How to buy NFTs in Canada
First, let’s answer the big question. What is an NFT? NFT is an acronym that stands for non-fungible token. For something to be fungible, it must be easily tradable for something of the same value. Some examples include a Canadian dollar or a bitcoin. You can trade one bitcoin for another, and you will have the exact same asset. Therefore, something non-fungible is the exact opposite. A non-fungible asset is unique, like a rare trading card, the Mona Lisa, or a concert ticket that is good for a certain seat at a certain show for a certain date. An ownership NFT provides blockchain security and convenience for a specific asset with a specific value.
In most cases, each NFT is based on the Ethereum blockchain. This platform supports NFTs since it can store more information than a traditional cryptocurrency. That said, other blockchains have created their own version of an NFT. The combination of these advancements have made it possible for gamers, art collectors and blockchain enthusiasts to purchase in-item games and other unique assets that can be traded for a profit. NFT’s don’t stop there. In fact, structures like casinos, theme parks or entire virtual worlds can also be created and sell items to other players.
Defining Features of NFTs
An NFT can also be defined by a couple of key characteristics. For one, similar to other unique items, an NFT cannot be divided into a smaller denomination like a Bitcoin. The item can only be purchased and held as a whole item, which makes sense since tangible collectible items cannot be broken up into pieces.
Additionally, NFTs can only exist on the platform they were issued on. For example, a cat on the platform CryptoKitties could not be used on a platform like CryptoPunk, even though other characters are created on it.
All pieces can be verified with 100% confidence since all items such as online trading cards can be traced back to the original artist. Therefore, there will never be any need for third-party verification. Additionally, any data related to the NFT is stored on the blockchain and is secured through smart contracts. Therefore, the token will never be destroyed, removed or replicated. For artists, this means that monetizing their work is easier than ever before, and digital art can also derive real value. But what do we mean by real value?
What Makes an NFT Valuable?
As a digital asset, many wonder why anyone would ever spend real money on it. Consider a famous piece of art. To some, it is baffling that someone would be willing to spend that much on a picture that has no real utility. However, some people like the art and see the value in it. In a similar way, NFT’s are purchased by people that simply like digital art, CryptoKitty etc. While some people might be trading the asset for fun with the hopes that one day they will be able to sell it for more, this concept can be risky. Consider that if everyone had this belief, the whole system has a higher potential to crash.
Unlike a piece of art, each digital asset is verified, giving it value in that it is impossible to duplicate in its entirety. Therefore, users truly can say they have a one-of-a-kind asset.
Other NFT’s may derive value from being created by a celebrity that users admire or by giving you a certain status in a game. After all, the concept of putting real money into an online game is far from a new concept. Just think about paying for extra lives in Candy Crush. The only difference is prestige bought through an NFT can never be removed.
History of NFTs
Some believe that the first NFTs to exist were Colored Coins back in 2012. Colored Coins were made up of small denominations of bitcoin, the satoshi. Each colored token could carry specific ownership information for a wide range of assets, including a property, shares of a company or even the ability to issue your own cryptocurrency. Unfortunately, the scripting language that acts as the foundation of bitcoin was not built for this purpose. Building off the lessons of this project was Counterparty, an open-source Internet protocol built on the bitcoin blockchain. Counterparty had a decentralized exchange, token and numerous other projects, including a trading card game and meme trading. In April 2015, the game creators of Spells of Genesis began issuing in-game assets onto the blockchain through Counterparty. This was also one of the earliest known releases of an Initial Coin Offering (ICO). The token that was launched was referred to by the name of BitCrystals and could also be used as currency in the game. A little over a year later, a trading card game, Force of Will, also teamed up with Counterparty. The result? The fourth highest ranked card game in North America joined industry leaders like Pokemon and Yu-Gi-Oh.
Moving forward another year and we arrive at the age of Cryptopunks, one of the first NFT’s on the Ethereum blockchain. Founders Matt Hall and John Watkionson discovered that they could create unique characters on the Ethereum platform, each one completely different. At first, anyone who had an Ethereum wallet was eligible to claim their own character free of charge. However, as soon as all 10,000 were claimed, owners began trading and selling them.
Cryptopunks leveraged a combination of features on the Ethereum blockchain, being defined as a ERC20 and ERC721 hybrid. From the lessons learned in these early projects, one thing was clear. A platform that would allow software developers to more easily deploy NFTs was needed. As a result, the release of ERC721 and ERC1155 were created. Eos, Neo and Tron later released their own NFT token standards to further encourage developers to build and host NFTs on their blockchain networks.
However, it wasn’t until the creation of CryptoKitties in 2017 that NFTs really became mainstream. CryptoKitties used ERC721 tokens which were built to be the technical standard for non-fungible tokens on the Ethereum blockchain. This standard differed from other ERC20 tokens in that they had the ability to track ownership and movements of individual tokens in the block. Like the name suggests, CryptoKitties actually was related to cats. In fact, it was a blockchain-based virtual game where players could adopt, raise, and trade virtual cats. Many people became aware of this app since it both significantly slowed down the Ethereum blockchain and made many people rich. Yes, some people were selling their CryptoKitty for over $100,000.
