How to Invest in NFTs in Nigeria

How can Nigerians invest in NFTs?

👉 If buying the best NFTs appears attractive to you, it is a clever idea to educate yourself on what NFTs are and how NFT investment works. Although digital art, music, and blockchain gaming products account for most of NFT trade volume, any asset might be at stake.

👉 The blockchain, the distributed ledger on which numerous cryptocurrencies are recorded, serves as the hosting platform for NFTs. Even though Bitcoin was the first to popularize blockchain technology, many other intriguing networks have emerged.

👉 Even while Solana, Cardano, and the Binance Smart Chain are all major players in the NFT field, Ethereum has emerged as the industry leader among these networks. An NFT marketplace is a venue where people may buy and sell NFTs.

👉 The greatest NFT marketplace is a user-friendly online storefront where traders may peruse and buy NFTs made by other traders. Typically, NFTs will be advertised at a set price or via an auction, with potential buyers able to place bids hoping to snag the security.

👉 Lastly, suppose you want to keep your newly purchased NFT safe and make further transactions in the cryptocurrency ecosystem. In that case, you will need a crypto wallet.

👉 Several reliable crypto wallets establish connections to NFT markets, enabling customers to pay for goods and store their digital assets securely.

Understand the risks involved with NFTs

👉 As a novel asset class, NFTs should be regarded as very hazardous. A portion of the risk of investing in NFTs is the danger of investing in cryptocurrencies.

👉 Even though cryptocurrencies have existed for over a decade, the digital currency investing sector is still relatively young and volatile. Due to government intervention or poor market circumstances, the value of cryptocurrencies may plummet without warning.

👉 If the cost of your NFT is denominated in Ether, and the price of Ether drops by half, then your NFT may fall by half or even more. As a result, you can lose your entire investment in a cryptocurrency or an NFT.

Choose an NFT

👉 The first step in acquiring an NFT is also the most enjoyable: shopping for the NFT you want to get. Each NFT is exclusive or a member of a restricted set. Explore the marketplace listings until you locate the appropriate NFT to begin your collection.

👉 You may explore OpenSea, Rarible, and Axie Marketplace to determine what is accessible. However, in most NFT markets, you can only acquire NFTs using cryptocurrency, so you must manage the crypto you need.

Do Your Own Research (DYOR) into different NFTs

👉 Successful individuals in the NFT sphere and beyond do not take their own research lightly. Do not just accept life as it is. Do not be afraid to put your money where your mouth is, but before you do, be sure you have done your homework.

👉 There are four key areas you should investigate, discussed below.

Consider its creator

👉 A proverb in the NFT industry states, “An NFT is only as excellent as its developer.” When investing in a non-fungible token, you are indirectly investing in the individual behind the enterprise. Therefore, your responsibility is to explore and understand the creator’s lineage.

👉 Nigerians must ask some of these questions when they evaluate the creators:

➡️ How many further NFTs have they designed?

➡️ How productive were the projects?

Evaluate the product/NFT

👉 You must also determine the value of the NFT you want to obtain. You can determine this by examining the NFT’s metadata. The metadata comprises the item’s attributes, such as its name, picture, or video file.

👉 To study the metadata of a token, one may either do it directly on the token’s smart contract or on an NFT Marketplace that extracts the information, such as OpenSea.

Consider the Community

👉 When studying a project or token, most individuals disregard the community. However, as the saying goes, kindness starts at home. Therefore, a solid initiative must have the support of a strong community.

👉 A key characteristic of a good community is that they participate in sensible discussions, as opposed to just spamming the group with “Gm,” “Gn,” and “Wagmi” messages.

👉 In addition, the community manager is engaged, communicates efficiently, and provides frequent updates. Nigerians must consider wherever the members/holders of the NFT they want to purchase congregate.

Branding of the Project and its Roadmap

👉 Research the project’s branding and the roadmap, and ask the following questions:

➡️ What are the creator’s intentions for the project? Do they have expansion plans?

➡️ What is the brand’s meaning?

➡️ Are their values congruent with your own?

👉 A project’s branding is what will keep it desirable and in demand. Therefore, you must include it in your study.

Choose an NFT Marketplace

👉 The NFT craze is in full swing in 2023. Famous social media platforms such as TikTok and Reddit incorporate NFTs into their applications. In addition, large clothing corporations, such as Nike, purchase NFT shoe labels, and the most prominent celebrities embrace the practice.

