Where To Buy NFTs – Direct Or Marketplaces
Acquiring your first NFT via drops or marketplaces
So you want to dive into NFTs, but how exactly do you buy an NFT? They are unlike crypto exchanges where you can exchange your fiat money for cryptocurrencies – NFTs have to be bought with cryptocurrencies, so how do you do that?
Besides being airdropped or gifted NFTs directly into your crypto wallet, you can either buy them directly off the project (also known as minting) or via marketplaces.
Buying NFTs From Marketplaces
Let's start with the more straightforward way – buying off marketplaces like OpenSea, and Rarible.
Connect your wallet
Make sure you have enough ETH (or other types of crypto if you are buying NFTs on other chains)
Press Buy Now, and Sign the transaction
If you're choosing to participate in an auction, note that you'll have to swap your ETH into wETH and pay gas fees to make the bid. If you win the bid, the wETH will be deducted. Otherwise, you'll be refunded the wETH less the gas and transaction fees.
There are several types of auctions. A typical auction has a time limit and the highest bid wins. During which, the owner of the NFT can set a Reserve Price, which is hidden from everyone and is the minimum price that he will sell the NFT for. If none of the bids meet the Reserve Price, the auction will not proceed and he will incur gas and transaction fees for listing the auction.
Another type of auction is a Dutch auction. This is usually done for new mints with a limited number of quantities, and the price of the NFT will drop periodically until a floor price, or until it is sold out. You'll usually encounter this for new drops.
Minting NFTs Directly From The Project
While some projects choose to drop their collection or series via the marketplaces, most projects choose to run it via their own website. To mint directly from a website, you'll need to:
Connect your wallet to their website
Wait for the drop (date, time, and price are usually shared via Discord and Twitter)
Sign the transaction when the mint goes live
Some projects allow you to mint directly via the smart contract. DO NOT run just any smart contracts that are shared with you online. Only run smart contracts on links provided by official sources, and you can usually see on EtherScan the owner of the smart contract.
Minting directly via smart contracts can be faster than via the website, but requires making manual adjustments. This can get quite technical so avoid it if you're not sure.
Connect your wallet to the Web3 client on the Smart Contract
Enter your mint price and mint quantity (details shared via Discord and Twitter)
Execute the contract, and adjust your Gas Settings: You can adjust your Gas Limit, Max Priority Fee, and Max Fee.
For starters, you can select High Priority, leave the Gas Limit alone, and pay a Max Fee you're comfortable with to attempt to prioritise your transaction ahead of others. The reason people pay these extra fees is to mint the NFT ahead of others.
Once ready, press Sign.
The benefit of minting directly via smart contract is that it is faster, and in a highly competitive NFT market, you want every advantage to try and cop a drop.
Benefits Of Direct Minting NFTs And Whitelisting
Between the mint prices and the immediate resale price on marketplaces, an NFT can easily flip for 2X to 3X of its mint price (at the very least). This is because there are plenty of flippers who are in it for the quick flips and quick money. Most of the time, direct minting is also the cheapest way you can acquire an NFT.
One way to hack the direct minting is to get into the projects' whitelist, which is an early access list limited to early interested people. Every project has its unique whitelist methods, which includes:
Lucky pick amongst Discord sign-ups
Limited time for Whitelist sign-ups
Requirement to own their existing NFT items
Whitelisters usually have a 48 to 72 hour window to mint their NFTs ahead of the public sale, they do not have to compete and pay high gas fees. They can wait for a lower traffic period to pay less gas fees to mint their NFTs.
Is It Worth To Buy NFTs Via Marketplaces After They Are Sold Out?
Given the speculation surrounding the NFT market, resale prices immediately after the drop can be expensive. For 90% of projects out there, you can expect floor prices to drop within a week or two. However, there are some projects with very strong communities that have not seen their floor prices drop below their mint price e.g. Bored Ape Yacht Club, Mutant Ape Yacht Club.
These are the projects that are sold out within the first hour, and which people are willing to pay high gas fees for. Many a times, they have "floor sweepers" who are rich in ETH and buy up NFTs at the floor prices if they get too low.
Should you buy an NFT right after it is sold out, or wait till it drops? It depends.
If you really like an NFT, or you think you have picked a winner, by all means, buy it off the marketplace at any time you wish. Either way, you should expect that most NFTs will lose their value in time given that we are in a bubble. If you recognise that there is too much hype around a project, even if its current price is above is mint price, you might want to wait for floor prices to drop slightly before entering.
My personal approach is to set a price I am willing to pay for an NFT, and to try to acquire it at that price or less. If it gets cheaper, I will buy more, and if it is beyond my budget, I am happy to lose out. This is because I am in it for the long game, so do note that if you are buying NFTs for short-term speculation, your approach should differ.
Above all, most NFTs will likely be a miss in the long run. Just be comfortable with spending money or ETH that you do not need.