TS5 | How To Buy An NFT On A Marketplace

So there’s this NFT that you’ve been eyeing for a while and it’s now at a price you might be able to afford. How do you buy it from a marketplace like OpenSea?

Discussion Topics: How To Buy an NFT on a Marketplace

• Similarities and differences between NFT marketplaces and e-commerce
• Popular marketplaces you could try
• Why smaller marketplaces might sometimes be a better option
• Information to consider before you buy
• Bidding on NFTs that are not currently on sale

Transcript: How To Buy an NFT on a Marketplace

Hi everyone, welcome back to today’s episode of The Token Singaporean, my name is Vnstr. So in the last episode, we talked about how we can mint our very first NFTs. But what if you’re interested in an NFT that’s been around for a while or if you missed the mint, and it got sold out, how else can you get into the project? So today, we are going to talk all about that. And that is how you can buy your NFTs through secondary marketplaces. So stay tuned to find out how.

Hi everyone, once again, thank you for joining me here today. And today, we’re going to talk all about how we can purchase NFTs from secondary marketplaces. So like I mentioned before, at the beginning, I believe there are two main ways where people can purchase the NFTs, the first way is to mint and that was something that we covered in the previous episode. So today, we’re going to talk all about purchasing through secondary marketplaces.

So just a short recap to explain the difference between minting and purchasing from secondary marketplaces. So previously, as I mentioned, when we talk about minting, we are actually buying firsthand from creators or founders, once they have launched their NFTs. So it’s usually bought through their personal website, I mean, not their personal website, but their projects website.

But here’s the problem. What if you missed the boat? Like, what if it got sold out and you didn’t get in on time? Or what if you just came across this project that’s been around for a couple of months, and you really love it, you’ll see a lot of potential in it, and you want to buy it at this point in time when it’s no longer in its initial phase. So this is when we talk about purchasing from secondary marketplaces.

So actually, I think that purchasing from secondary marketplaces is probably a concept that we are really very familiar with because it is something that is very common in the Web 2 space. So it’s actually similar to websites like eBay, similar to apps like Carousell, where you can buy from owners who are looking to sell their NFTs. So in this case, these owners could have minted multiple NFTs and are looking to take some profits and sell a couple of them.

Or maybe they just have their own reasons, and they would like to let go of their NFTs. And because these NFTs are no longer minting they have already mentored out. So if this is the case, you will have to look for these sellers to purchase an NFT if you would like to join their project. So first thing you need to understand is that similar to a regular Web 2 secondary marketplace, when you’re purchasing from there, you are no longer purchasing at mint price. So you’re not purchasing at the retailer’s price. In fact, you’re just purchasing at a price that is deemed fair by the seller himself or herself.

So in general, prices can be either higher or lower than the mint. And that largely depends on market sentiment. So for example, if the project is not doing so well, or rather, the project is in the building phase, and perhaps people are not really holding on to the project, maybe the price of each NFT might be lower than its mint price. But if the project has a lot of traction, and there’s been a lot of developments and updates along the way to buy this NFT, you might have to pay a lot higher, or maybe a little bit higher than the original mint price.

So in essence, we are running like a free market condition. So the prices are no longer fixed. So you don’t expect yourself to buy an NFT at the exact mint price that was stated in the project. All prices are set according to market conditions, according to the expected price, or rather, the perceived value of each NFT by the sellers themselves. So, expect yourself to see price fluctuations, here and there as well. This is when it’s important to sort of observe and track the prices in order to find a nice entry point, a good entry point for you to enter the project.

So in the various secondary marketplaces, within the website, there is actually basic data for you to sort of see the volume traded, how much people are trading during this period of time, what is the cheapest price that you can get a single NFT for within a project, etc.

I’ll talk more about that later. But right now, let’s just talk about where you can find secondary marketplaces and what are some of the examples of the most popular secondary marketplaces available in the NFT space. So I would say at this point in time I’m recording, the most popular and widely adopted secondary marketplace is this marketplace called OpenSea.

You can look them up on Opensea but of course, there are also many other up-and-coming marketplaces worth checking out, for example, LooksRare, and Mintable, It is actually a Singapore-based marketplace and coming pretty good, and pretty impressive, I would suggest everyone check it out. There is x2y2, Rarible, etc.

