What is NFT? What do You Need To Know About Non-Fungible Tokens?
Today, we’ll tell you everything you need to know about NFTs—including what they’re good for—and how you create one of your own.
What Does NFT Mean?
Let’s start with answering the most basic question: What are NFTs?
NFT stands for non-fungible token. An NFT is, by nature, unique — meaning no two NFTs are alike. It should also be noted that NFTs are not physical objects but digital files.
Think of it as collecting prized artwork like paintings or sculptures. Only in this case, you’ll be collecting digital art. But digital art has evolved to include anything that users see value in. That’s why you’ll find NFTs of tweets, GIF files, and other items you wouldn’t normally think are collectible.
So how did NFTs become a thing?
The first NFT on record is a piece called Quantum by Kevin McCoy who is also credited as the originator of NFTs along with Anil Dash. In May 2014, Kevin and Anil showcased the technology at a conference called Seven on Seven.
NFT works by putting digital artworks on the blockchain — Ethereum to be more precise. This means that NFT files can store information like the history of the NFT.
Nobody can alter the record of ownership or replace an NFT since all NFTs are stored in the Ethereum blockchain.
These days, you’ll find examples of NFTs in different NFT marketplaces like OpenSea.
NFT marketplaces are great places to discover items that are up for sale. It can also give you an idea of what people are creating and what buyers are looking for.
The great thing about NFTs is that it’s open to all niches. While it’s common to find pieces related to gaming or internet culture, you can find and buy NFTs that resemble more traditional artworks like photographs and music.
As for the most expensive NFT ever sold, it would have to be Pak’s The Merge which sold for over $91.8 million. Over 28,000 collectors had to pool their money together to buy the piece. It’s one of the rare examples of an expensive NFT being owned by more than one person.
The success of The Merge isn’t a one-off though as many other NFTs sold for millions of dollars.
Beeple is an artist who managed to sell multiple NFTs worth millions. His most expensive artwork to date is a collage made up of 5,000 pieces of his work from 2007 onward.
This particular piece sold for $69.3 million and is currently the most expensive NFT that’s owned by one person.
NFTs that sell can vary. Sometimes, it’s more about the story than it is about the artwork itself — though the same can be said about tangible artworks too.
What Are the Types of NFT?
We’ve briefly explored the types of NFTs that you could create. Let’s talk about it in detail.
What NFT genres could you explore?
Most will argue that artworks are the biggest sellers in the world of NFT. If you’re an artist, you might want to try your hands on selling your art as NFTs.
There are NFT creators who only offer limited runs of the NFTs they choose to sell. That makes them great collectibles.
NFTs come in many forms with music being one of them. If you’ve got music that you’d like to sell as NFTs, there’s no reason why you shouldn’t try.
Photographs also work as NFTs. And the great thing about it is that it could just be about anything. You’re not limited to a specific genre.
Domain names aren’t the first thing that comes to mind when talking about NFTs. But yes, you can purchase domain names as NFTs if you wish.
NFTs could be just about anything. You can do trading cards. It could be about sports. You can create virtual worlds and release NFTs about those.
What Are NFTs Used For?
Now that you have a more solid understanding of what NFTs are, you might be wondering what they’re good for. How can you use NFTs?
That’s a great question.
As they are, NFTs are a representation of ownership of a digital item. They’re not divisible, meaning you’re the sole owner of a one-of-a-kind item. While the creator of the NFT can produce multiple copies of the same item, the NFT that you own will still be uniquely yours.
NFTs are usually bought by collectors who are fans of the artwork and would like to support the creator. Or they’re bought by investors looking to sell their NFTs at a higher price down the road.
For creators though, NFTs are a lifesaver. They use it to get compensated for the work that they put out. As you can probably imagine, it’s difficult for creators to earn money from digital art. It’s also great for exposure. As more people pay for their NFTs, they’re able to attract attention that opens the door for more opportunities.
NFTs and Big-Name Brands
As NFTs get more mainstream attention, companies are starting to think of ways to incorporate non-fungible tokens into their business model.
For example, Adidas had an NFT drop where it made more than $22 million in sales. It was the company’s first-ever NFT launch.
UNICEF plans to sell 1,000 NFTs to commemorate its 75th anniversary in 2022 using the Ethereum blockchain. All proceeds will go toward funding the initiatives of the UNICEF Global Office of Innovation.
Game publishers like Square Enix, Ubisoft, and EA are also starting to see the value of NFTs. These companies have declared NFTs as the future of their industry. There are games that incentivize players to play more by offering NFT rewards.
What Can’t You Use NFTs For?
We should stress that just because you own an NFT does not mean you have the copyright to that work. The creator of the NFT will still own the copyright as well as the reproduction rights to it.
Think of it like this:
When you buy a poster featuring the Mona Lisa, you don’t own the rights to the original painting. What you do have rights to is the poster itself. And you can do anything with that poster. You can resell it to someone else if you want to or hang it up in your home and admire it from there.
That’s where some of the controversies regarding NFTs come in.
Because NFTs are digital artworks, it’s very easy to take a screenshot of an NFT and save a copy of it. You don’t really need to purchase an NFT if all you want is to do is look at it.
And considering how expensive some of these NFTs can get, not everyone’s open to the idea of buying an NFT especially if they can save the images for free.
How Unique Are NFTs?
If people can just copy an NFT and save them on their computers, then how unique can an NFT be?
That’s the same question others have asked about NFT ownership. Technically, yes, every NFT is unique. No two NFTs are the same.
