How to Buy NFTs That You Can’t Afford?
|– NFTs have become popular in the digital space, but it’s led to inaccessibility especially with top-tier projects. |
– Rare digital artworks and collectables are expensive and sales happen so quickly that it takes perfect timing and fat bank balances to enter the scene of valuable NFT ownership.
– There are a couple of ways to buy NFTs without massive capital investment: Through fractionalized ownership and group bids.
– Both of these allow multiple people to buy a NFT through smart contracts which store ownership data. They offer a clever resolution to the exclusivity of NFT ownership and allows the general community access to the market.
Fascinated with Digital art and want to buy NFTs but can’t afford them? We’ve got you covered.
NFT. Three letters that represent a world of possibility and excitement. With Jay Z, Gimes, Tony Hawk and Steph Curry joining in the crypto-meets-art market, there’s an undeniable air of cultural intrigue in the space.
It’s fantastic for digital artists. The rise of popularity in the market offers exposure at a global level. But those who want to buy and collect top-tier NFTs get hit by a hurdle making it difficult to get started: The price-tag. The sought-after projects have become expensive, making the exciting idea of NFT ownership a steep one to make a reality.
The Not-So-Nifty Inaccessibility in the NFT Market
Two things make the quick rise of NFT popularity a bittersweet pill to swallow:
- Top-tier NFTs value; and
- The limited access to valuable NFTs.
The value of an NFT makes it worthwhile as a collectible and as a possible investment, but it also means that most people’s eyes will start to water and their pockets will stay shut. It means NFTs become a very nice-to-have if you have the liquid funds, but an elusive dream if you don’t.
NFTs are unique and projects lean towards a limited approach. So when top-tier projects (like the highly sought after Crypto Punks, Bored Apes) release all of their NFTs into the digital world; that’s it. No more will be minted and the rarity and limited-edition supply drive demand. If you have a rare NFT, that is great! But if you don’t, it’s hard to get on the boat when it’s already left the harbour.
Luckily, if you don’t have the funds to buy a blue-chip NFT and if you think you missed out on them, you don’t need to throw in the towel!
How to Buy Expensive NFTS without Massive Capital
To address the expensive elephant in the room, a few innovative solutions have sprung up to offer collectors, traders, and enthusiasts a way to buy blue-chip NFTs (like those big-budget bored apes or proper pricey punks) without needing to dip too deeply into their savings.
When it comes to blue-chip NFT ownership, most people are priced out before they can even place a bid on a piece. It leaves a massive gap where collectors can’t get a foot in the door. Fractionalized ownership is a way to open the door and let interested collectors in.
Fractionalization might sound like something from Harry Potter, but the only magic is in the potential. Simply, it’s the act of dividing ownership of NFTs into smaller, more affordable fractions. It means several people can own one single NFT through democratized, shared ownership.
There are a few platforms (such as Fractional, Niftex, and DAOfi) that enable fractionalizing of NFTs through smart contracts.
The way this happens is if someone fractionalizes their NFT on one of the platforms that enables it, they can then issue the tokens on the market, where people can visit, explore, and decide on which tokens they want to buy. Tokens can be used to buy the fractions of an individual NFT or a collection.
Similar to fractional ownership, group bids offer a way for several buyers to enter the market without colossal capital. Group bids allow collectors to team together to bid on NFTs. Instead of whales flooding the market and buying all the Punks and Apes, a group bid means multiple people can outbid the big spenders and win NFTs.
A platform like PartyBid enables buyers to band together in “parties” to pool their assets together and bid on NFTs in auctions. If the group bid wins the auction, the users will have shared ownership of the NFT proportional to their contribution. If they don’t win, they can reclaim their contribution back from the pool (and try again on another NFT).
The Tech Tricks of Shared Ownership (How It Works)
While you can’t divide art in the physical world, there’s a clever tech solution that allows NFT pieces to be divisible for shared ownership.
The very-quick-tech-how-it-works: ERC20 tokens are fungible tokens and ERC721 tokens are commonly the standard token used to generate and mint non-fungible tokens on Ethereum’s network.
Smart contracts can be created to generate ERC20 tokens linked to an indivisible ERC721 NFT. With the smart contracts deployed, anyone who holds any of the ERC20 tokens linked to the ERC271 token can own a percentage of the NFT. The contracts also secure and store the data behind fractional ownership and anyone can see that the NFT has fractionalized ownership.
Why Shared Ownership of NFTS Is So Thrilling
There are few benefits that make the concept of sharing ownership so worthwhile considering. Firstly, you get exposure to a world of assets without needing to fully own a collectible. It also adds incredible liquidity to the market and it’s much easier to buy and sell fractions of NFTs. This adds a flavour of market movement to a project, where NFTs can appreciate and depreciate in price depending on the NFT market.
Fractional ownership also not only opens up the scene to new fans and NFT collectors and makes the space more accessible, but it also speaks to an important part of cryptocurrency as a whole as a community-centric concept.
Shared ownership represents the battle against centralization and monopolization. As multiple people work together, the door to accessible opportunity is opened and the risk of a too-exclusive market has a tidy resolution. It’s a fantastic combination of people taking advantage of innovative tech to work together to achieve a mutual goal.
Knowledge is power.
If you want to know more about this topic, check out this dedicated School of Block episode on fractionalized ownership and group bidding!