And along the way, at this point in time, they have not launched yet. But we are also expecting to see Coinbase coming up with its own marketplace. So interesting times we’re living in so yeah, it’s worth checking all these marketplaces out once in a while.

So here’s the thing, in order to list each NFT, usually, sellers would have to create an account manually in each of the marketplaces and list their items manually as well. So naturally, since OpenSea is the more widely adopted marketplace right now, I mean, very naturally, you can see that there will be more listings and more choices for you if you shop on OpenSea at this point in time.

But that’s not to say it will remain like that forever. As I mentioned, a lot of the other marketplaces are also catching up. They’re giving a lot of incentives for sellers to list their items on their marketplaces. So it’s always good to check out a few marketplaces before you buy something because sometimes you never know you’ll get a better deal in a less prominent marketplace. You never know, it really depends on your luck, I think.

So before we actually start to actually buy NFTs from the marketplaces, I think there is a couple of data that would be good for you guys to know. And these are all provided by most of the marketplaces themselves.

Understanding how to read this data will give you a good idea of whether you are looking at legitimate listings, how many owners are there within the project, the cheapest price you can get if you want to enter the project at the lowest possible price, how much volume has been traded to sort of indicate whether the project has traction, so on and so forth.

So now we’ll look at each point and explain what these data can tell you. For now, for simplicity’s sake, I am going to explain this data and what you can see based on the OpenSeas website, if you open a projects page on OpenSea, right at the top, you will see several numbers, which are actually pretty important. You will see items, owners, floor price, and volume traded. So let me explain to you what each of these points means.

So the first point that we can see would be items, so items basically mean the total number of items minted for the collection. So the total number of NFTs that’s available within that collection that’s been minted. So why is this important? This is very important because it kind of can help you determine whether you are on the legitimate page of the project within OpenSea.

So what I mean is, for example, if a project is a 10,000 NFT collection, and it’s been minted out. So there are 10,000 pieces of these NFTs floating around in the market. And then you click on OpenSea, and then you enter a page, which you think is the main project page within OpenSea. However, on the item number, you only see 10 items. If this is the case, what happens is that this page is likely created by a scammer.

At this point in time, I don’t think I want to delve deeper into exactly how the scam works, because, in our next episode, we’ll be talking a lot more about the frauds and scams that are rampant in the NFT space and how you can avoid it. But at this point, you just have to remember that understanding what these item numbers mean, can sort of help you to decide and know whether the OpenSea page is a legitimate page for the project. That is one thing and also, to sidetrack a little bit a little bit deeper into how it can help you. It can also help you to determine whether you want to mint a project.

So for example, you would like to mint this project-specific project just to hold for a little while and do a quick flip for profits. So like I mentioned during the minting episode in order for you to be able to make a quick buck from minting and flipping the collection usually has to sell out. So what you can do usually is that while minting is happening, you can keep observing the item number on OpenSea, and watch how many have been minted over time.

So this sort of gives you a gauge as to whether the project has traction to whether the project is close to mint out already. So usually, if you want to aim for a flip, you would start minting or aping in when the project is about 80% minting out those kind of numbers that will be pretty safe for you to enter, and get a couple of NFTs and then just wait for the project to mint out and then find a good time to flip your NFTs for good profit.

The second data point you need to know would be owners, so owners are very straightforward, it basically means the total number of unit owners within the collection. So usually more owners would be better because when there are more owners, it means that on average each owner should own less of each NFT. So this is better, because if it is evenly distributed then people are less likely to dump their NFTs for quick profits.

Because if you only have two NFTs you can’t sell too many, you still want to have skin in the game. Whereas if you have like 20 of it, you can sell like 18 of it and still have skin in the game. And if there are a lot of NFTs on sale in the market, then you will affect the price of the NFTs because there is more supply. The floor number you need to know and understand the floor price.

So the floor price is very straightforward. And as a season NFT person or rather not just me, but many others would tell you that if you really like a project floor price doesn’t really matter. But I can assure you from experience that when you’re new to NFTs floor price is usually the only thing you will check every single day.

So what is the floor price? Basically, it is the cheapest NFT in that collection that is for sale right now. So for example, if you’re someone with limited funds, and you just want to have skin in the game, within a project that you really like, doesn’t really matter whether the NFT you buy is there or not within the collection, then floor price would be what you’re looking at, because you just want the cheapest entry at that point in time.

However, if you’re someone who values, how rare an NFT is, when you buy etc. you have more funds to play with, then floor price doesn’t really matter that much because you’ll be going into the collection, and really choosing something that you fancy to purchase it. And the last basic data that you need to know would be volume traded. And volume traded basically just means the total Ethereum value transaction throughout the entire collection over the entire course of time.

So it’s important because sometimes it gives you an idea of whether at this point in time or during this period, there are any transactions happening if let’s say, an announcement happens, and then you see that suddenly a lot of people are trading again. So you can see that, maybe this project is gaining traction, it could give you an idea of whether you want to buy in, or you want to take the chance to liquidate your assets.

So I think more on that further down the road where we are all more familiar. But in a nutshell, these are the data points that would really help you in understanding the market overall. And also finding a good time to enter any project when it comes to purchasing from secondary marketplaces.

The last thing you need to know this might be specific to OpenSea, I’m not too sure I think most other platforms also provide this option. But it’s this bidding versus buy now option. So I’m just going to briefly explain the difference between these two options. So that you can understand and sort of determine whether you want to bid or you want to buy an item when you see it on the marketplace. So to bid for an item, the item actually doesn’t have to be on sale.

So what happens when you enter a project’s page on OpenSea is that you will see all the NFTs that have been minted within the collection. Some are for sale, some are not, you can filter them through and find out.

For example, you see this NFT that you really like but is not listed for sale, but you really want to buy, what you can do is you can bid for the item based on a fair price that you think you would pay to purchase the NFT and then that information will be sent to the seller or rather the owner of the NFT and if the price is right and the owner is like okay, sure I’ll sell that to you, then a transaction can happen. But in order to bid for an item, you need to first convert your ETH into wrapped Ethereum.

So the conversion happens all within the OpenSea website itself is just one click away. After placing the bid, you will basically wait to just see if the owner of the NFT accepts your bid. If the accepted transaction will automatically go through, you don’t have to approve of anything anymore. And the benefit is that you will not have to pay gas fees, because bidding owners will be the ones who will bet against fees for you.

So this makes a lot of difference, especially during periods when there is a bull market and gas prices are very high because it could make a difference of a couple hundred dollars, we’ll never know. So sometimes people try to buy items too bidding in order to save on gas fees. Sometimes it’s just a matter of indicating your intention to purchase an item and seeing whether the owner is willing to sell it to you at a price that you did miss.

And the most straightforward one would be to buy now. So buy now consists of all the items that are listed on OpenSea that are on sale within the collection. So for these items, you basically just buy based on the prices set by the owners. It’s very straightforward. And it’s an immediate process. But in this case, if you do buy, you have to approve the transaction and you will be the one paying the gas fees, but the transaction will happen immediately.

You do not have to wait for the owners to see if the price is right or whatever, because the owners have already listed the price that they think they want to sell it for. So once you click on it, you accept everything. It will be an immediate process.

And yes, this is basically an overview of how you can purchase from secondary marketplaces. I mean, it is very convenient, and you can do it anytime. But just like Web 2 marketplaces, scams are plenty, there are many, many ways that you could get cheated.

And I think the aim of our next episode will be to talk a little bit more on that so that you can sort of protect yourself and be more aware while you’re purchasing in these marketplaces and just prevent yourself from getting scammed by very, very malicious people that are around to take your money. And yes, with that, we’ve come to the end of this episode of The Token Singaporean, we finish our purchasing of the NFT series, part one and part two, part one being minting and part two, being buying from secondary marketplaces. I really hope that you’ve learned a thing or two from my sharing. And once again, I need to remind everyone that all that I’ve said is not financial advice.

So please do your own research before you go about making any purchase or making any sale. However, if you do have any questions, feedback, or comments, feel free to write to us and we’ll be very, very happy to answer you. Alternatively, you can also find me on Twitter, my Twitter name is VNSTR_eth. So write to me on Twitter, and I’ll be happy to connect with you guys. And lastly, if you enjoy this podcast, please help me by just writing a short review because it will really help the podcast go a long way.

So once again, thank you for being here. I look forward to being here with all of you guys in the next episode of The Token Singaporean. Bye.