NFT an acronym for on-fungible token as we all know it’s a big trend in the crypto industry now asides the crypto industry it keeps taking the art and collectibles industry by suprise.
NFTs are tokens that we can use to represent ownership of unique items. They let us tokenise things like art, collectibles, even real estate. They can only have one official owner at a time and they’re secured by the Ethereum blockchain – no one can modify the record of ownership or copy/paste a new NFT into existence.
NFT stands for non-fungible token. Non-fungible is an economic term that you could use to describe things like your furniture, a song file, or your computer. These things are not interchangeable for other items because they have unique properties.
Fungible items, on the other hand, can be exchanged because their value defines them rather than their unique properties. For example, ETH or dollars are fungible because 1 ETH / $1 USD is exchangeable for another 1 ETH / $1 USD.
You can learn more in the video below.
NFTs and Ethereum solve some of the problems that exist in the internet today.
As everything becomes more digital, there’s a need to replicate the properties of physical items like scarcity, uniqueness, and proof of ownership. Not to mention that digital items often only work in the context of their product.
For example you can’t re-sell an iTunes mp3 you’ve purchased, or you can’t exchange one company’s loyalty points for another platform’s credit even if there’s a market for it.
A little comparison between NFT’s and the assets on the internet.
|An NFT internet||The internet today|
|NFTs are digitally unique, no two NFTs are the same.||A copy of a file, like an .mp3 or .jpg, is the same as the original.|
|Every NFT must have an owner and this is of public record and easy for anyone to verify.||Ownership records of digital items are stored on servers controlled by institutions – you must take their word for it.|
|NFTs are compatible with anything built using Ethereum. An NFT ticket for an event can be traded on every Ethereum marketplace, for an entirely different NFT. You could trade a piece of art for a ticket!||Companies with digital items must build their own infrastructure. For example an app that issues digital tickets for events would have to build their own ticket exchange.|
|Creators can retain ownership rights over their own work, and claim resale royalties directly.||Platforms, such as music streaming services, retain the majority of profits from sales.|
|Items can be used in surprising ways. For example, you can use digital artwork as collateral in a decentralised loan.|
Non-fungible tokens (NFTs), data stored on a blockchain that guarantees a digital item’s ownership and uniqueness, exploded into the mainstream last year, driven by the belief that people want to own, showcase and trade their digital assets in the virtual world.
Minting is simply the process of creating NFTs.
But NFTs are more than get-rich-quick schemes. For creators who want to start dabbling in the world of digital assets, here is a quick beginner’s guide for minting an NFT, which means adding the data of a digital file to a blockchain.
Step one: What are you minting?
What kind of NFT would you like to create? While some of the most popular projects feature cartoon avatars, almost any digital file format can be turned into an NFT, including GIFs and various audio and video formats.
Step two: Decide on a marketplace
There are many marketplaces that allow you to discover, buy and sell NFTs, but some are more suitable for individual creators and artists.
OpenSea, based on the Ethereum blockchain, currently boasts the biggest user base and trading volume, and is the top choice of many NFT creators and buyers.
Binance NFT is also a good marketplace to consider.
Step three: Create a crypto wallet and get crypto
Set up a crypto wallet that is compatible with your marketplace and blockchain of choice. Crypto wallets hold the private keys to your crypto assets, including cryptocurrencies and NFTs, and let you receive and send crypto with your wallet address.
MetaMask and Coinbase Wallet are popular choices for marketplaces based on Ethereum, whereas Phantom and Solflare are among wallets that work for Solana-based platforms. You can set up a wallet – typically done through an online platform, browser extension or app – without owning any cryptocurrencies. Later, you can buy cryptocurrencies from a crypto exchange or use services that allow you to buy them directly with credit cards, such as MoonPay.
Step four: Upload and mint
Once you have a crypto wallet ready, you can start creating. We will use OpenSea and MetaMask as examples.
From the menu options at the top of the OpenSea page, click “create” and proceed to connect your MetaMask wallet with the platform. A pop-up will appear for you to complete the connection. Then you can upload the file you prepared, add a name and description, and choose whether you want it to be minted on Ethereum or Polygon, the latter being a related but cheaper alternative to Ethereum.
To finish up, click the blue “create” button at the bottom of the page. Your new NFT will not be minted on the blockchain until after it is sold.
To sell your first Ethereum NFT, OpenSea requires a one-time gas fee, which fluctuates based on factors such as network traffic.
Uses of NFT.
Gaming has a huge demand for unique items that are tradable and purchasable. Their rarity directly affects their price, and gamers are already familiar with the idea of valuable, digital items. Micro-transactions and in-game purchases have created a multi-billion dollar gaming industry that could tap into NFTs and blockchain technology.
It’s also an exciting area in terms of what an NFT represents. Tokens for video games combine aspects of art, collectibility, and utility for players. However, when it comes to big-budget video games, NFT implementation is a long way off.
It’s easy to forget that not every NFT derives value from a song, picture, or collectible item. In decentralized finance (DeFi), NFTs also provide unique financial benefits. Most will have some artwork too, but their value comes from their utility.For example, JustLiquidity offers an NFT staking model. A user can stake a pair of tokens in a pool for a certain period and receive an NFT to access the next pool. The NFT acts like an entrance ticket and is destroyed once you participate in the new pool. This model creates a secondary market for these NFTs based on the access they provide.
Like an image file or video, you can also attach audio to an NFT to create a collectible piece of music. Think of it as a digital “first edition” of a record. Attaching a song to an NFT is similar to our art example, but there are other use cases.
In the meantime, smaller projects have ended up working mainly with independent artists. Rocki on Binance Smart Chain gives independents a platform to sell royalties and stream their music. Their first royalty NFT sale on the platform raised 40 ETH for 50% royalties using the ERC721 token standard.
Credits: Ethreum and Binance.