If you’ve read anything about NFTs, you’ve probably felt the same confused cocktail of emotions that you did when first reading about cryptocurrency:
Interest plus confusion with a pinch of FOMO.
I know that’s how I felt – and at the end of the day, there were just two questions that needed answering:
- Should I buy an NFT?
- If so, how?
The following is the four-step process to going from feeling ¯\_(ツ)_/¯ about NFTs all the way to confidently buying and storing your first one.
First, you’ll need some Ethereum
Surprise! You didn’t think you could buy NFTs with plain ol’ dollars, did you?
Joking aside, there’s actually a functional reason why you can’t buy NFTs with USD. It’s not just because NFTs are a critical component of the crypto ecosphere, and the tech wizards behind them look down on fiat (read: government-backed) currency with disdain.
Well, perhaps that’s a tiny part of it.
But the primary reason you need Ethereum to buy NFTs is that when you buy an NFT, you’re not just paying for the value of the NFT – you’re also providing the fuel your NFT requires to become etched onto the blockchain.
Like most crypto concepts, the inextricable link between Ethereum and NFTs can be a funky one to grasp. So let’s start at the beginning.
What’s so special about Ethereum?
Ethereum is the second most popular cryptocurrency (by market cap) for a reason: it’s the most innovative.
You see, Bitcoin creator Satoshi Nakamoto designed the original blockchain as a giant online ledger where you could record stores of value (you can read about the full history of Bitcoin here).
But only stores of value.
This is a gross oversimplification, but the Bitcoin blockchain contains records that essentially say:
- Chris Butsch owns 0.42 bitcoin.
- Chris Butsch sends 0.16 bitcoin to Steve Buscemi.
- Steve Buscemi owns 0.841 bitcoin.
And so on. “Who owns how much bitcoin” is pretty much all the Bitcoin blockchain could handle (not to downplay the importance of the OG blockchain, but it’s still true).
Therefore, developers soon began asking: what else can we store on the blockchain, besides just stores of value? Can we store medical records on there? Legal data? How about a simple record of who owns which piece of digital art?
Such thinking gave rise to the Ethereum blockchain and the proprietary crypto that powers it, Ether (colloquially known as Ethereum). Ethereum allows us to record non-fungible tokens, aka unique strings of data:
- Chris Butsch owns the digital artwork Nyan Cat.
- Kayla Stevens is Type: 0 Negative.
Et cetera. As you can see, the possibilities for NFTs are virtually (heh) endless.
Why do you need Ethereum to buy NFTs, and what are “gas fees”?
When you buy an NFT, you’re actually paying three entities:
- The artist.
- The NFT marketplace.
- The miner, who supplies the computational power necessary to record your NFT to the Ethereum blockchain.
The artist may not mind being paid in cash – but the marketplace and the miner sure don’t want your USD.
Furthermore, they can’t accept it even if they wanted to. The Ethereum blockchain isn’t designed to facilitate cash transactions – only Ethereum can flow back and forth, so you’re essentially paying for your art using the local currency.
The term gas fee arose because the Ethereum blockchain is extremely busy, and your NFT can quite literally sit in traffic before reaching its destination. The longer it does, the more Ethereum you have to pay.
To draw an analogy, imagine you buy an expensive piece of art from an art gallery across town. You pay the artist and the art gallery, but you also have to pay the delivery service who brings it safely to your house and hangs it on the wall. The longer they sit in traffic the more they’ll charge you for gas, hence, “gas fee.”
In summary, NFTs need Ethereum to exist, and since NFT purchases are facilitated using Ethereum blockchain technology, they require Ethereum, not cash, to process.
How and where should you buy Ethereum?
If this marks your first crypto purchase, don’t be intimidated – you don’t have to go to some shady site to buy it. In fact, buying crypto has never been safer or easier.
Coinbase is perhaps the most beginner-friendly place to buy crypto. Not only do they have a clean and intuitive user experience, but they’ll also pay you in crypto just for learning about crypto.
To buy crypto on Coinbase, all you have to do is create an account, link your bank account info (banks won’t let you buy crypto on credit), and click “Buy/Sell.”
How much Ethereum should you buy?
