Non-fungible tokens (NFTs) have exploded in popularity recently. 2021 saw the emergence of many NFT designs that the world has become addicted to. In 2021, several NFT platforms have emerged and more and more Canadians are investing in them. If you’re interested in purchasing an NFT, read our guide to buying NFTs in Canada.
What are NFTs?
NFT stands for non-fungible token. When we say “non-fungible”, we mean something that is unique and cannot be copied. Fungible means something that can be copied or divided, with each unit being equal to all other units. Cryptocurrency is volatile. Person A’s Bitcoin is exactly the same as Person B’s Bitcoin. They are interchangeable without any differences.
On the other hand, an NFT simply does not have the same value as another NFT. Each NFT is unique. You can create multiple copies of a single NFT, but that’s the same as an artist releasing limited edition prints of their painting.
NFTs exist on the blockchain, which means the owner of the NFT can be publicly verified. If the blockchain shows that the NFT belongs to you, no one can dispute or counterfeit it. Think of an NFT as a certificate of authenticity that cannot be forged or destroyed.
When you think of an NFT as a certificate of authenticity, you can start to see broader use cases for NFTs, such as diplomas, tickets, or real estate.
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Are cryptocurrencies and NFTs the same?
NFTs and cryptocurrencies are not the same. Cryptocurrency is required to purchase NFTs in Canada. Think of NFTs as a painting and cryptocurrencies as the money you used to pay for them.
Moreover, a cryptocurrency token or fungible token created on the Ethereum network is known as ERC-20 token. These are NFTs, i.e. non-fungible tokens created on Ethereum ERC-721 tokens.
What makes NFTs valuable?
The rarity of NFTs makes them valuable. As with any collectible, the rarer your NFT is, the more it is worth. Of course, NFTs are only worth what people are willing to pay for them.
CryptoPunks is a set of 10,000 NFTs that were randomly created by computer code on the Ethereum blockchain in 2017. Each NFT has “features,” and some of them are rarer than others. For example, some CryptoPunks wear hats and others do not. Some have piercings, some don’t. No two CryptoPunks are the same. If, for example, only one of 10,000 CryptoPunks had blue hair, it would be the rarest feature.
CryptoPunk #7523 was the third rarest from the collection and sold for $11.75 million in 2021. Other NFTs sold for more. The artist known as Beeple has auctioned his “Everydays” NFT collage at Christie’s for $69.3 million.
Canadian artist Micah Dowbak has created a self-replicating NFT that creates new, unique NFTs over time. It was put up for auction in Phillips and sold for $4.1 million.
How to buy NFTs in Canada?
To buy an NFT in Canada, you need to purchase cryptocurrency. The cryptocurrency you need to purchase depends on the NFT marketplace you choose.
Step 1. Register on the exchange
First, register on a cryptocurrency exchange and verify your account to buy Ethereum. You can check out our recommended Canadian cryptocurrency exchanges here. There are some good choices. If you’re looking for the one with the lowest fees, go with Coinsmart. Their deposit fees are low and even free if you deposit over $1,999.
Step 2. Buy cryptocurrency
Once you verify your account and fund it with Canadian dollars, you can purchase cryptocurrencies. If you’re just getting started with NFTs, probably buy Etherium. It is the most popular cryptocurrency to buy NFTs in 2023.
Step 3. Install Metamask wallet
Next, you will need a cryptocurrency wallet. The wallet will protect your cryptocurrencies from theft and we recommend using a hardware cryptocurrency wallet if you intend to make a large purchase. A hardware wallet safely stores your cryptocurrencies offline so no one can steal them.
To spend cryptocurrencies on the NFT market, you will need a wallet that can be easily connected. We recommend using the Metamask wallet, which you can easily add as an extension to your browser (Chrome, Brave, etc.). You can then connect your hardware wallet to your Metamask wallet. Every time you make a transaction using Metamask, you will need to sign the transaction on your physical hardware wallet.
Step 4. Send cryptocurrency to Metamask (or other preferred cryptocurrency wallet)
After installing Metamask, send the Ethereum or other cryptocurrency you need to your Metamask wallet. Make sure you have the correct wallet address for the network you are using. For example, if you are purchasing an NFT on Opensea, you will need Ethereum and you will need to connect Metamask to the Ethereum network (Ethereum is already connected by default).
Step 5. Connect Metamask to the NFT marketplace
Popular NFT marketplaces for Canadians:
- Binance
- Open sea
Binance NFTs are not free, but network fees for purchasing NFTs on Binance are minimal. They will cost you a few dollars, not several hundred. To purchase NFTs on the Binance NFT marketplace, you must use Binance coin (BNB), Binance USD (BUSD), or Ethereum. Trading and registration are very easy.
Open sea is the most popular NFT marketplace, but it can also be the most expensive. Most NFTs on Opensea are created on the Ethereum network. The Ethereum network has been heavily overloaded for a long time and is unable to cope with the number of transactions that are placed on it every second. As a result, Ethereum transaction fees run into the hundreds of dollars throughout the day. The buying/selling process can be a bit complicated for beginners.
Some NFTs on Opensea were created on Polygon, which you can purchase without incurring any network fees. However, you still need to purchase Ethereum first and then connect your Ethereum to the Polygon network to make the purchase. You can do this on Opensea using the Metamask wallet.
Other NFT markets for Canadians include:
- Rare
- NBA’s best shot
- Nice Entry
- Crypto.com
Rare sells digital art and collectibles on the Ethereum, Flow and Tezos networks.
NBA’s best shot sells licensed digital collectibles called “Moments” to NBA fans. You can buy NBA Moment by depositing cryptocurrency into your “Dapper Balance” on the NFT platform. You can do this using a credit or debit card or by depositing cryptocurrencies including Bitcoin, Ethereum, Bitcoin Cash, Dai and USDC. NBA TopShot runs on the Flow blockchain.
Nice goal sells digital art and collectibles with no gas fees. You can purchase NFTs on Nifty using a debit or credit card, Gemini balance, or prepaid Ethereum.
Crypto.com offers digital art and digital collectibles, but is currently quite buggy as it is still one of the newest NFT marketplaces. You can purchase NFTs on crypto.com using a credit or debit card, account balance, or via crypto.com Pay, which can connect to your Metamask wallet.
What is the future of NFTs?
We believe that investing in NFTs is risky, but every cryptocurrency carries risks. Some people believe that the NFT art they buy today will be worth much more in the future, while others believe that the NFT hype is over.
The future of NFTs likely lies less in digital art and more in useful practices such as creating contracts, identity documents, ticketing and receipts. Having proof of ownership on the blockchain is the true future of NFTs.
Digital art and digital collectibles are currently all the rage in NFT markets, and there’s no sign of changing.
