Nyan Cat apart from GIFS I made up in the taxi ride over to Berkshire Hathaway. Thus I would be more well-positioned to pick out which GIF was likely to strike a chord with crypto-enthusiasts. That said, every individual person has a unique perspective. If you know a subject matter deeply, you will perhaps be able to see value few others can see.

History of Non-Fungible Tokens (NFTs)

Every NFT is different, so buying NFTs isn’t like buying shares in a company. They all have their own values that often fluctuate based on what the market is willing to pay. It would be practically impossible to track the value of an EFT composed of NFTs. It’s a promising new front in the world of technology, but risks abound when investing in any movement’s nascent stage.

Non-fungible tokens, on the other hand, are completely unique items that are minted on the blockchain like a cryptocurrency — except they are unique. There is only one Nyan Cat GIF — even if you made an exact copy, it wouldn’t be accompanied by Blockchain-minted authenticity like the Nyan Cat GIF. You can post an Instagram of the Mona Lisa next time you visit Paris, or you can even buy a faithful real-world reproduction. But there’s only one version that’s commonly accepted to be the true copy, and that’s at the Louvre in Paris. It can be harder to discern the difference between an original and a copy of something when they are both digital — and often you can’t tell the difference — but the underlying idea is the same. An NFT, on its own, doesn’t necessarily grant copyright ownership.

For most beginners, DeVore said it’s a good idea to start with a reputable online marketplace. Some well-known examples for art include OpenSea and Nifty Gateway. But there may be others depending on what you’re looking to buy. NBA Top Shot, which makes licensed NFTs based on basketball games and players, has its own marketplace, for instance. NFTs can also be used to acquire voting rights in a decentralized autonomous organization, or DAO, that is governed using blockchain technology. And in some cases, owners of certain collections of NFTs can be eligible for exclusive or discounted “airdrops” of additional NFTs or crypto assets.

Unenforceability of copyright

When she isn’t feverishly working to meet a deadline, Robyn enjoys hanging out with her kids, drinking coffee, reading, and hiking. You’ll want to keep fees in mind as you research options. Most exchanges charge at least a percentage of your transaction when you buy crypto.

Should You Invest in NFTs?

“At the time the iPhone was created, nobody would’ve thought that one of the killer apps was going to be hailing a ride,” said Haun of Andreessen Horowitz. However, some NFTs entitle the owner to there’s only one survivor of this year’s cryptocurrency slaughter certain real-world perks. Before you buy, you may have to set up a cryptocurrency wallet that also stores NFTs. MetaMask is one wallet commonly used to buy and store NFTs and cryptocurrency.

Critics of NFTs question its value

Some services, such as Nifty Gateway, will hold your NFT for you, which can simplify the process if you’re willing to entrust your purchase to a third party. Online shops allow users to search for NFTs based on the kind of art, the creator, the price and other filters. If you’re interested in buying one that has more cachet, look at famous collections such as CryptoPunks and Bored Ape Yacht Club. Creators have experimented with building other value propositions into NFTs. For instance, entrepreneur Gary Vaynerchuk’s VeeFriends NFTs come with free passage into his VeeCon business conference. Some restaurants have created NFTs that give transferable rights, like reservations, to whoever owns a token, similar to how season tickets work for sports teams.

Since NFT ETFs combine elements from the investing and cryptocurrency sectors, it’s helpful to look at them both separately. Although NFTs date back to 2014 and started gaining popularity in 2017, it wasn’t until 2021 that they really took off. That year saw the launch of several popular NFT collections, such as Bored Ape Yacht Club, and led to growing interest in NFT investing. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Will Heydecker is a writer, screenwriter and illustrator who still likes dragons.

Or you may not be able to resell it at all if no one wants it. The monetary aspect of the sale of NFTs has been used by academic institutions to finance research projects. The fact that every NFT is different means that ETFs likely won’t be able to invest in the NFTs themselves, only stocks related to them. Walk through the ins and outs of selling your own NFTs. Learn to design, produce, market, and sell your own NFTs.

When you tokenize one of them, that note becomes distinguishable from the others—it is non-fungible. The other two notes are indistinguishable, so they can each take the place of the other. Within a few short weeks of their launch, cryptokitties racked up a fan base that spent millions in ether to purchase, feed, and nurture them. Robyn Conti is a freelance financial writer based in Los Angeles, CA. She has been writing about workplace retirement plans, investing, and personal finance for the past 20+ years.

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