How To Buy NFTs In Australia Explained: A Beginner's Guide

NFTs, also known as Non-Fungible Tokens, represent the latest trend in digital currency.

Encoded with the same software as other cryptocurrencies, NFTs can be easily traded online using cryptocurrencies.

We've prepared a guide for Australian investors on buying NFTs, covering the best-selling types, tips on selecting the right NFT crypto wallet, and a step-by-step walkthrough for making your first NFT purchase.

If you don't have a crypto trading account yet, consider eToro, which is used by many investors in Australia and worldwide. You can create an eToro trading account HERE.

Crypto assets are unregulated & highly speculative. No consumer protection. Capital at risk.

1. What Does NFT Mean In Australia?

Non-Fungible Tokens (NFTs) are digital currencies created and stored on a blockchain, typically representing a digital asset.

They are unique digital assets that validate ownership of a particular asset. You can exchange images, documents, and digital art forms.

You can buy NFTs through peer-to-peer sales, social media, and cryptocurrency websites. Yet the most typical way to buy them is on NFT marketplaces that allow people to trade NFTs, list them for potential auctions or bidders, and mint (create) NFTs.

2. Why Do People Invest in NFTs?

Below are some reasons why investing in NFTs has to become more popular:
 

• It is a speculative asset that can make gains quickly. It is also a risky asset that can lead you to lose all your money. (be careful)

• Their high popularity makes them easy to trade. Their high liquidity attracts investors to buy them cheaply and sell higher for short durations.

• Besides drawing high figures in the marketplace, some investors prefer storing these high-value tokens for future use.

• Some crypto lenders accept NFTs as collateral against loans of digital assets.

• Though most NFTs represent digital art, there is a rising niche of in-game assets you can use in virtual land and video games.

Always seek the help of a professional financial advisor before making any investment decision. Investing carries risk.

3. Is NFT Popular In Australia?

NFT is a new digital asset class growing popular daily and gaining widespread mainstream attention. With the rising demand, this asset is becoming more readily available.

According to Finder’s survey of 1,000 Australians in September 2021, about 4.6 of the respondents confirm they own some NFTs. Australia occupied the 15th position based on the number of NFT investors.

The poll also revealed that 7.1% of Aussies plan to become NFT investors shortly, which could push the country up in the rankings.

4. The Pros And Cons of NFT Investing

Starting with a positive note, here are some excellent reasons to buy NFTs:

Pros:

• It is appealing and full of money-making opportunities.

• They are collectible, and you can use them to buy more things you love and expand your collection.

• NFTs are online and easily accessible from many places. 

• It helps artists get their fair share without sharing their creations across a broad audience for free. It will boost artists’ creative skills and give them more opportunities to create and use their work to sustain a living. 

• Anyone can invest in NFTs.

• You may get the first-mover advantage.

• New and exciting technology 

• Blockchain technology validates digital ownership of the asset.

• Potential for significant returns on sale

• With more companies investing in the crypto and NFT space, the future of NFT looks promising.

Cons:

Like any other cryptocurrencies, NFT also has a few downsides, such as:

• Relatively novel asset class whose value is yet to be fully understood.

• Underdeveloped technology 

• Due to its speculative nature, it is a risky investment 

• It is opinion-based, and as opinions change with time, the value of NFT fluctuates based on people’s interest in it.

• You can’t hold, see and experience NFT as the technology doesn’t involve physical items. 

• The market value of NFTs can be volatile 

• Doesn’t generate income 

• ETH transaction fees can be costly during high network traffic periods

• The NFT markets are close to zero regulation, making them riskier than conventional financial instruments.

Always seek the help of a professional financial advisor before making any investment decision. Investing carries risk.

5. How Do NFT Owners Make Money?

NFTs present new and unending possibilities to purchase and sell digital assets like video clips, artwork, memes, and audio files.

Backed up by blockchain technology, they have a virtual certificate that proves their authenticity. Listing your digital assets, or NFTs is a great way to generate passive income for a long time.

You can find below nine different ways how one can potentially make a profit from selling NFTs:
 

• 1. Sell NFTs in an NFT Marketplace: All it takes is to register your NFT with a reputable market and start making sales. The most popular NFT platforms include Axie Marketplace, Mintable, Rarible, SuperRare, and Cryptopunks.
   
• 2. OpenSeaRent Out: Another way to make money from NFT is to rent it to the other person for a defined period at a cost.

• 3. Earn Royalties: Your NFTs can earn a lifetime of royalties, even after you sell them to someone else.

• 4. NFT Sports: You can convert sports-related stuff into digital assets and sell them to make money. These could be T-shirts, badges, and fans’ historical videos, photos, and moments.

• 5. Staking NFTS: You can store your digital assets in stake form and assign them to the entity interested in keeping them. In return, you receive a share of the incentives and rewards the entity earns on various sites like Rplanet.