👉 Many blockchain businesses are developing markets for non-fungible tokens in response to the NFT gold rush. NFTs can be mined, traded, auctioned off, and accumulated in a marketplace dedicated to NFTs by musicians, digital producers, and artists.

👉 However, it is essential to recognize that not all markets are created equal. For example, some use the Ethereum network to facilitate liquidity mining. However, others employ novel technologies, such as Concordium, to provide enhanced security and cheaper gas expenses.

👉 Others also include special community governance tools, enabling members to agree on the platform’s rules and plans. The optimal choice relies on your NFT requirements and aesthetic choices.

👉 However, Nigerians can use the following components to decide on an ideal NFT marketplace where they can purchase tokens.

Consider the Token Standard of the Platform

👉 NFT markets may fulfil similar purposes, but they are not identical. Different systems, for instance, utilize various tokens.

👉 Depending on your NFT application, every token offers benefits and disadvantages. Currently, the most common token standards used by Ethereum-powered markets are:

➡️ ERC-721 – These tokens are the first non-fungible tokens since each unit is unique and scarce. If you like accumulating rare items, these tokens are an obvious choice.

➡️ ERC 998 – In addition to being non-fungible, users can combine ERC 998 tokens into complicated positions and trade them with a single transfer of ownership. In addition, ERC 998 tokens may include homogeneous fungible units, such as ERC20. This token standard is suggested if you want to keep a wide portfolio of digital assets for long-term benefits.

➡️ ERC 1155 enables users to hold fungible and non-fungible tokens using the same smart contract. Therefore, users interested in collecting in-game tradable assets will find the ERC 1155 token standard suitable.

➡️ FA2 Tokens can be used in various contracts, including those involving several assets, attributable to its unified token contract interface.

Verification Process for Users

👉 It takes extraordinarily little for hackers and con artists to jump on a new trend and prey on unsuspecting people. Unfortunately, with the widespread use of NFT markets, the number of scammers preying on unsuspecting buyers and collectors has increased.

👉 Because of the prevalence of fraudulent content makers and consumers, choosing a marketplace with a stringent verification procedure is important.

👉 Nigerians must remember that content creators on a blockchain can tokenize whatever they want, including films, GIFs, images, and even audio. Certain artists are free to market their mintable collections with or without the owner’s consent.

👉 Subsequently, the hundreds, or even millions, of funds you have worked so hard to achieve could vanish without your knowledge.

👉 The best way to protect yourself from potential problems is to choose a marketplace with a reliable verification procedure.

👉 For instance, only the original authors should be able to log into their accounts. Thus, there must be two-factor authentication, such as a code and a biometric.

Price Discovery

👉 Price discovery is crucial for both buyers and sellers, but many markets have yet to implement it. Using the NFT market’s price discovery function, you may determine what you think the going rate should be for your mintable artwork.

👉 In addition, potential purchasers might utilize this function to their advantage before dropping a significant sum of money on a useless item by using the price discovery option.

👉 NFTs are commonplace already, and their widespread use is expected to accelerate in the next several years. Thanks to this growth in demand, the market has become more liquid, which improves price discovery across all exchanges.

Fractionalization of Tokens

👉 Depending on the collector, the piece of art, or even if it happens to coincide with a major international or national event, NFTs may go into the thousands of dollars.

👉 Furthermore, some collectors provide exclusive ownership of their mintable artwork, making it the only example of its kind in circulation. In such an instance, the collector is free to set whatever price they choose for the piece.

👉 Thanks to token fractionalization, collectors need not shell out the full asking price to obtain rare NFTs. In this way, both buyers and sellers benefit.

👉 Instead of waiting for the highest bidder in an auction, a seller may just transfer ownership of their item in the smart contract and get payment in bits. Similarly, investors in NFTs do not have to break the bank to have a piece of the action.

👉 Because of fractionalization, NFTs are now within the financial reach of everyone willing to pay the collector, even the small amount they require. In addition, improved industry-wide rules and regulations could be implemented since this boosts mass adoption.

Crypto Wallet Compatibility

👉 For the NFT marketplace ecology to function properly, it must interact with conventional money. To mint or purchase NFTs, users must first fund their wallets. Therefore, you should look for a service that supports many wallet types or, even better, the one you use the most.