While CryptoKitties sparked the NFT path, it is believed that without the groundwork from previous projects, they wouldn’t have gotten very far.
Recent rise of NFTs
Although there has been a massive growth in the last few years, the NFT space is still relatively immature and is believed to be continuing to grow exponentially. As a result, today’s non-fungible token ecosystem has come to include many NFTs piloted by companies for domain names, virtual worlds, decentralized finance, art marketplaces and cryptocurrency art museums. The market has since become so popular that a total of $174 million has been spent on NFTs. This is only believed to increase as the gaming and collectibles space continues to revolutionize. Among the most notable projects are Hashmasks and NBA Top Shot.
Hashmasks are known as the newest type of digital artwork, complete with their own names. These virtual artworks were created when 70 artists from around the world came together under the management of Suum Cuique Labs. The project was inspired by Jean-Michel Basquiat’s work from New York in the 1980s. For those who are unfamiliar, Basquiat was known for his graffiti-style, bright-coloured portraits. The Hashmask artists use unique combinations of skin colour, character, mask and eye colour, item and background, which now amount to 16,384 unique pieces in circulation. Each unique work is hashed onto the Ethereum platform as an ERC721 token, making it an NFT.
Haskmasks are also unique when compared to other NFTs in that each piece has a designated explicit and implicit rarity. Explicit rarity refers to the features chosen by the artist, while implicit rarity refers to the personal touches added by each artist, such as the design of their t-shirt. It is the combination of these features that allow each Hashmask to be measured in terms of a more exact level of rarity.
Additionally, Hashmasks leverage a Name Changing Token (NCT), a currency that allows NFT holders to change the name of their digital art pieces. Each name is part of what makes each asset so rare. To change the name, 1,830 NCT tokens will need to be burned (or removed from circulation).
NBA Top Shot
NBA Top Shot is known as the next big trading card market through online-only collections of basketball highlights. On the platform, virtual trading card packs in video form can be purchased to be displayed or re-sold all in one place. Packs are created once the National Basketball Association (NBA) selects a highlight such as a Kawhi Leonard three-pointer that is produced only a set number of times. This was done in partnership with Dapper Labs, the company responsible for determining how many coins will be in circulation. Each highlight is then placed into a digital pack similar to a pack of regular trading cards. The only difference is that purchasers can have confidence that nobody else will ever have the same highlight. The platform also claims that you will have ownership of that clip indefinitely.
Coins can be purchased from the NBA Top Shot website for between $9 and $230 depending on the player, rarity of the card, and quality of the highlight. Users might choose to purchase a specific moment from another trader in the marketplace or buy a pack of moments from the Top Shot website. Purchasing a package of moments gives users the same element of surprise as if they were to open an ordinary set of trading cards. Once each pack is purchased, the cards are added to your encrypted, secure wallet. Collectors may also choose to showcase their favourite moments on their personal profile or hold onto them with the hopes they will reach prices as high as $208,000, the highest on record.
How to buy NFTs
Investors can buy and trade NFTs like any other Ethereum based cryptocurrency. The only catch is that users can only purchase an NFT off of a specialized platform since each piece is built off the Ethereum ERC721 token standard. The second major difference is that an investor can not purchase more than one token like they would on a normal exchange. They can only purchase a single token.
To interact with the Ethereum platform, users must first purchase some Ethereum. This can be done on an exchange like Bitbuy. Like other Canadian platforms, users will be prompted to create an account with an email and password. From there, users may choose between providing some basic details or uploading supporting documents to verify who they are. Once verified, users can fund their account through e-Transfer (for amounts starting at $100) or Bank Wire (for $20,000 or more).
With funds added to the user’s account, users can select Ethereum and how much they would like to purchase. With a balance of Ethereum, users will then need to transfer their Ether to an Ethereum wallet that allows integration to a website that sells NFTs like NBA Top Shot or a specialized platform like OpenSea.
TL;DR: How To Buy NFTs in Canada
1) Buy Ethereum from a Canadian crypto platform like Bitbuy
2) Download MetaMask wallet (Google Chrome extension or App)
3) Send Ethereum from Bitbuy -> MetaMask
4) Connect your MetaMask wallet to one of the popular NFT marketplaces such as Opensea or Rarible.
5) Browse the NFT marketplace and purchase
Should I Invest in NFTs?
Like a famous painting or a one-of-a-kind trading card, investing in an NFT may not guarantee you a profit, at least right away. Since the majority of the population is only recently getting used to the concept of digital assets, it may be some time before your NFT’s are worth big money. That said, with CryptoKitties selling for tens of thousands of dollars and Bitcoin reaching 70,000 CAD, it may only be a matter of time before people are trading NFTs for major profits.
Before investing, it is recommended that traders do some research into the complex world of non-fungible tokens since the market is quite different even from the rest of the cryptocurrency world.