It’s 2021, and the world of cryptocurrency is fast expanding into new domains and territories. The technology that supports and powers the cryptocurrency landscape, known as a blockchain, was up until recently only used for cryptocurrency transactions. However, NFTs have changed all that by putting the technology that powers crypto to ever more innovative uses.
As with most projects in the crypto sphere, NFTs started off slow in 2017 and gradually picked up popularity over time. It wasn’t until the year 2021 that the scope and prominence of NFTs skyrocketed up to previously unimaginable heights.
For those who are new to the world of cryptocurrency and blockchain, NFTs might be a little confusing to wrap one’s head around. In this article, we will provide a complete beginner’s guide to NFTs, outlining what they are, how they work, what you can do with them, and how you can start creating and selling your own NFTs today. So let’s get into it!
Non-Fungible Tokens (NFTs)
What is an NFT? 🖼️
NFT stands for non-fungible token. Unlike most crypto, such as Bitcoin and Ethereum, NFTs are not designed to function as currency. Instead, NFTs are an example of an alternate use-case of blockchain, whereby the very same blockchain technology that powers cryptocurrency transactions is used for an entirely different purpose.
If you trade one Bitcoin on a cryptocurrency exchange, the value you receive in return will be equal to one Bitcoin. This is because cryptocurrencies are designed to be interchangeable, and no single cryptocurrency has a unique identifier. Each NFT, on the other hand, does have a unique identifier. This is where NFTs get their name; for instance, like two physical paintings, no two NFTs are alike and are hence non-fungible.
NFTs can hence be thought of as digital tokens that use blockchain technology to secure the ownership and authenticity of a unique and one-of-a-kind asset. Through blockchain technology, the history of the asset’s ownership can be verified, and hence its authenticity confirmed.
What Can I Do with an NFT? 💡
Even after knowing what an NFT is, it is easy to wonder what the user value is in all this. Today, NFTs are used to create unique digital artworks, songs, and games that can be bought off of NFT marketplaces. Since the world of NFTs is still very much in its early stages, people are still discovering more and more innovative ways to put these digital assets to good use.
Recently, the NBA started using NFTs to transfer the old-school world of sports card trading onto the digital sphere. Today, an entire trading ecosystem is being built around these digital trading cards. In a different vein, a project known as Decentraland uses NFTs to build entire augmented realities for users to interact with.
While lots of NFTs are simply static images that are unique and verifiably authentic, many other NFTs have actual in-game uses as well. One example of this is the popular NFT based game CryptoKitties. This game was released on the Ethereum network in 2017 but has exploded in popularity in the last two years.
The concept is simple; each digital kitty is represented by a unique NFT, which gives it a one-of-a-kind genetic make-up. Kitties can then be bred to produce more unique kitties, which can then be bought and sold in an effort to develop a collection over time.
It may not sound like much, but at its peak, CryptoKitties congested over 10% of the Ethereum network. In fact, this is the use-case that brought everyone’s attention to NFTs.
🤑 Where Can I Buy NFTs? 🛍️
Depending on the type of NFT you wish to buy, you will find different NFTs in different places. Most kinds of gaming NFTs can be found as in-game purchases, while digital artwork NFTs can be found on digital art auctions.
That being said, most NFTs are available on any one of the large number of online NFT marketplaces that exist today. Using any of the following NFT marketplaces listed below, you can find some of the popular and trending NFTs for sale or auction.
OpenSea is a very user-friendly NFT marketplace that does not require any verification to use. All you need is some crypto funding. The site has a very large number of collections to browse through and choose from and even offers a ranking feature that shows you trending and interesting pieces.
What’s more, OpenSea is an NFT marketplace that makes creating and selling your own NFTs extremely straightforward. More importantly, there is no coding required, giving OpenSea a very low barrier to entry. It should take about three minutes to create your first digital artwork on OpenSea, and the process is completely free.
