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These days, Non-fungible Tokens (NFT) have become increasingly popular. People are spending thousands or even millions on these distinctive cryptocurrency assets to sell later for huge profits. This has tremendously affected digital artists and due to this new crypto-audience, they have seen a huge shift in their livelihood.
In brief, NFTs are a variety of digital assets, including audio, image, or video files in the shape of cryptocurrencies. The Q3 2021 Non-fungible Tokens reported that the trading volume for NFT tokens has increased by a whopping 700% from the previous quarter ($10 billion).
1. What is NFT?
As mentioned above, Non-fungible Tokens are digital assets containing identifying data. NFTs retain the owner of a unique item and let us tokenize things such as a painting, picture, music, video game, or GIF. Due to this rarity NFTs become valuable. Due to this available data in the blockchain no two NFTs are alike, and you cannot swap NFTs or directly replace it with other tokens.
In contrast, fungible items are exchangeable because their value characterizes them. For example, Bitcoin is a fungible token, you can trade one for another bitcoin, and you will have the same thing. In other words, you can swap one or receive smaller portions of one Bitcoin to someone, and the one can transmit that back, and you still have one Bitcoin.
Non-fungible Tokens are not dividable, as you cannot send someone part of a ticket. The data of a NFT is kept in the smart contract and immutably registered on that blockchain. Therefore NFTs have just one authorized owner secured by the Ethereum blockchain, and no one can change the form of ownership or copy or paste a new NFT. That is to say, Non-fungible Tokens are not interchangeable since they have unique properties.
2. How do NFTs work?
Non-fungible Tokens are part of the blockchain technology and are usually connected to a cryptocurrency blockchain. For example, Ethereum’s blockchain keeps NFTs by storing extra data that makes Non-fungible Tokens unique. It is worth mentioning that other blockchains have their Non-fungible Tokens as well, such as Tezos, Polkadot, Cosmos, and Binance Smart Chain.
Everyone can trade their works anywhere and be part of an international market. Furthermore, creators can possess ownership and royalties of their work even when the NFT is passed down through several people. Non-fungible Tokens confirm the ownership of digital items by the special ID and metadata available in the blockchain. NFTs are coined via smart contracts that transfer ownership and manage this transferability. When somebody makes an NFT, they run code held in smart contracts that fit different standards. This data is added to the blockchain where the NFT is being formed as follows: creating a new block, verifying information, and registering data into the blockchain.
Non-fungible Tokens authorize detailed features (like the owner’s identity or secured file links) by their smart contract technology. However, NFTs’ protocols and smart contract technology are relatively complicated and still need to be further developed. Applications and platforms for the management and creation of NFTs face the challenges of standardizing. The unified protocols and interoperability are critical for such a system to be successful in its operations. Now, each developer is working on their project.
3. What are NFTs used?
NFTs solve the concerns that have always existed on the internet. As everything becomes increasingly digital, there is a necessity to possess digital items (a rarity, originality, and ownership). Not to say that digital things only function in the context of their development.
Non-fungible Tokens used for digital assets distinguishes them from each other in orto prove their value or rarity. They can designate everything from virtual properties to artworks to ownership rights. Non-fungible Tokens stand for selling digital art (GIFs, music, videos), the real things (car, ticket, legal documents, marks), and too many options and ways to get innovative ideas. For example, Beeple, a famous digital artist, sold one of his works for $69 million by NFTs technology in march 2021 and became the third most expensive living artist.
We have seen that NFTs are about using technology to sell things like digital art. NFTs are prepared to give you something that cannot be copied, called ownership of the work (so a copy is as good as the original!). You can buy NFT on marketplaces such as OpenSea, Rarible, Binance, and Coinbase. In brief, if you have an NFT:
1. You can readily demonstrate you possess it;
2. No one can use it in any way;
3. You can sell it;
4. You can control it forever with your wallet.
4. How to buy NFT?
Here is how to get your first digital item ownership. These steps are quite similar through various platforms. Remember that you will need a wallet containing ETH to start buying NFTs. So the first step will usually be connecting your wallet to the NFT platform (like Opensea). So the steps are usually as follows.
- Open an account on an NFT marketplace platform (like Opensea).
- Connect to your ETH wallet though your NFT platform (usually by clicking the ‘Connect’ button.)
- Select the wallet you want to connect to and log into your wallet.
- You will require to accept the terms of service as always and you will be connected to your wallet.
- In the next step search for the NFT you want to purchase.
- Click the “Buy” button, if you want to buy it!
- A confirmation form asks you to check the details. If you want to continue, click the “Proceed to payment” button to move to the final step.
