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How and where to buy NFTs
Read our step-by-step guide to buying NFTs in Australia.
Key takeaways
- Secure a crypto wallet and buy Ethereum or other supported cryptocurrency first.
- Select an NFT marketplace that suits your interests then link your crypto wallet.
- Be aware that NFTs are subject to capital gains tax in Australia upon sale.
There are now lots of different ways you can buy NFTs, from dedicated marketplaces to popular crypto exchanges like Binance and Crypto.com. In this guide, we'll look at how to buy NFTs from an NFT-exclusive marketplace.
1. Buy ETH or another crypto
Most NFTs are traded on the Ethereum blockchain, so you'll need to buy some ETH or another supported crypto first. Use our table below to compare which blockchain different NFT marketplaces use.
2. Transfer to a wallet
Your crypto will need to be in a compatible crypto wallet to proceed. If you don't already have one, MetaMask is a popular choice for ETH.
3. Choose NFT marketplace
Research which NFT marketplaces offer the NFT collection or category you're after and create an account. Have some photo ID ready to verify your identity, and then connect your crypto wallet.
4. Buy your NFT
Browse the marketplace's NFTs to find one you like that suits your budget. Make a bid or purchase instantly. Once confirmed, your NFT will be added to your account.
Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific
provider, service or offering. It is not a recommendation to trade.
Where to buy NFTs in Australia
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Detailed steps for how to buy NFTs
- Purchase cryptocurrency. NFTs are created using smart contract technology, which means they are usually purchased using cryptocurrency. Over 90% of NFTs are traded on Ethereum marketplaces, meaning that most marketplaces have adopted ETH as their trading token. While NFTs can be purchased with other tokens, such as BNB or NEAR, the majority of NFTs are sold for ETH. If you need to purchase ETH to trade for NFTs, simply head to a cryptocurrency exchange and buy the desired amount of Ethereum.
- Set up a wallet. For integrating Ethereum tokens with decentralised applications (dapps), the most commonly used wallet is MetaMask. Setting up a MetaMask account is straightforward and you can follow this guide to get started. Once your account has been set up and secured, forward the ETH you've purchased from the brokerage exchange to your MetaMask's wallet address.
- Choose your NFT marketplace. There's a hefty range of marketplaces to choose from, so make sure you research which NFT category you wish to buy (be it digital art, metaverses or memes) and compare the marketplaces that offer it.
- Create an account. Register an account on your selected marketplace. Different marketplaces will have different set-up and verification processes, so follow the prompts specific to the platform. Depending on the marketplace of choice, you may need to provide government-issued identification to begin trading.
- Link your wallet. Once your account is ready for action, connect your wallet (in this case MetaMask) to the marketplace. This will usually involve nothing more than clicking a "Connect Wallet" button and following the prompts.
- Browse the available NFTs. Now that your wallet is linked to your marketplace account, you can start looking at the various NFTs available on the platform. Keep in mind the amount of Ethereum you have available to help decide what NFT you can afford to buy.
- Bid or purchase NFTs. Some NFTs are listed as an auction, meaning that you have to bid on the asset prior to the closing date, much like you would on eBay. Conversely, some assets can be instantly purchased.
- Complete transaction. Follow the marketplace's prompts to execute your order and, once confirmed, your NFT will appear in your account. Your purchases will often be displayed on your profile dashboard and can be accessed via a tab labelled "My Collections" or something similar, which operates in the same way as a cryptocurrency wallet.
NFT peer-to-peer marketplaces
- Many popular NFT trading platforms take the form of a peer-to-peer marketplace. Any user that creates an account can mint their own NFTs and then sell them.
- This results in these platforms typically stocking a huge range of NFT categories for you to browse through.
- Peer-to-peer marketplaces are often decentralised, making for a true P2P experience. The platform doesn't act as an intermediary and cannot censor, veto or otherwise get involved in transactions.
- Most of these decentralised marketplaces operate on the Ethereum network, and transactions are accompanied by a gas fee that is typically paid in ETH.
Popular peer-to-peer NFT marketplaces
OpenSea
- OpenSea is probably the best known and most popular P2P marketplace in the decentralised finance ecosystem, boasting the largest user base and transaction volume relative to its competitors.
- OpenSea is built on the Ethereum Layer 2 protocol, although it has recently integrated support for Klaytn and Polygon blockchains and their associated tokens.
Read our full review of OpenSea
Rarible
- Rarible is a relatively unique marketplace in that its governance and economic functioning revolves around the distribution of its utility token, RARI. RARI holders contribute to the community by participating in the governance process by voting on proposals.
- Rarible is focused on the creation of novel NFTs and fairly compensating content creators for their artwork.
