NFT: Meaning and How to Invest

May 29, 2022 3 min read

NFT: Meaning and How to Invest

NFT: Meaning and How to Invest

Recently, there was a media buzz about NFTs being the next way to make money on the internet. The whole idea sounded insane to people at first, but people started thinking of investing in them with proper understanding. However, not everyone still knows what it is, how it works, and how to invest. So, let’s start with: “what is NFT and how to invest?” 

Non-Fungible Tokens (NFTs)

An NFT is a digital asset represented by a vast number of things that are creative and unique. It could be digital art, video, music, or video game items. It can be purchased or sold online using cryptocurrencies like BTC, ETH (most times), etc. 

NFTs have been around since 2014 but never gained mass recognition until 2021, when the market stood at a total worth of $41B. In 2022, people are getting more creative that by the end of the year, the value could be twice as 2021’s. 

How NFTs Work?

NFTs are different from cryptocurrencies and physical money. They are non-fungible, i.e., one NFT cannot be traded for another NFT item. However, cryptocurrencies can be traded or exchanged for another. But if there is something that brings NFTs and cryptos together, it is that they are built on blockchain technology. 

An NFT comes with a digital signature that can be passed from one person to another. If you create an NFT and sell, the ownership is automatically transferred to the other party. It comes with a built-in authentication that changes on sale. So, now the other party has the original item. And since NFTs exist on an Ethereum blockchain, there is a public ledger that records all transactions that take place. 

Now, NFTs can be created or minted. The minting often involves using digital objects and creating something out of them. It could be graphic art, music, collectibles, videos, gifs, and avatars. 

What is an NFT Used For?

From what has been described about NFTs, it is obvious that it is a scheme to favor artists and content creators. It provides them with a platform to sell their content. It removes the need to sell arts or creative content at galleries or auction them for sale at a gallery. And by finding the right exchange platform to mint and sell, creatives can sell directly to consumers and get profits. It even gets better when they sign up for the royalties program – if there is a re-sale of the content or piece to another person, they get a percentage 

How to Invest in NFTs?

NFTs are the new investments. However, like every other investment, you need to take your time and discover some things – there are important factors you must consider. Here is how to invest in NFTs in 3 comprehensive steps:

Step 1 – Gather Information about Trending NFTs

For someone interested in investing in NFTs, you should gather enough information about them. Ideally, everyone thinks NFTs are the next and fastest money-making schemes. While that may be true, you might find yourself chasing shadows if you don’t research well. The common NFT materials are art, music, video, and video game items. That means whatever you have to do has to be within this range. 

Also, you should read about sales – the date and the crypto requirements. By doing all these, you gradually understand how NFTs work. You can buy research materials online and join groups to get more enlightened. 

Step 2 – Choose the Right Brokerage or Exchange Platform 

The next step to investing in NFT is signing up with a brokerage or an exchange platform. Before buying an NFT, you have to buy cryptocurrencies like ETH. And to do this, you have to visit a crypto brokerage or an exchange platform. The former has a middleman connecting buyers and sellers, while the latter allows direct trading (but considers the market). 

Step 3 – Find an NFT marketplace to Buy

Finally, you have to find an NFT marketplace. It is a platform where NFTs are bought and sold. Some of the popular platforms are OpenSea, Rarible, and Axie Marketplace. On these platforms, you will find a series of NFTs listed; you can choose whichever matches what you are looking for and pay for it. When paying the specified amount in ETH, you will also have to add other fees like gas fees (often paid to miners). 

After purchasing an NFT, it is stored in a crypto wallet as your own asset until you are ready to trade in the future. 


NFTs are the future. But what better way to prepare for that future than by learning about it now? Hopefully, you understand how NFTs work now and proceed with investing in one or many, depending on your capacity.