- If you want to continue, just confirm the transaction and it will be processed. Then, you will receive your NFT directly to your wallet and will be yours to own.
Also, this process lets you financially help artists you like. By buying an NFT, you usually have some basic controls over the NFT in your wallet, like publishing the image online or putting it as your account picture. Furthermore, you can buy NFTs and hope that their value goes up one day so that you can sell them.
5. How to create NFT for sale?
You may be curious about NFTs because it offers you a manner to sell your works. Did you know that you can still receive royalties when others sell your NFT later on? Let’s begin with the basics; if you are a creator, follow these steps:
1. Pick an Item: what unique digital asset do you want to turn into an NFT? painting, picture, music, video game, meme, GIF, or even a tweet? An NFT is a unique digital item with an owner. Do not forget that its scarcity gives an NFT value.
2. Digital Wallet: to create your NFT, first of all, you need some cryptocurrency to support your initial investment. The wallet provides you with such a tool. The best NFT wallets are Metamask, Math Wallet, AlphaWallet, Trust Wallet, and Coinbase Wallet. when you have a digital wallet, the you will need to buy some cryptocurrency. NFT platforms usually accept Ethereum. If you have some cryptocurrency, you can use it to make and sell NFTs.
3. Choose the Blockchain: after selecting your digital asset to sell, it is time to begin the process of coining it into an NFT. That starts by choosing the blockchain you plan to use for your NFT. Ethereum is one of the best blockchains you can choose. Other popular options: Tezos, Polkadot, Cosmos, and Binance Smart Chain. Depending on what blockchain you want to use, select an NFT marketplace. For example Opensea uses Ethereum while Hicetnunc uses Tezos.
4. NFT Marketplace: now you can start making your NFT. As mentioned earlier pick a marketplace depending on what blockchain you want. HoweverEthereum blockchain based platforms are the most popular at the moment. The best NFT marketplaces are OpenSea, Axie Marketplace, Larva Labs/CryptoPunks, NBA Top Shot Marketplace, Rarible, SuperRare, Foundation, Nifty Gateway, Mintable, and ThetaDrop. It is worth mentioning that some marketplaces may require a specific cryptocurrency for buying. After choosing your NFT marketplace, you must connect it to your digital wallet (Similar to when buying NFTs). That lets you pay the required costs to coin your NFT and have any sales proceeds.
5. Upload the File: finally, you are ready to coin your NFT. Your selected NFT marketplace usually has a guide for uploading your file to the platform. That process allows you to turn your files such as PNG, GIF, MP3, or other file types into a marketable NFT.
6. The Sales Process: the final step is to determine how you want to monetize your NFT. Relying on what platform you pick, you can:
– Fixed price: it means that the first person is ready to complete that price to buy NFT.
– Timed auction: those interested in NFT have a time limitation to submit their last offer.
– Unlimited auction: you manage the end of the auction whenever you like.
if you choose an auction, it is better to decide on the minimum price and your royalties in the case of reselling NFT on the secondary market. Relying on the platform, you could pay a listing price, an NFT minting cost, a charge on the sale, and a marketing fee to transfer money from the buyer’s wallet to yours. Due to the volatility in cryptocurrency pricing, costs also can fluctuate. Then, it is important to take a close look at the costs you have to spend to coin and sell the NFT to make certain that they are beneficial.
The sale expenses of NFTs are depending on their popularity and rarity. Therefore, NFT makers can create a lot of money. However, not all NFTs will sell even, let alone make their creator any money, given all the fees involved with minting and selling NFTs. Due to the costs, you may lose money on your NFT product. The most suitable method to avoid failure is to make certain you want to sell work that others find useful.
Highly Rated Books About This Topics
The following book is a best seller book on Amazon about NFT. It teaches all the basics about NFTs and how to buy and sell NFTs.
Non-fungible tokens provide many opportunities, creating the possibility of the creation of secured tokens and the tokenization of digital items and real assets as mentioned above. Real assets same as other properties can be tokenized for ownership. If the secured tokens are non-fungible, ownership over the asset is completely traceable and transparent, even if tokens describing ownership are sold.
Further application of NFTs could be certificates such as for goods, software licensing, guarantees, and even birth and death certificate is either a legal document. The smart contract of a non-fungible token immutably proves the identity of the owner and could be held in a digital wallet for the comfort of access. One day, our digital wallets could include evidence of every certification, license, and many other things we own.
Ethereum is developing to make using NFTs more efficient. Ethereum is now going via a series of advancements, called Eth2, that will return mining to staking. This will remove computing power as a security tool, and decrease Ethereum’s carbon footprint. In such a world, stakers save funds rather than computing power to confirm the network.