You’ve probably heard of nonfungible tokens (NFTs)—by this point, you may even be ready to stop hearing about NFTs. Beeple’s Everydays: The First 5,000 Days sold for more than $69 million in March 2021, sparking wider interest in digital artwork and sustained media coverage. WIRED senior writer Kate Knibbs sold one of her tweets as an NFT, and features editor Sandra Upson even profiled a few CryptoPunks.
The concept of digital ownership can be difficult to grasp, and with so many of the loudest voices heavily invested in NFTs, it can be hard to know who to trust. Our guide to the blockchain is a good place to start if you are looking for a more in-depth discussion of core topics, like Ethereum.
Use caution when wading into the world of NFTs. Financial investments can disappear overnight in rug pulls. Certain artworks may pose security risks, like exposing your IP address. Also, the energy consumed from blockchain transactions contributes to climate change. If you still want to buy and sell NFTs with all that in mind, here’s what you need to know.
How NFTs Are Bought and Sold
Before reaching for your debit card, it is important to understand that NFTs are purchased with cryptocurrency. Most of the transactions on OpenSea, the preeminent marketplace, are done with Ethereum and a cryptocurrency wallet is necessary to participate. Current competitors to OpenSea include SuperRare, Nifty Gateway, and Rarible. Two common cryptocurrency wallet options are Coinbase Wallet and MetaMask.
Get started by visiting the OpenSea login page and connecting your crypto wallet. Visit your Profile where collected NFTs can be seen by members of the community. Profile pages track your favorite NFTs and marketplace activity.
Now you’re prepared to browse through the marketplace and potentially make a purchase. Certain listings will feature a Buy Now option, while others allow you to place an offer to the owner. If you click Make Offer, choose the amount you are willing to pay and an expiration date. After the exchange is complete, the NFT is transferred into your wallet and appears under the Collected tab on your profile page. OpenSea takes a 2.5 percent cut from every marketplace transaction.
To put an existing NFT on the market, go to your Profile and click on the desired NFT. Then select the blue Sell button at the top right of the screen. Pick Fixed Price if you would like to sell it for a specific amount, or pick Timed Auction if you want people to bid on your NFT.
OpenSea charges an account initialization fee for your first listing. Ethereum transactions incur something called a “gas fee.” If a seller accepts an offer made on an NFT, then they pay the gas fee. For fixed price sales, the buyer is responsible for the extra cost.
Profile Picture NFTs Reign Supreme
Profile picture projects stand out as the most popular type of NFT collection. A series of digital artworks is created around a single subject like an ape or alien. The subject is often in the middle of frame and reiterative with an assortment of facial expressions, skin tones, and accessories.
Using CryptoPunks as an example, one NFT in the 10,000-piece collection may be unique for having a mohawk, pink lipstick, and 3D glasses, but the overall style is instantly recognizable as part of the larger project. In cryptocurrency circles on Discord and Twitter, NFT profile pictures from well-known collections are ephemeral status symbols.