• 6. NFT Gaming: If you enjoy gaming and want to earn playing games, then blockchain-based games are an excellent opportunity to buy and trade NFTs. Nowadays, more games are coming up with more moderately-priced NFTs; some even offer free collectibles to players.

• 7. Create And Sell NFTs:The best thing about NFTs is that you can use your creative talents to create something unique that will fetch you a tidy sum. If you like creating digital stuff or have digital stuff that you want to monetize, you can earn by selling whatever digital asset you develop as an NFT.

• 8. Trade NFTS: Buying and selling digital assets is another way to earn profit. However, it is essential to perform your due diligence and assess the ability of the NFT to make you higher profits.

• 9. Invest In NFT Startups: Several industries use NFTs worldwide to bring about positive change. You can find NFT startups that showcase innovations in the cryptocurrency world. Investing in startups could be a great way to support their journey in the NFT world. Doing research and risk assessment of companies before investing can improve your chances of earning good returns over time.

6. What Are The Most Profitable NFTs? 

The below have been some of the most profitable NFTs in the world. However, please keep this in mind. Past performance is no indication of future performance. Your capital is always at risk.

Digital Artwork

You can sell it on the below marketplaces:

• CryptoPunks

• Pudgy Penguins

• Bored Ape Yacht Club

Video Games

Popular ones include:

• Axie Infinity

• Mobox

• My Neighbor Alice

• Mines of Dalarna

• Illuvium

• Star Atlas

• Aliens World

• My Crypto Heroes

• Gods Unchained

• Decentraland

• Sorare

• CryptoKitties

• The Sandbox

• Age of Rust

Music

• Music recording and distribution via cassettes and CDs

• Digital streaming platforms and record labels

Video Clips and GIFs Of Memorable Moments

Memes, including Nyan Cat, Disaster Girl, Bad Luck Brian, Doge, etc.

Domain Names – Register, build and sell domain names

Digital Trading Cards Like Baseball Cards

Collectible items 

Miscellaneous Online Items such as your Facebook statuses, Snapchat stories, etc. 

7. Can You Make NFTs In Australia?

Yes. Several online platforms allow people to create and upload their creations as NFTs. OpenSea is a popular platform for uploading your artwork or images.

Once you select the platform, you must create and set up a payment account to receive payment for your work and pay fees. Once done, you can sell your digital images, art, videos, or game items for a fixed price or through a timed auction.

8. Where Can You Buy NFTs in Australia?

Crypto exchanges such as Coinspot, Crypto.com, and Binance have NFT marketplaces that enable Australians to buy NFTs directly through their platforms.

Alternatively, you can consider dedicated NFT marketplaces such as Rarible and OpenSea that offer more NFT options.

Here is a list of some places where you can buy  NFTs in Australia:

9. How To Use An NFT Marketplace In Australia?

To use any NFT marketplace, you need an NFT wallet to store, trade, and buy your NFT tokens. Next, you must create an account for a specific NFT marketplace and ensure the cryptocurrency it trades in is compatible with your NFT wallet.

Once you have created the account and have a compatible wallet, you can list your NFTs, place bids on listed digital artworks, or pay for the token at its asking price.

10. Steps To Buy Your First NFT in Australia

To learn how to start investing in NFT, follow the below steps:

Step 1: Buy Cryptocurrency

Crypto assets are unregulated & highly speculative. No consumer protection. Capital at risk.

Usually, you buy NFTs using cryptocurrencies. To know how to buy NFTs, you must first purchase crypto to trade NFTs.

You can consider crypto exchanges like eToro to choose from an extensive range of coins.

Step 2: Set Up an NFT Crypto Wallet

As NFTs are not physical currencies, you need a digital wallet to keep them safe online and access them quickly whenever required.

MetaMask is a popular digital wallet that makes it simple to trade NFTs for items and keep your data safe.

Step 3: Select A Marketplace

Now that you have cryptocurrencies and a digital wallet, you can buy your first NFTs.

You only need to visit an NFT marketplace that facilitates buying and selling NFTs. Some of the popular ones are Binance and CoinSpot in Australia.

Step 4: Create An Account On The NFT Marketplace

Before buying an NFT, you must create an account with an NFT marketplace.

Visit the home page of your chosen marketplace, locate the 'Create an Account' link, enter the necessary personal details and create the account.

Step 5: Link Your Wallet

Once your account is verified and active, link your wallet by entering your credentials.

Step 6: Begin Browsing NFTs

Considering your budget, goals, and public interest, you can begin browsing NFTs. Choose the best one that best aligns with your criteria.

Step 7: Place A Bid Or Purchase

Some NFTs are readily available for purchase, while for the ones that are up for auction, you might need to place your bid based on your budget.

Once you have your price and bid, you can execute your buy order. Your NFT will appear in your account and be available for instant access.

11. How Much Money Do You Need To Make A NFT?

To create a utility token on a blockchain, you must make a Gas payment. It is a one-time payment to compensate for the energy needed to process and verify blockchain transactions.