- Rarible offers a wide range of NFTs, from digital art to music, memes and even NSFW content.
Mintable
- Mintable is an aptly named peer-to-peer NFT marketplace that revolves around the minting of new NFTs. What separates this platform from the rest of the field is its zero-gas fee service that allows artists to create their own unique NFT at no charge.
- Mintable's collection of assets includes digital artwork, collectibles, music, in-game items and rare trading cards.
Curated marketplaces
- Curated marketplaces differ from peer-to-peer marketplaces in that they are typically not decentralised, and products for sale are selected and distributed by the platform itself.
- In line with this, users are typically unable to mint novel NFTs using a curated marketplace, although certain websites allow for submissions to be reviewed.
- While much of the freedom you get in a P2P marketplace is lacking, curated marketplaces will often have higher-quality products on sale and are less prone to scams and price gouging.
Popular curated NFT marketplaces
SuperRare
- SuperRare is a curated NFT marketplace that primarily deals in digital artwork, particularly conceptual works. While many of the more popular NFTs (like CryptoPunks) are pixel-based and simple, SuperRare cultivates a collection of abstract, complex art that is easily identifiable.
- SuperRare has a limited range of products compared to other P2P marketplaces, offering only 4 categories: still image, GIF, 3D artwork and videos.
Crypto.com
- Crypto.com is one of the newer players in the NFT market, allowing its client base to purchase and sell NFTs in March 2021.
- Traditionally used as an exchange for the trading of cryptocurrencies, Crypto.com users can now buy a variety of NFTs, which include a number of sports collectibles and contributions from famous artists like Snoop Dogg.
Read our full review of Crypto.com
Sorare
- Sorare is a curated marketplace designed as a platform for users to purchase, swap and sell digital trading cards.
How to invest in NFTs
NFTs as an investment
Many people are wary of purchasing NFTs due to their novelty, high prices and unclear denomination of value. When deciding to invest in an NFT, it's worth thinking of them as more like a collectible (a rare trading card or artwork) than a stock.
As these digital tokens become more mainstream, celebrities and well-known artists are beginning to mint their own products. Fans may be able to follow their favourite content creators (famous or up-and-coming) and purchase art they believe will be valuable.
The scope for investment in NFTs goes far beyond collectibles. Users can purchase the rights to domain names and land deeds in a metaverse (essentially a digital world that NFT owners can interact with) with a view to profiting off a sale in the future.
CryptoPunks – one of the first-ever NFT series issued on the Ethereum blockchain – is a good example. Minted in 2017, users could purchase the rights to a CryptoPunk for a few hundred dollars. As of September 2021, the cheapest "Punk" on the market is valued at US$108,000, with some selling for over US$4 million.
Visa, the multinational fintech company, has begun to expand into the crypto market, purchasing a "Punk" in August 2021 for approximately US$150,000.
NFTs as a utility
Not all NFTs are designed as collectibles or potential investments. As the scope for these digital assets has evolved, so too have their use-cases. A number of blockchain-based games have incorporated NFTs into their gaming models, which allow users to buy, sell and trade NFTs as in-game items.
For example, Axie Infinity, one of the biggest blockchain-based applications in the world, has been gaining particular prominence in the South-East Asian markets. Users participate in the Pokemon-style game by purchasing NFT characters and items and then battling them against other characters from across the globe.
Investing in NFT blockchains
The vast majority of NFT platforms have been built on the Ethereum 2.0 protocol, given its support for smart contracts and dapp development. However, as the NFT sphere progresses, tech developers have identified issues with using Ethereum for NFTs, primarily due to its high gas fees and slow transaction times.
As a solution to this, a number of new blockchains have sprung up that prioritise the security, transaction and creation of NFTs. Unlike many NFT marketplaces, these protocols come with an attached utility token, which users can buy the same way they would any other cryptocurrency (through an exchange).
Investing in an NFT blockchain may be a good alternative for those who are a little tentative about certain NFTs as a product, but believe in the technology's future.
- Flow (FLOW). Created by Dapper Labs (the developers behind popular legacy NFT service CryptoKitties), Flow currently hosts one of the most prominent NFT platforms on the market today, NBA Top Shot. Flow's network is built on the premise of scalability without using sharding technology, which marries it to NFT marketplaces and blockchain-based video games. They are currently working on an officially licensed platform for users to purchase MMA NFTs.
- Chiliz (CHZ). Chiliz is a blockchain originally built on the Ethereum network that is focused on sports-based decentralised applications. The Chiliz development team has officially partnered with a large number of sports clubs and organisations and has built the Socios fan tokens system. This platform allows fans to purchase NFTs for specific soccer clubs and support their favourite team.