The median sale price of an NFT these days is around $150 to $200 according to independent research by Eileen Kinsella, so $250 should be enough for a first purchase.
That being said, you can always find an NFT you like and come back to this step to buy the precise amount you’ll need.
(Forget what you’ve read about the “average” price of NFTs – when the vast majority of NFTs sell for under $200 and only one sells for $69 million, it’s better to work off the median).
Anyways, once you buy your Ethereum, there’s one more hoop to jump through before you actually buy an NFT; you’ll have to extract your “keys” to a “wallet,” and use your wallet to pay for your NFTs.
I know; NFT-buying has more hoops to jump through than the Kennel Club Dog Show – but it’ll all make sense in a bit.
Next, let’s get you a crypto wallet
A crypto wallet is where you store the public and private keys to your cryptocurrency:
- A public key is like your account and routing number – you can share these publicly and they can only be used by others to send you crypto.
- A private key is like your bank account password. Your private key is used to control the Ethereum in your balance, so you never want to share it.
Technically speaking, your crypto wallet doesn’t contain your crypto – remember, your Ethereum lives on the blockchain. Rather, your wallet is more like a crypto keyring.
Anyways, you’ll need a wallet to buy digital assets on OpenSea or any other crypto exchange. OpenSea users seem to love using MetaMask, and I don’t hesitate to recommend it. It’s free, secure, and easy to use – it even has its own Chrome extension.
But in case you’d like to shop around, check out our guide to the 6 Best Crypto Wallets To Stash Your Bitcoin.
Now, once you’ve downloaded MetaMask and gone through the wallet creation process, you’ll be brought to a screen like this.
Next, we’ll “deposit” your Ethereum into your new wallet. Head back to Coinbase, or wherever you bought your ETH, and click “SEND”.
On the TO line, or ADDRESS, put your public key (listed under Account 1 in the screenshot above):
Click “Send now”, and bingo bango, you now have a wallet full of ETH!
One last thing before we move on: anyone who holds any amount of crypto should know that there exists a more “secure” type of wallet that some crypto traders vastly prefer.
Hot and cold crypto wallets: which is right for you?
In the example above, we created what’s known in the crypto world as a hot wallet. Hot wallets are “hot” because they’re connected to the internet – your private key exists on a server somewhere.
These days, hot wallets are extremely secure. They’re enshrouded in state-of-the-art security measures like two-factor authentication, AES-256 encryption, and the physical servers are even protected by armed guards.
Even still, billions of crypto has been stolen from exchanges like Mt. Gox, Poly Network, and others, with regular everyday people losing their crypto fortunes overnight. These “hacks” or “heists” happen when bad guys get access to private keys and use them to send themselves crypto.
Coinbase itself has never been directly hacked, but 6,000 Coinbase users did lose their crypto through a malicious phishing scheme in October 2021. The digital ramparts defending your MetaMask wallet have also never been breached, but there are scattered reports of a handful of users having very, very bad days.
All in all, your crypto is probably 99.9998% safe online. But for some users, that’s just not good enough. Therefore, they extract their private keys to a cold wallet which is entirely disconnected from the internet.
Cold wallets usually take the form of a USB stick, a hard drive locked in a safe, or even scrawling your private key onto a piece of paper.
The pros and cons of using a cold wallet are similar to hiding your cash under the mattress. In physical form, your crypto and NFTs can’t be stolen by hackers on the internet.
However, the biggest “threat” to a cold wallet is that it’s simply lost. If you do decide to store your keys in a cold wallet, well, just be sure you don’t end up like this guy!
Alrighty – you’ve got your wallet (hot or cold), your wallet is “full of” ETH, so now it’s time to do some NFT shopping!
Head to an NFT marketplace
In Q1 2022, the most popular and well-trafficked NFT marketplace is OpenSea. Big budget competitors are on their way – most notably from Coinbase and Binance – but for now, OpenSea is still the internet’s de facto Grand Bazaar for NFTs.
All these NFTs…where to start?
Well, first thing’s first: let’s create an account and link up your MetaMask wallet.
Actually, OpenSea won’t even let you create an account until you link up your wallet.
