NFTs and 12 things you need to know about them
Table of Contents
What exactly are NFTs?
A Non-Fungible Token (NFT) is a digital file whose unique identity and ownership are verified on a blockchain (a digital ledger). NFTs are not mutually interchangeable. NFTs to things such as digital artwork is commonly auctioned at online NFT marketplaces. The token can be bought with cryptocurrency and resold.
NFTs are used to commodify digital things, such as digital art, video game items, and music files. Access to any copy of the original file, however, is not restricted to the owner of the token.
How did it start?
One of the earliest NFT projects was a 2015 project called Etheria. Since then, NFTs have grown to become a speculative market. There has been some concern over the carbon emitted per NFT transaction.
An NFT is created by uploading a file, such as an artwork, to an NFT auction market, such as KnownOrigin, Rarible, or OpenSea. This creates a copy of the file recorded on the digital ledger as an NFT, which can be bought with cryptocurrency and resold. Although an artist can sell an NFT representing a work, the artist can still retain the copyright to the work and create more NFTs of the same work. The buyer of the NFT does not gain exclusive access to the work.
NFTs representing media have been analogized to autographs. A person who uploads a certain work as an NFT does not have to prove that they are the original artist, and there have been numerous cases where art was used for NFTs without the creator’s permission.
What else is it used in?
Art was an early use case for NFTs, because of the purported ability of NFTs to provide proof of authenticity and ownership of digital art, which, unlike physical art, does not have a preexisting means of recognizing authenticity.
NFTs can also be used to represent in-game assets that are controlled by the user instead of the game developer. The first use on NFTs in gaming was implemented by Tokenzone using a centralized approach. NFTs allow assets to be traded on third-party marketplaces without permission from the game developer.
Carbon Emission Claims
The British AI artist Memo Akten created an online CO2 calculator to criticize the unreasonable carbon footprint for Ethereum-based NFT transactions. In early 2021, a German conceptual artist auctioned a single transparent pixel for 1 Ether, thereby emitting 125 kg of CO2.
An analysis of data from an NFT market found that the average NFT art transaction used 340 kWh of electricity and had a carbon footprint of 211 kg of carbon dioxide, equivalent to around a month’s worth of electricity consumption for a resident in the EU, driving for 1,000 km, or flying for 2 hours.
These claims are disputed, blockchain miners utilize the same volume of energy regardless of NFT usage or lack of.
The carbon emissions claims are not new and are not exclusive to or impacted by NFTs but are a trait of proof of work blockchains.
How to create NFTs
Creating your own NFT artwork, whether it be a GIF or an image, is a relatively straightforward process and doesn’t require extensive knowledge of the crypto industry. NFT artwork can also be used to create collectibles like sets of digital cards. Before you start, you will need to decide on which blockchain you want to issue your NFTs.
Ethereum is currently the leading blockchain service for NFT issuance.
However, there is a range of other blockchains that are becoming increasingly popular, including
- Binance Smart Chain
- Flow by Dapper Labs
Each blockchain has its own separate NFT token standard, compatible wallet services, and marketplaces.
For instance, if you create NFTs on top of the Binance Smart Chain, you will only be able to sell them on platforms that support Binance Smart Chain assets.
This means you wouldn’t be able to sell them on something like VIV3 – a Flow blockchain-based marketplace – or OpenSea which is an Ethereum-based NFT marketplace.
Since Ethereum has the largest NFT ecosystem, here’s what you’ll need to mint your own NFT artwork, music, or video on the Ethereum blockchain:
An Ethereum wallet that supports ERC-721 (the Ethereum-based NFT token standard), such as MetaMask, Trust Wallet or Coinbase Wallet.
Around $50-$100 in ether (ETH). If you are using Coinbase’s wallet you can buy ether from the platform with U.S. dollars, British pound sterling, and other fiat currencies. Otherwise, you will need to purchase ether from a cryptocurrency exchange.
Once you have these, there are a number of NFT-centric platforms that allow you to connect your wallet and upload your chosen image or file that you want to turn into an NFT.
The main Ethereum NFT marketplaces include:
- Makersplace also allows you to create your own NFTs but you have to register to become a listed artist on the platform beforehand.
How much does it cost to make NFTs?
While it costs nothing to make NFTs on OpenSea, some platforms charge a fee. With Ethereum-based platforms, this fee is known as “gas.” Ethereum gas is simply an amount of ether required to perform a certain function on the blockchain – in this instance, it would be adding a new NFT to the marketplace. The cost of gas varies depending on network congestion. The higher the number of people transacting value over the network at a given time, the higher the price of gas fees and vice versa.