It is true that people can save a version of an NFT and use it for their own purposes. And since the creator of the NFT owns the right to the artwork, that person can reproduce copies of the NFT — meaning others can own an NFT that looks exactly like yours.
How to Create NFT
If you’re an artist who wants to try creating NFTs, we’ve got news for you: It’s actually not that hard to do.
Here’s how you do it.
Step 1: Buy Cryptocurrency
Unfortunately, the first step to creating an NFT is to buy cryptocurrency. NFTs are not something you could do for free. Turning a digital artwork into an NFT will have an upfront cost.
There are different cryptocurrency options out there. However, you’ll want to use Ethereum. It’s the most widely used cryptocurrency in the NFT space which means it’s probably the safest bet. After your purchase, double-check to make sure that it is in your digital wallet.
How much you’ll need will depend on the NFT marketplace you’ve chosen to work with.
Also, keep in mind that the value of Ethereum—just like other cryptocurrencies—tends to fluctuate. So try to buy at the most appropriate time to make the most out of your investment.
Step 2: Add Your Wallet to an NFT Platform
No matter what digital wallet you went with, you’ll still need to add it to your NFT platform of choice.
The process will slightly vary depending on the platform. But all of them should have a feature that will allow you to connect your digital wallet. You’ll be asked to enter some information including the name of your wallet provider.
After you successfully connect your digital wallet, you’ll be able to move on to the next step.
Step 3: Upload Your File
Once you have your wallet connected, upload your digital file and convert it into an NFT.
Again, the process will be different depending on the platform you choose. But for the most part, all you’ll need to do is to attach the file and upload it. You might be asked whether you want to create a single NFT or multiple copies of it.
Make sure that your digital file is compatible with formats accepted on the site. Most NFTs are made from, PNG, GIF, and MP3 files but an NFT marketplace might accept others.
Step 4: Launch an Auction
After uploading your digital file and converting it into an NFT, you can start an auction to sell it.
Most marketplaces will give you options. You can sell the NFT at a fixed price, meaning you’ll get paid exactly what you asked for. It’s also possible to go for an unlimited auction strategy wherein people bid on an NFT indefinitely until you close the bidding by accepting an offer.
You can also launch a timed auction where bidding closes after a set amount of time has passed.
It’s also at this point where you choose the minimum price. You’ll have to think carefully about your pricing. Set it too low and you could severely undervalue your work. But put it too high and you might not sell it at all.
Remember that you’ll need to recuperate some of the fees that you paid to make the whole thing worth the time and effort.
Make sure that you have a captivating title and description to go along with your NFT.
Step 5: Pay the Fees
Now comes the hard part — paying all the fees. This is the reason why you have to connect your digital wallet on the platform as you’ll need Ethereum to pay for them.
There are different fees to pay. To start, there’s the listing fee. Then there’s the fee for generating the NFT. And finally, there are the commission and transaction fees which you’ll pay after an NFT is sold.
Because of the fluctuating value of cryptocurrencies, it’s hard to tell how much you’ll end up paying.
What Does Mint NFT Mean?
On a technical level, it’s the process of converting a token through blockchain technology so that people can buy it.
But to simplify it, “minting” an NFT refers to the process of converting a digital artwork into an NFT.
When you upload your digital file on a marketplace and convert it into NFT, what you’re doing is minting.
What Is Gas?
If you’ve been researching the NFT space, you might have come across a term called Gas.
Gas—in this context—refers to the expenses associated with minting NFTs which includes transaction fees. You can think of it like those processing fees that you have to pay when using a service to move money from one account to another.
List of Platforms for Minting NFT
Here’s a list of the most popular NFT platforms where you could mint NFTs.
Blockchains to Use for Minting NFTs
Here’s a list of blockchains you can use to mint NFTs.
How to Choose Which NFT to Buy
Considering how new NFTs are to most people, how will you know which NFTs are worth buying?
Well, as is the case for all investments, you should learn how to do some research.
There are steps that you can try to see which NFTs might be worth looking into. Social media is a good place to start as noteworthy NFTs will likely show up in NFT-related groups and hashtags.
If you’re a fan of particular creators, look at their official websites to see if they have upcoming projects.
You can also try joining groups that follow the NFT space closely. While opinions will vary about projects, it will give you an idea of which ones are gaining traction.
From time to time, you’ll also hear the term rare NFTs thrown around. These refer to NFTs with limited runs. Sometimes, these rare NFTs will be sold pre-minted and only sent to buyers manually.
Most Popular Wallets for NFT
Which popular wallets should you use to store your cryptocurrency? Here’s a list of the most credible ones.
Most Popular NFT Projects
Looking for inspiration? In that case, you should look at what NFTs are currently popular in the market. There are places you could visit online that will clue you in on what’s hot in the community.
OpenSea, for example, has a list of the top NFTs and creators.
Visiting Clubhouse rooms will help you keep in touch with those who live and breathe NFTs. They’ll know which NFTs are popular with collectors.
Frequently Asked Questions
What Does NFT Mean?
NFT stands for non-fungible token. It’s a digital file that’s been converted into a sellable asset using crypto like Ethereum.
What Is an Example of NFT?
A popular example of an NFT collection would be CryptoPunk — 10,000 uniquely generated characters. Some of the pieces sold for millions of dollars.
How Do I Get an NFT?
You can buy NFTs from NFT marketplaces. Most pieces are sold through cryptocurrency which means you’ll need a digital wallet with funds in it.
What Is NFT Drop?
It’s another way of saying that an NFT project is being released for purchase at a time and date set by the creator or seller.
What Is NFT in Gaming?
It allows gamers to own digital items either to use in-game or as a collectible.