- Enjin (ENJ). Enjin is an Ethereum-based blockchain designed to provide game developers with new ways to integrate NFTs with their applications. Supported by gaming giant Ubisoft and other prominent gaming developers, Enjin also offers an NFT marketplace for users to buy items (such as swords and avatars) that can be used in associated gaming applications.
- Decentraland (MANA). Decentraland is heading a new frontier of NFT technology – metaverses. A metaverse is essentially a digital world where users can interact with other players as well as the world around them. Decentraland users can buy and sell avatars, weapons and even land deeds that can be used in the virtual world. MANA is the application's native token and is used for transactions on the network.
Investing in NFT marketplaces
NFT marketplace tokens are the final option for you to consider. Though most platforms use Ethereum, SuperRare (RARE) and Rarible (RARI) both have cryptocurrencies tied to the economic functioning of their associated marketplace.
What to consider when buying NFTs
Before you decide to purchase an NFT, there are a few things you should consider.
What blockchain is it hosted on?
The vast majority of NFTs are hosted on the Ethereum protocol and use ETH as their native buying/selling currency. It's a good idea to research the underlying blockchain of any NFT you purchase and decide whether you believe it to be a sustainable option for the future of these digital assets.
How to buy (and sell) NFTs
As mentioned previously, most marketplaces that sell NFTs are built on Ethereum, so you will need to purchase and use ETH to buy NFTs. The market is expanding though, and options now exist for users who wish to invest in NFTs directly with fiat or other cryptocurrencies like BNB and RARI.
Having a wallet and tokens for gas fees
Some NFT marketplaces accept direct transfers, but for the most part, you will need a Web3 wallet (typically in the form of a browser extension like MetaMask) to connect your cryptocurrency with the platform.
In addition, you will likely need extra funds on top of the NFT's value to pay for gas fees. In this case, you will need to purchase these crypto tokens in advance.
Tokens used for paying gas fees will generally take the form of ETH, BNB or SOL.
Risks of buying NFTs
NFTs are still a very novel product and assessing their viability as an investment is largely speculative. Many people are still sceptical about the actual value that NFTs represent, with some believing they are simply a scam.
Outside of public opinion, there are other risks associated with purchasing an NFT.
NFTs are built within smart contracts on a blockchain. While this technology is focused on security, it may still be prone to smart contract bugs or exploits. If this was to occur on an NFT marketplace hosting your NFTs, you may end up losing your entire collection.
Perhaps the biggest, and most talked about, risk of purchasing NFTs is their price. While you can certainly acquire some digital assets for next to nothing, others can set you back in the hundreds of thousands (or more). Due to these huge price points, a downturn in the NFT market could result in you quickly losing a substantial amount of your money.
Pros and cons of NFTs
Pros
- An exciting new technology. NFTs are novel and relatively underdeveloped, giving you an opportunity to get in on the ground floor.
- Fair revenue streams for artists. Perhaps the biggest positive of NFTs is their ability to return economic agency to underrepresented artists. Assigning value to digital content has become one of the biggest issues in the technology era, and this has only been exacerbated with the explosion of streaming services. NFTs may help artists receive fair compensation for their work.
- Practical use. NFTs are beginning to see real-world use cases. For example, NFTs actually share a lot of parallels with tickets – they are one-off, not replicable and have a unique serial/barcode. In fact, the New York Knicks basketball team recognised this and trialled distributing their tickets via NFTs.
Cons
- High risk. NFTs are still a relatively new asset class and their value is yet to be fully understood.
- Public opinion. If you thought cryptocurrency was a polarising conversation topic, NFTs are a level beyond that. While there are certainly a number of people who believe in the future of NFTs, there are even more that believe NFTs to be unrealistic and over-priced.
- Digital representations of physical assets. While one of the main points of NFTs is to assign value and ownership to digital art, you still don't get to hold, see and experience an NFT the same way you do with a physical collectible.
Verdict
NFTs started off as a fun project for tech-savvy developers and users to participate in minigames. Since then, the ecosystem has exploded to the point that pretty much everyone knows what an NFT is, and certain tokens are worth tens of millions.
NFTs are one of the most speculative assets on the market today, and their real-world value will be a topic for hot debate for many years to come.
The big question NFTs must answer is how they will revolutionise the art and content creation industry. Developing into a legitimate revenue stream for artists will take NFTs a long way towards becoming respected.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly
volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of
future performance. Consider your own circumstances, and obtain your own advice, before relying on this information.
You should also verify the nature of any product or service (including its legal status and relevant regulatory
requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may
have holdings in the cryptocurrencies discussed.
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