Blockchain technology has opened the door to many innovations and offerings, and none of them have grabbed current headlines as much as NFTs. It seems everyone’s talking about NFTs these days, so it’s time to take a close look at this concept and try to make sense of it.
So, let’s talk about NFTs and find out what they are, how to make NFTs, how to sell NFT art, how to buy NFTs, and when the time is right to conduct these transactions.
But before we get into the transactional aspects of NFTs, it would help first to understand what they are.
What’s an NFT?
NFT stands for “Non-Fungible Tokens.” The term "fungible" comes from economics and describes an object, such as your smartphone, couch, or image file. You can't exchange these items for others since they have unique properties. Cash and commodities are examples of fungibility.
NFTs are tokens representing ownership of unique collectible crypto assets. Non-fungible tokens have been around since 2012, with the advent of Bitcoin Colored Coins. These coins were small fractions of a Bitcoin, called “satoshis,” colored in or marked with unique information that potentially linked the coin to real-world assets.
NFTs can represent almost any intangible or tangible item, such as:
- Collectibles, such as digital trading cards
- Video game-based virtual items such as avatars, skins, weapons, or virtual currency
- Virtual land, which is land that exists in the Metaverse or other virtual worlds
- Tokenized real-world assets like cars, designer sneakers, or real estate
- A domain name
- Video footage of classic moments in sports
Alright, this sounds very interesting, but how do you make a non-fungible token?
How Do You Make an NFT?
Although it sounds like the process may be complicated, it’s actually very simple and straightforward. You don’t have to be a crypto expert to make your own NFT. Here are the steps needed to create an NFT, with images courtesy of Coindesk
First, choose your blockchain. Each blockchain has its unique NFT token standard, marketplace, and wallet services. Thus, if you create an NFT on one chain, you can only sell it on platforms that support the chain you used.
For this example, we'll show you how to make an NFT on the Ethereum blockchain. Of course, it helps that Ethereum has the most extensive NFT ecosystem. For starters, you need:
- An Ethereum wallet such as Coinbase Wallet or Trust Wallet, since they support Ethereum’s NFT token standard, ERC-721
- Sufficient ETH to handle the gas fees, defined as the amount of Ether needed for an Ethereum blockchain user to perform a network transaction
Once you have secured these resources, it’s time to choose an NFT-centric platform that lets you connect your Ethereum wallet and upload the file, image, or whatever you want to make into an NFT.
The three current top Ethereum NFT marketplaces are:
- OpenSea (also the largest marketplace)
The following image shows OpenSea’s page. Notice the “Create” button in the upper right corner.
Click the button and go to the screen that prompts you to connect your wallet. It will automatically connect your wallet with the marketplace once you enter your password as required.
Next, hover your cursor over the “Create” word in the top right corner and choose “my collections,” then click on the blue “Create” button, like so:
You will see a window that lets you upload the artwork, adding a name and description. You’ve just created a folder where you can place your newly made NFTs.
After you assign the image to your collection, it appears as seen below (look at where the blue arrow is pointing). Now add a banner image to your page by clicking on the red pencil icon at the top right corner.
If everything turned out right, it should look like the following image:
Click on the blue "Add New Item" button and sign a new message with your wallet. This action will take you to a new window that lets you upload your image. Many marketplaces allow you to make your creation unique and scarcer by adding special attributes and traits.
After you have finished, click the “Create” at the bottom, then confirm your NFT’s creation by signing another message in your wallet. Presto! The artwork should now show up in your collection!
How to Buy NFTs
Before you buy an NFT, answer these questions:
- What marketplace do you plan to buy your NFT from?
- What wallet will you need to connect to the platform and perform the transaction?
- Which cryptocurrency will you need to fill your wallet with so that you can conclude the sale?
- Is the NFT you want only available for purchase at certain times?
How to Sell NFTs
When you’re ready to sell your NFT on your chosen marketplace, find it in your collection and click the “Sell” button. This action should take you to a pricing page where you can spell out the sale conditions, including whether you want to sell it at a fixed price or at auction. Remember, some platforms will only support the native token from the blockchain used to build it.
You can optionally program in royalties and choose which ERC-20 token you want for your NFT sale. Click on the “Edit” button located next to the image, then sign the message with your wallet.
Note that some marketplaces charge a fee to complete this process.
Explaining NFT Marketplaces
NFT marketplaces are digital platforms used to sell and buy NFTs. People can store, display, and sell their NFTs for actual money or cryptocurrency.
Where to Buy NFTs
Here’s a sampling of some of the better-known marketplaces in 2022. The best marketplaces for beginners are marked with an asterisk (*).
- Axie Marketplace*
- Larva Labs
- NFT ShowRoom
- Nifty Gateway
Of course, these marketplaces are also good places to sell NFTs.
Is Now a Good Time to Buy and Sell NFTs?
It's the same story with any new craze that hits society today. It begins as something only a few people even know about. Then more people catch on, escalating into an over-hyped runaway freight train, inviting scrutiny, criticism, and analysis, especially on social media.
Non-Fungible Tokens are no different. NFTs are currently riding a high wave of buzz and hype, and everywhere you turn, it seems that someone’s releasing a new NFT. Celebrities such as Eminem, Snoop Dogg, Grimes, Shawn Mendes, Lindsay Lohan, heck, even William Shatner, Captain Kirk himself, have released NFTs.
Who knows how long the NFT market will be blazing hot? So yes, now is a good time to buy and sell NFTs because it could change. Collectibles are volatile, and their worth is purely a psychological thing. After all, collectibles such as baseball cards, comic books, and Beanie Babies have seen their markets bottom out.
Could it happen to NFTs? Sure! But until then, why not strike while the iron is hot?
1. Why are NFTs valuable?
Four factors determine the value of an NFT:
- Market-driven value. This value covers the artist’s popularity and the anticipated resale value of the NFT.
- Subjective value. This value hinges on how the artist’s statement/message makes you feel.
- Objective value. The value measures the creator’s technical skill and experience.
- Historical value. Does the object have any?
2. What’s the use of an NFT? Why bother?
For the same reason you want to collect baseball cards, coins, comics, cheap souvenirs, etc. Also, NFTs demonstrate ownership of potentially rare assets that represent actual real-world items.
3. If I buy an NFT, will it increase in value?
Not necessarily, as value is subjective. So the value could hit the stratosphere tomorrow or come crashing down.
4. I’ve heard that NFTs are bad for the environment. Is this true, and why?
Yes, they are. NFTs and Bitcoin use massive amounts of energy thereby negatively impacting the environment. The computer transactions used to sell and authenticate NFTs are energy-intensive, and usually rely on cheap energy sources (such as fossil fuels) to generate electricity.
5. Can I make NFTs out of JPEGs?
No. The NFT and the external media it’s tethered to are two different things.
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