How to Invest in NFTs – The Best NFT Art Marketplaces to Buy and Sell NFTs

More people than ever are investing in NFTs so we’ve reviewed the best NFT art marketplaces to buy and sell NFTs.

Due to their popularity, you may be wondering how you can get in on the action.

First, I’ll explain exactly what NFTs are and how they work. Then I’ll review some of the most popular places to buy and sell NFTs.

By the end of this article, you should be able to determine whether an NFT investment is right for you.

What is an NFT?

A non-fungible token (NFT) is a unit of code built on a blockchain that’s used to authenticate digital ownership of a real world asset. Non-fungible means the tokens are one of a kind.

NFTs function much like a certificate of ownership. The most common use of NFTs at the moment is to identify unique digital art, but an NFT can represent anything of value.

NFTs are created on a blockchain, which is essentially a huge global ledger. A ledger that can be viewed and added to by anyone, but never changed.

The most common blockchain for NFTs is the Ethereum blockchain. Almost 90% of NFTs are stored on Ethereum.

NFTs are structured similar to cryptocurrencies, which are also stored on a blockchain.

Unlike NFTS, which are non-fungible tokens, cryptocurrencies such as Bitcoin are fungible tokens. This means they are not individually unique and are meant to be interchangeable like typical currency.

How Do NFTs Work?

As an investment, NFTs function much like stocks or physical art. Their value is set by the market.

You can buy and sell NFTs just as you would any other asset. As with other types of investing, the goal is to identify assets that will appreciate in value.

When an NFT is sold via an exchange or marketplace, the transaction will be automatically recorded on the blockchain.

How Much Does an NFT Cost?

The most expensive NFT sold to date is a work of art called The Merge by the artist, Pak. That NFT sold for $91.8 million.

Another notable sell was by the artist, Beeple, for $69 million. Named The First 5000 Days, this artwork combined 5000 images that were created over 13 years into a single NFT.

The trade volume of NFTs was over $40 billion in 2021. This was up from $13 billion the year prior.

According to nonfungible.com, the average price of an NFT in Q1 2022 was $1,057. It’s important to note that this is the average and approximately 1/3 of NFT sales were for less than $100.

How to Invest in NFT Art?

NFTs are typically purchased on an exchange or marketplace. This is the safest method.

Payment for NFTs is usually made with the Ethereum cryptocurrency since most NFTs are stored on the Ethereum blockchain.

NFTs can be resold via the same process over and over again. Like other collectibles, the market will dictate the NFT’s value at any given time.

The Best NFT Art Marketplaces

NFT marketplaces are where you buy, sell, and trade NFTs. 

Some exchanges allow you to buy cryptocurrencies in addition to NFTs. Some are exclusively for NFT art and other digital assets.

Like crypto exchanges, NFT marketplaces are either centralized or decentralized. In centralized marketplaces, the platform is essentially buying and selling assets for you based on your instructions. Decentralized marketplaces support peer-to-peer sales.

It’s important to choose a reputable marketplace when purchasing NFTs. We’ve reviewed some of the most popular ones below.

OpenSea

The only decentralized NFT marketplace on the list, OpenSea allows users to buy and sell NFTs along with other digital assets like crypto collectibles.

Founded in 2017, OpenSea leads all marketplaces in terms of sales and popularity. The decentralized nature of the platform makes it appealing to those interested in peer-to-peer sales.

Users benefit from the many payment options available on the platform. OpenSea supports more than 150 different payment tokens.

They also make it easy to create or mint your own NFT. You can then list and sell your art in the marketplace.

Nifty Gateway

Nifty Gateway is a popular centralized marketplace that was founded in 2018 and is now owned by Gemini, a cryptocurrency exchange.

With a focus on curated “drops,” this marketplace functions a bit differently than OpenSea. They work with in-demand artists to offer exclusive NFTs.

As a result, the price of NFTs on Nifty Gateway are typically higher. The higher demand could mean more potential as an investment, however.

Binance NFT Marketplace

Binance serves primarily as a cryptocurrency exchange, but has also launched their own NFT marketplace.

The centralized Binance NFT marketplace includes art, in-game items, digital collectibles and more.

Binance has it’s own blockchain known as the Binance Smart Chain (BNB). As a result, it’s marketplace offers NFTs from both the BNB and Ethereum blockchains.

Rarible

Rarible is another centralized marketplace that allows users to create, sell, and purchase NFTs. The range of NFTs available include artwork, collectibles, music, videos and more.

If you’re interested in creating your own NFT, Rarible is a popular choice. NFTs can be minted in under 5 minutes on their platform.

Rarible was among the first to offer royalties to artists on secondary sales. The artists make money each time their NFTs are resold. Most platforms have since added this feature.

How to Purchase Your First NFT?

The first step to purchase an NFT is to choose a reputable marketplace such as one listed above. The marketplace will determine which payment options are available.

NFT purchases are made with cryptocurrency and some marketplaces allow you to purchase crypto directly within their platform with a credit card.

If the platform doesn’t allow you to purchase crypto directly, you will first need to register for an exchange account and wallet. Popular U.S. exchanges include CoinBase. Popular wallets include MetaMask and CoinBase Wallet.

Most NFTs are built on the Ethereum blockchain so you will need to purchase Ethereum cryptocurrency via your exchange account. Next, transfer the Ethereum to your wallet so it can be used to purchase an NFT.

Once you’ve identified an NFT that you like, simply connect your crypto wallet to that marketplace and make the purchase.

The NFT data is updated on it’s respective blockchain and the authentication key is stored in your wallet. You are now the verifiable owner of this digital asset and can hold, sell, or trade as you wish.

How to Create or Mint Your Own NFT

The process to create your own NFT also begins with creating a crypto exchange account and wallet if you don’t have one already. Some marketplaces, like OpenSea, allow you to purchase crypto directly from the marketplace with a credit card.

You’ll need to purchase some Ethereum (or other crypto) via an exchange and transfer it to your wallet. The wallet is then connected to the marketplace where you’d like to create your NFT.

The Ethereum will be used to pay the minting fees associated with NFT creation as well as the gas fees incurred once the NFT is sold. Gas fees are based on the transaction volume at any given time on the respective blockchain.

You can now create a new NFT by following the directions provided by the marketplace selected. You will be asked to upload a digital file such a gif, png, or jpeg.

You’ll then select which blockchain to create the NFT on and set any resell royalties, if applicable. Once the the NFT is created, it can then be listed for sale in the marketplace.

Is an NFT Investment Right for You?

The NFT market is still in it’s infancy. It’s too early to know whether NFTs will prove to be a viable long-term investment option.

Investing in NFTs is higher risk than investing in cryptocurrency, which is an extremely volatile market in itself.

The best reason to consider investing in NFTs is to support the individual artist. If you’re already into crypto or physical art, NFTs could help diversify your portfolio.

Summary

NFTs or non-fungible tokens have skyrocketed in popularity in recent years. NFTs are units of code built on a blockchain that are used to authenticate ownership of a real world asset.

Non-fungible means one-of-a-kind. This distinguishes NFTs from cryptocurrencies, which are fungible and can be used interchangeably like fiat currency.

Most NFTs are built on the Ethereum blockchain and most transactions are made using the Ethereum cryptocurrency.

A reputable NFT marketplace is the best place to buy and sell NFTs. OpenSea is the most popular NFT marketplace.

Creating or minting your own NFT is possible on several platforms. The process is relatively simple, but does include fees.

When creating, buying, or selling NFTs via a marketplace, you will need to connect a crypto wallet to pay and get paid.

You will need to add some Ethereum to your wallet via a crypto exchange. Some marketplaces allow you to purchase cryptocurrency directly from the platform itself.

NFTs are a new asset class so the long-term viability of the market is unknown. The best reasons to consider an NFT investment are to support the artist or to diversify your existing crypto or physical art portfolio.

For more ways to invest, check out the 13 Best Ways to Invest Money for Any Budget.