NFTs can be a confusing class of assets and can be difficult to understand even for people who are familiar with cryptocurrency and the blockchain. It doesn’t help that there is so much conflicting information being thrown around about them either. You don’t need to know everything about NFTs to get involved in the markets, but you do have to know the basics and be able to tell the truth from all the lies. Let’s take a look at a few things you should know about NFTs before you start investing in them.
Know what an NFT is and what it isn’t
One of the first things you have to understand is what you’re actually getting when you purchase an NFT. Some people assume that they’re getting the rights to the image or the asset attached to an NFT when they buy one. But, in reality, an NFT is nothing but an entry on the blockchain, and while it may link to the visible asset that you’re buying, you are buying this entry and nothing else. This not only means that you won’t be the owner of the asset, but that it can be moved at any time leaving with nothing but a piece of code.
So, make sure that you know the terms of the purchase first. Some NFTs will give you partial or total ownership of the asset attached to the NFT, while others may offer staking benefits. It is up to you to look up what you’re buying and make sure that the price is worth it.
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Learn About the Different Blockchains for NFT Projects
There are two main blockchains for the minting and buying/selling of NFTs: Ethereum and Solana. And the blockchain on which an NFT is hosted makes a big difference.
A lot of people prefer Solana NFTs, for example, because transactions are faster and cheaper. Transaction speeds can make a big difference when bidding on NFTs and getting outbid because of speed issues can be extremely frustrating. This is why you should consider looking up general news about NFTs and news on Solana NFT specifically, so you can take advantage of NFT launches on the platform.
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You will need a Wallet Before You Start Buying
As we said earlier, NFTs are entries on the blockchain just like cryptocurrencies. And like with cryptocurrencies, you will need a wallet to buy, sell, and store NFT purchases.
But things can get a bit more complex with NFTs. Some project creators, for example, will only accept one specific type of wallet. Projects developed for certain blockchains may also require you to use a wallet made for that blockchain specifically.
This means that you may have to juggle multiple wallets if you decide to invest in upcoming projects on new blockchains. This could be worth it if a collection is getting lots of traction but will make it more complex for you as a newcomer, so be ready for that.
Now that you know a bit more about NFTs, you can start looking at a few promising projects and start your research on them. Before you invest in anything, however, make sure that you counter-verify your opinions with the community and try to start with smaller projects to limit your risk.