The fee is similar to taxes users pay to store the NFT and use the RAM to execute selling and buying NFT transactions on the blockchain. The charge for gas differs based on the time of day and the level of demand to create transactions. The gas fee is usually lower on weekends when fewer people transact.

If you are an NFT creator, you will have to pay a service fee to use the marketplace and gas fees from the blockchain platform you're using.

The average gas fee is around $40 to $800, and service fees could be a maximum of 7.5% based on the peer-to-peer marketplace you use.

12. How To Trade NFTs?

The key to making profits with NFT trading is to know when to sell them.

The appropriate time to sell your NFT depends on the:

• The type of NFT you own 

• Your purpose in buying it

• The level of people's interest in your NFT. You must research the marketplace to determine interest in the NFT.

• Appreciation and depreciation of prices

Once done, compute net profit by reducing royalties paid to the initial owner, listing fees, and gas fees from the profit amount.

If you are interested in getting into complex NFT trading, you need an extensive understanding of the crypto industry that requires the assistance of a crypto professional.

Moreover, you can visit dedicated apps, marketplaces, or freelancers to assist you through the process of finding an NFT for sale.

13. How To Compare NFT Marketplaces?

Like different types of cryptocurrencies to buy NFTs, several other NFT marketplaces facilitate these sales. As these marketplaces are global and not location-dependent, Aussies aren't bound to use an Australian-based platform.

Here are the pointers you must remember when comparing NFT marketplaces:

• The type of audience and visitor-base size

• Collection size (Go for a broader collection size as it may be more enticing due to increased choice).

• Supported Payment methods to buy and trade into the mainstream

14. What To Look For In A NFT Wallet?

Selecting a wallet is a crucial step in buying and using NFTs. Before you choose one, consider the critical things listed below:

• Compatibility - Ensure your preferred NFT market supports your chosen wallet.

• Organized Interface - When selecting a wallet, ensure it is quick to download and easy to use for all purchases. 

• Security – To save your NFTs from cyber criminals, you must provide a higher level of network security. 

• Diversified Use – Ensure that your wallet can access your NFT anywhere. 

• Multi-Chains - Find wallets that support multiple NFTs marketplaces. 

15. What To Consider When Buying NFTs?

The type of NFT you invest in determines whether you gain or lose on your investment. Here are a few things you should consider:

• The type of blockchain is it hosted on

• How to purchase (and sell) NFTs (with fiat or other cryptocurrencies such as RARI and BNB)

• Transaction fees 

• Wallet, preferably a Web3 wallet, to connect your cryptocurrency with the platform.

16. What Is The Average NFT Price?

The average price of an NFT fluctuated massively over the last month and year. It was between $6,900 and $1,400.

17. Is NFT Taxable In Australia?

The tax treatment of NFTs is identical to that of cryptocurrencies. The profit earned from the sale of NFTs isn't exempt from taxation.

NFTs are subjected to capital gains tax based on the below situations:

• When you sell the NFT

• When you give an NFT as a gift 

• When you exchange/ trade the NFT for another NFT or other cryptocurrencies.

• If you buy an NFT and sell it later for a higher price, you will incur a capital gains tax event. Similarly, on making a loss on an NFT sale, you may experience a capital loss. You can use it to offset capital gains you made in the same or subsequent fiscal year.

According to ATO, the amount of income tax payable depends on the following:

• Your circumstances

• How do you use the NFT

• Your reasons to hold and transact with the NFT.

Whether you an investor or an artist, you may pay tax on the NFT:

• as a CGT asset 

• on revenue account 

• as part of a business

• as a profit-making scheme

The amount of GST payable depends on whether your transaction fulfils the requirements of being a GST-free or taxable supply. As NFTs can't be exchanged for services and goods, you can't use them with the personal use asset exemption as applicable to cryptocurrency.

18. Is An NFT A Good Investment?

Yes and No. Many artists and investors have made good profits by selling their digital art.

How much you make from your NFT depends on how valuable it is. Like physical art, the value of non-fungible tokens depends on the artist, the artwork, and their supply and demand.

That's why investing in popular NFT collections is essential, even gaining mainstream attention, such as Bored Ape Yacht Club, CryptoPunks, etc. The massive craze among people has resulted in exponential growth in the floor price for these NFTs.

To uncover its intrinsic value before investing, you must research the NFT market extensively.

Always seek the help of a professional financial advisor before making any investment decision. Investing carries risk.

19. Conclusion

NFTs are one of the most speculative assets that have the potential to revolutionize the art and content creation industry.

Developing into a legitimate revenue stream for tech-savvy developers and artists, NFTs serve as an excellent hedge against traditional investment assets such as shares and precious metals.

Considering their complex nature, investors should study them to get the best experience for their budget and objectives.

If you don't have crypto a trading account yet, consider eToro, which is used by many investors in Australia and worldwide. You can create an eToro trading account HERE.

Crypto assets are unregulated & highly speculative. No consumer protection. Capital at risk.

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