Rarible is another popular NFT marketplace where users create, buy and sell individual artworks. While the marketplace is just as democratic and almost as user-friendly as OpenSea, you do have to pay for each artwork you mint on Rarible. This means that, unlike OpenSea, you will have to create an NFT block for your piece and put it on the blockchain.
Due to this, Rarible is a much less crowded marketplace and offers much fewer digital collectibles. NFTs created on Rarible are hence more likely to be seen by potential bidders, which is part of why you pay anywhere between $40-80 for each artwork you create here.
Foundation is an NFT marketplace that of the three mentioned in this guide is the most difficult to use and is also the most exclusive. In other words, before you can even post artwork on Foundation, you will have to get a certain number of up-votes from other artists and users in the community.
Due to the exclusivity of the Foundation NFT marketplace, you will find that artworks here are of better quality and go for much higher bids than those on other platforms.
For established artists who already have a large following on other platforms, this is definitely a good place to sell their work as NFTs. In this case, you might even be able to get an invitation from a community artist on Foundation and skip the long queue of people waiting to get enough up-votes.
🤔 How Can I Make My Own NFTs?
You might be thinking by this point that NFTs are probably very complicated to create. We are here to tell you otherwise. Due to the recent and dramatic rise in popularity of NFTs in the digital marketplace, these crypto tokens have become easier to create and sell for yourself.
Before you can start minting your own NFTs, you will need to make sure you have the following three things:
- A self-created artwork, song, or digital collectible.
- Some cryptocurrency to pay the minting fee
- A cryptocurrency wallet in which to store your crypto
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Once you have these three things, you will need to pick the blockchain on which you are to create your NFT. There are many blockchains from which you can choose, and some are more popular than others. Here is a list of some of the top trending blockchains on which to create NFTs:
- Binance Smart Chain
- Ethereum Virtual Machine
Today the most popular blockchain to create NFTs on is the Binance Smart Chain, which is now also compatible with the second most popular one, the Ethereum blockchain.
In order to create your very first NFT, you will need to follow these simple steps:
1. NFT Content
The first thing to do is to make sure that the contents of your NFT piece are in a file format that can be used as eligible metadata. This metadata will be stored within the private key that will constitute the unique identifier of your NFT.
Normally, you can use TXT, JPG, PNG, MP3, or GIF files for your NFT content.
2. Find a Marketplace
Once you have your NFT piece in the appropriate file format, you will need to find a marketplace on which to sell your NFT. The NFT marketplaces that are mentioned in the previous section are great places to start, especially OpenSea and Rarible, as they are democratic and user-friendly platforms.
Every different NFT marketplace has its own dominant theme and hence its own preferred file formats for NFT content. Make sure that the marketplace you choose is best suited for the type of NFT content you have created.
Another thing to note at this stage is what the preferred cryptocurrency token of each marketplace is with regards to minting fees. While Ethereum is the most common token used on NFT platforms, many marketplaces have their own preferred crypto token.
3. Connect Crypto Wallet
The next stage is to connect your crypto wallet to the NFT marketplace of your choice. This is so that you can transfer your crypto tokens to the marketplace for minting fees and even port your NFT project to your crypto wallet after it’s created.
4. Mint NFT
Once you have uploaded the metadata containing your NFT content and set the pricing and terms for your NFT, you will be able to “mint” your NFT.
Keep in mind that most marketplaces do not allow users to create multiple NFTs in a single transaction. In order to mint more NFTs, you will have to repeat the process.
Today, NFTs have never been easier to create for yourself. As the world of decentralized finance extends its reach to more and more users, we will see the quality and quantity of NFTs continue rising as it has for the last two years.
All in all, NFTs are an innovative use-case of the very powerful blockchain technology that is currently taking the computational and financial worlds by storm. If you are a creator who doesn’t want to miss out on the unique possibilities that this new technology has to offer, NFTs are truly a great place to get started.