OpenSea makes linking your wallet with MetaMask super easy and seamless, but if you need help, they have a pretty thorough walkthrough in their Help Center.
Alright – now that we’ve done our chores, let’s get to the fun stuff – browsing NFTs.
What is OpenSea and how does it work?
The name “OpenSea” is rather fitting for an NFT marketplace – tranquil from the shore, daunting when you’re in it.
Don’t let its serene, inviting appearance fool you – there is a slight learning curve to “navigating” OpenSea.
Let’s dive in.
OpenSea is the world’s largest NFT marketplace. Like a cryptocurrency itself, OpenSea was founded by just two really, really smart people in late 2017 – and thanks to early support from Silicon Valley, exploded into a $1.5 billion valuation almost overnight.
In November of 2021, OpenSea crossed a mind-boggling threshold just shy of its fourth birthday – $10 billion in NFT sales made to 629,867 traders, according to Bitcoin.com. By contrast, it took Netflix and Dropbox 10 years each to make their first billion.
Anyways, OpenSea’s staggering growth and sales figures have poured kerosene on the NFT craze. Legions of artists, collectors, and eager early investors have flocked to the platform, which has rapidly evolved to become more robust, secure, and user friendly.
So, how does it work?
OpenSea can best be described as eBay for NFTs. Sellers can list their NFTs for auction, fixed price, or a combination of both. And to be honest, I think the user interface is even cleaner and more intuitive than eBay’s.
Unlike eBay, however, OpenSea will actually show you details like the NFT’s past trade history and current offers that have been rejected. You can even see exactly who transferred the NFT to whom, and when.
This level of upfront transparency is helpful, borderline imperative, since the high-end art world is already rife with scams and fraud. Item Activity doesn’t entirely eliminate these things (see the risk-related FAQ below) but it helps.
The “challenge” with browsing OpenSea
Now, while OpenSea and eBay share the same basic functionality, they have completely divergent “vibes” – and depending on what kind of NFT buyer you are, this could create challenges in your shopping experience.
You see, eBay is like a loud, shouty marketplace. SAVE ON THIS! 15% OFF! BUY BUY BUY DEAL DEAL DEAL! eBay is very commodity- and price-driven, and the site is specifically designed to help you find the best deal.
OpenSea, by contrast, is like a quiet art gallery. You’ll never see coupons, deals, or even prices listed anywhere on its front page.
Even when you visit a specific NFT collection, prices are barely visible – as if gently whispered to you by a bespectacled gallery director.
Because NFTs are handcrafted pieces of art, the concept of a “deal” or a “discount” on OpenSea isn’t just foreign – it’s vulgar.
The bottom line is this:
OpenSea is designed for NFT buyers to search by art and artist – not by price.
Just like a real art gallery, OpenSea is designed for buyers to gently wander with their arms clasped behind their back, find a piece that speaks to them, and pay the artist’s asking price.
That being said, there is a tasteful way to ask “do you have anything under $250?” on OpenSea.
Step 1 is to just start browsing. Scroll down the homepage and pick an NFT category to start:
From here, choose an artist’s collection that you fancy. In my case, that’s definitely Bad Face Robots.
BadFace-Team’s creations seem pretty affordable, but we’re still on a $250 budget. So click the filters to the left, and set your budget.
Now, at this stage, you may not find any NFTs available with this particular artist. If so, I encourage you to keep browsing.
Purchase your NFT and keep it safe
So, what happens when you buy an NFT?
Once you buy your first NFT, it’s 100% yours. A record of your ownership is etched onto the Ethereum blockchain, where it’ll remain forever. Even if you sell or transfer your NFT, a record of your previous ownership will still be etched in stone on the blockchain.
To view your purchased NFTs, head to your Account > Profile > Collected Tab:
Purchased NFTs are automatically added to the crypto wallet you registered with OpenSea. And to be clear, there’s no rush to extract them to a cold wallet before the crypto baddies get to them. For now, NFTs are considered safe in a MetaMask wallet tied to OpenSea.
That being said, you may still want to transfer your NFT to a new wallet. Perhaps you’d like to send it as a gift to someone, or maybe you just want to covet it in physical form like the Sword of a Thousand Truths: