NFTs, or non-fungible tokens, have taken the world by storm. The art world, specifically, has been one of the world’s industries that’s been most affected by this culture shift.
There are a few things you need to know when collecting NFTs—namely, learning how crypto generally works, setting up a wallet to store funds and pay for digital art, and finally actually buying NFTs (from ethically sound and reputable auction platforms).
This article will tackle these issues so you can start buying and selling digital art confidently and build your portfolio like a seasoned NFT collector.
So, what are NFTs?
Before we get stuck, it would be remiss not to go over how crypto and non-fungible tokens work in general and why they are such an intriguing option for art collectors going forward.
Simply put, an NFT is a digital asset that is stored in the blockchain, a highly encrypted, decentralized fortress of data and information.
Crypto-traders operate in this space due to its near-impenetrability and security from unethical behavior due to no governing body.
This is where it differs from traditional trading arenas, such as big banks on Wall Street for stocks or auction houses like Sotheby’s or Christie’s for art. It takes away some risk in regards to the possibility of human interference or corruption.
This democratization of digital assets is the predominant reason why artists are turning to NFTs to sell their pieces of art. It’s paving the way for a new generation of dealers and making art more accessible to people from all walks of life.
Still not quite making sense? Well, say you go to your local art gallery and buy a piece from an up-and-coming artist. You own the rights to the asset itself, knowing it’s one-of-a-kind. However, the intellectual property rights remain with the author (i.e., the artist).
How did the art get digitized? Well, it’s a process called minting, and the artist shelled out some serious money or crypto to have it done. This article on minting NFTs explains.
Someone may be able to buy a print of the same piece of art or take a photo of the piece, but you have the original—this is where the value of the art is held, and laws regarding NFT copyright come into play. Also if you are concerned about copycats then you must read this Can NFTs Be Copied? 7 Things to Know.
An NFT functions exactly the same; if you buy an NFT, you are the sole owner of that particular asset and its value. The only difference is it exists only in the digital world.
Setting up your digital (crypto) wallet
So now you’ve got a base understanding of how NFTs work and why you would want to collect them, you’ll need to set up a crypto wallet.
This is fairly straightforward. We recommend you go for a reputable platform that also has NFT-friendly functionality, such as Alpha Wallet or Coinbase. There’s not a whole lot to consider outside of this, so do your research to see what fits into your needs or preferences.
Keep in mind that the value of your wallet is not concrete—one ETH (the most actively used type of cryptocurrency) is generally worth thousands of dollars, but this depends on the day.
As we’ve gone over, crypto functions in practice as a stock market, subject to volatility and fluctuations in value. The art market functions like this, too, with pieces constantly changing in value, actively responding to supply and demand.
Coin Market Cap has up to the second charts showing the fluctuation of NFT finance.
You should be monitoring this closely and deftly managing your crypto assets to ensure they retain their value, either by buying and selling at the right time or leveraging your NFTs to acquire other pieces of digital art.
Before you know it, you’ll be building the value of your wallet through a strong portfolio of crypto and NFTs. Just try not to forget your password.
Building your digital art collection
OK, now for the fun part—actually buying some digital art. Gone are the days where you will need warehouses, or lock-and-key storage sheds to store art, where it can be subject to theft, natural disaster, or some other nefarious fate.
I can’t stress this enough: buy your art from a reputable NFT source. Stick with one of the main players while you learn the ropes (OpenSeas, SuperRare or Rarible, for example), and then branch out once you have gained some confidence.
Current Popular NFT Platforms (Buy, Sell, Trade)
Nifty Gateway is an excellent site, especially for beginners. There is a drop section, and you can also sign up for the drop newsletter. This means you will get an advanced warning of what NFTs will be available in the near future.
This gives you time to research the pieces, what the NFTs contain, and if you are interested in buying them.
There is a discover section where you can search through the NFTs on the site to see what is selling and how the price is changing. It’s a good way to see if the value of the NFTs you have collected are going up or down in value.
The Marketplace section is where you can find anything currently for sale and which NFTs people are willing to consider offers on.
It is so easy to buy on Nifty Gateway; it reminds me of eBay.
There are Buy Now options where the NFT is yet to sell or sell out, so you can basically add it to the cart. Then if the seller is open to offers, you can place an offer as you would on eBay; the only difference is that they don’t have to accept it, and there is no deadline.
Open Sea claims to be the largest NFT marketplace globally, which I would imagine they will have to work hard at to keep that title.
It is very similar to Nifty Gateway because you can buy, sell, and trade, plus you can browse and see rankings and activity.
The home page of Open Sea is a little easier to browse as it gives you categories that you can quickly use to find NFTs of interest. The sections are new, art, domain names, virtual worlds, trading cards, collectibles, sports, and utility.
The creator section appears to be more clear and more varied than Nifty Gateway. It appears to run more like a Shopify store where Open Sea allows you to set up a Store Front, and they help you set up the NFTs, easily attach them to your store, and handle the payment side of things for you.
Currently, Super Rare isn’t at the same level as Nifty Gateway and Open Sea because of pieces available to buy, sell, and trade.
However, it certainly appears to have greater quality on offer. At the time of writing, they vet the artists, so your portfolio will be checked for quality, and they will decide if they will allow you to sell on their site.
The Top 10 section is excellent. It is a blog page that highlights different artists, explaining what the artists and the art are about and why you should buy it.
If you are new to buying NFT art pieces, then you should read everything here. You can use the information to build your knowledge on what sells and what does not.
Plus, you might find an artist you really like and decide to collect their art range for personal pleasure.
Rarible is a very popular platform with a heavy amount of traffic and minted art to choose from. There isn’t a vetting process for artists so you will need to scour the listings to find the gems.
However, many prominent and successful artist use Rarible to list their collections.
Foundation is a top-rated platform and has a vetting process where only artists who have previously sold NFTs on their platform can invite other artists.
I believe an artist gets 3 invites for every NFT sold.
It’s not a perfect system, but there is a hurdle for entry, and therefore the artist’s craft may be somewhat superior. Numerous high-profile artists and creators use Foundation to list their NFTs.
Bidding and Buying
Start bidding with the funds in your digital wallet, and start winning some auctions. Once you’ve acquired your first piece of digital art, this will be stored in your wallet, with a link to a high-secured digital certificate proving its authenticity and allowing you to confer its value.
This is important—without the certificate, your NFT is pretty much worthless. This is why you should stick to the bigger marketplaces before finding more niche and exclusive auction sites.
Many of the bigger players will ensure proper compensation to the artist too, an ethical practice that is not limited to the digital art world. To learn more about how artists sell art and get compensated for their NFTs, you can check out this article.
Obviously, the more niche platforms are appealing as you will generally find rarer pieces of art to collect and invest in. Still, it’s hard to know which operate ethically and are trustworthy. Be mindful and manage your wallet and NFTs carefully by buying from trustworthy sites. Also, be sure to check who you are buying the NFT from and confirm it’s the artist or creator you are interested in. This article explains more: How to Check the Ownership of an NFT (7 Methods).
Now, go get some NFTs for your portfolio
This is a great time to be getting into NFTs. It’s been well-documented that the strength of the art market as an asset class has gone from strength to strength, and NFTs are no exception to this rule.
Hopefully, you’ll be feeling ready to take the leap and start collecting NFTs. Remember how crypto and the blockchain works, set up a wallet to your liking, and go ahead and buy your first piece and start building your portfolio.
Also, remember you have a perfect opportunity to establish a relationship with a digital artist and help their career. This concept has been emphasized within the NFT art world. Perhaps your NFT will increase in value while an artist’s career blossoms.
Perhaps you know an artist that wants to begin creating NFTs; well then, by all means, shoot them this link on getting started.
The other cool thing is that your original NFT asset—just like a tangible piece of art—will essentially never be able to be replicated. Welcome to the future of the art world.