👉 Suppose you want a positive experience and peace of mind about your money. In that case, the integration must be simple, smooth, and secure. Furthermore, the marketplace should allow for connections by credit card in addition to mobile wallets.

Additional Incentives

👉 You could choose from dozens of existing NFT markets and dozens more that are in the process of being built right now.

👉 However, like any other online service, you should prioritize finding the most beneficial platform for your needs. Incentives in NFT markets may vary widely. After reaching a specific user level, you are eligible for rewards such as discounts, referral incentives, and profit sharing.

👉 Additionally, some platforms provide significant incentives, such as letting customers choose their own royalty percentages and commission rates. Keep your eyes peeled for a promotion that will reward you for using the service.

Create and Set Up Your Crypto Wallet

👉 If you have not already done so, the next step is to create a bitcoin wallet. These digital wallets contain the bitcoin required to acquire an NFT.

👉 Not all digital wallets are compatible with over 20,000 cryptocurrencies currently in circulation. Therefore, you must choose a digital wallet compatible with the crypto necessary to acquire the NFT of your choice, for instance, Ether.

👉 An NFT wallet operates differently than a physical wallet. Your wallet does not contain genuine NFTs or cryptocurrencies.

👉 Instead, it grants access to the blockchain-stored assets. It assigns a private key to the address, allowing the wallet owner to approve transactions. If you own the private key, you own the contents of the given address.

👉 A wallet manages all technical aspects and provides an intuitive interface for acquiring, trading, and transferring NFTs or cryptocurrencies. In addition, it offers enhanced security with two-factor authentication and a handy method to monitor your assets across several devices.

👉 You can establish a free digital wallet on your computer or smartphone. MetaMask, Coinbase Wallet, and Ledger are crypto wallets compatible with NFTs.

Considerations when choosing an NFT Wallet

➡️ The overall compatibility with the NFT marketplaces you wish to use to obtain NFTs. If it is not supported, you cannot purchase the desired NFTs.

➡️ NFTs could range in value from hundreds to millions of dollars. Therefore, you want the highest level of security imaginable.

➡️ An interface that is simple to comprehend. A superior user interface will make purchasing and selling NFTs simple.

➡️ Cross-device usage. Accessing your NFTs on both a desktop computer and a mobile device might be useful.

➡️ Multiple chaining support. While most NFTs exist on the Ethereum blockchain, several other platforms also enable NFTs. Therefore, you will need an interoperable wallet with several chains to easily access as many NFTs as possible.

Transfer Funds into Your Wallet

👉 The next step is to fund your digital wallet with fiat currency, like US Dollars or Naira, to acquire the cryptocurrency required for the NFT.

👉 Although most of the main NFT markets accept Ether, it is conceivable that the precise NFT you want is only available in a different digital currency. Typically, the acceptable currency for an NFT purchase is the cryptocurrency corresponding to the blockchain that enables the NFT, such as Ethereum.

👉 You might need to connect to a centralized crypto exchange such as Binance, Paxful, Gemini, Kraken, or others to convert your fiat currency to Ethereum. Once you have Ethereum, you can transfer it to your marketplace of choice and buy your NFTs.

Connect Your Crypto Wallet and an NFT Marketplace

👉 After creating and funding your digital wallet, you may link it to the digital marketplace listing the NFT. Once linked, you should be able to check the cryptocurrency balance in your wallet that could be used to purchase one or more NFTs.

Buy Your NFT

👉 When you are ready to buy an NFT, click the “Buy” button. However, a “gas” cost is also required when making a purchase using ETH so that the Ethereum network can process your payment. Depending on Ethereum platform congestion, this cost might be hundreds of dollars.

👉 To get an idea of how much the gas costs for an NFT transaction, you can visit a website like NFT Gas Station.

Confirm the NFT Transfer to Your Crypto Wallet

👉 When you purchase an NFT, you will become the legal owner of that asset. No transaction on the blockchain can be undone or cancelled. Therefore, the NFT is yours until you decide to sell it.

👉 The NFT will not show up in your virtual wallet until the monetary transaction is finalized, which might take some time. Until the blockchain network that backs the NFT verifies and confirms the transfer, the NFT will not appear in your wallet. The exchange is finalized when the NFT is shown in the wallet.