Top tip: Ethereum gas fees are significantly cheaper on average during the weekend when fewer people are transacting value over the network. This can help keep costs down if you’re listing multiple NFTs for sale.
How to buy NFTs?
Before you rush to buy NFTs, there are four things you need to consider first:
What marketplace do you intend to buy the NFTs from?
What wallet do you need to download in order to connect with the platform and purchase NFTs?
Which cryptocurrency do you need to fund the wallet with in order to complete the sale?
Are the NFTs you want to buy being sold at a specific time, i.e. via a pack or art drop?
As you can probably guess by now, certain NFTs are only available on specific platforms. For example, if you want to purchase NBA Top Shot packs you will need to open an account with NBA Top Shot, create a Dapper wallet, and fund it with either the USDC stablecoin or supported fiat currency options.
You will also have to wait for one of the card pack drops to be announced and try your luck in trying to buy them before they sell out. Pack and art drops are becoming increasingly common as a method for selling scarce NFTs to an audience of hungry buyers. These drops normally require users to sign up and fund their accounts beforehand so that they don’t miss out on the opportunity to purchase NFTs when they drop. Pack and art drops can be over in seconds, so you need to have everything ready ahead of time.
Where to buy NFTs?
For crypto traders who are primarily interested in buying NFTs, here is a list of the most popular NFT marketplaces in 2021:
- Nifty Gateway
- Axie Marketplace
- NFT ShowRoom
How to sell NFTs?
To sell your NFTs on a marketplace, you’ll need to locate them in your collection, click on them and find the “sell” button.
Clicking this will take you to a pricing page where you can define the conditions of the sale including whether to run an
auction or sell at a fixed price.
Ether and other ERC-20 tokens are the most common cryptocurrencies you can sell your NFTs for, however, some platforms
only support the native token of the blockchain they were built upon. VIV3, for example, is a Flow blockchain marketplace
and only accepts FLOW tokens.
Is now a good time to get into non-fungible tokens?
The NFT craze is far from being over.
Major brands and celebrities such as the UFC and Shawn Mendez have signed deals to release their own non-fungible assets soon, and even Elon Musk’s girlfriend Grimes has jumped on the bandwagon selling almost $6 million worth of digital artwork in minutes.
Messari analyst Mason Nystrom anticipates the NFT market will exceed $1.3 billion by the end of 2021 as more artists, brands and icons flock to the space to create their own distinctive tokens. With more blockchains competing to produce better NFT services too and a growing range of platforms to choose from, now is a great time to take part in the space.
Now about, the JPEG (which you can download for free) which sold for 69 Million USD
On Thursday, a digital collage of hundreds of weird, brightly colored images made by a South Carolina artist known as Beeple sold at the prestigious Christie’s auction for $69.3 million. The staggering price is the third highest ever for a work by a living artist, second only to pieces sold by art-world giants Jeff Koons and David Hockney.
But unlike Koons’s balloon dog sculptures and Hockney’s acrylic paintings, the collage, known as “Everydays: The First 5000 Days,” is entirely digital. In effect, the buyer — a blockchain investor who goes only by the name of MetaKovan — bought a file that is not very different from the photo posted at the top of this article.
An American digital artist, Mike Winkelman, has put together a collage of the 5,000 works of digital art he has been posting every day since May 2007 and assigned it a non-fungible token (NFT).
The artwork itself is a Jpeg file, 21,069 × 21,069 pixels, and can be copied.
A Rembrandt or a Souza can also be copied, but the original remains the original and retains its value.
The token that comes with the Jpeg file is what denotes its originality and uniqueness. The token is created using the blockchain — a bitcoin is also a token created using the same technology. Christie’s has auctioned digital art in the past as well, but the uniqueness was attested to by paperwork. In the present case, everything is digital.
In the recent past, a music group, the Kings of Leon, also issued a new album along with a few tokens authenticating limited edition launch copy uniqueness. These could go on to become collector’s items and add value in time. We can expect many more things to come with NFTs assigned to them.
What sets it apart, though, is that this specific file is an NFT, or non-fungible token. Using the same principles behind cryptocurrencies such as bitcoin, NFTs allow people to claim ownership over specific digital files, be they songs, videos or static images. Beeple, whose real name is Mike Winkelmann, is the latest beneficiary of a rush into NFTs that’s a side effect of the fast-growing interest in digital currencies and the technology behind them.
Crypto Whale in Singapore Is the Buyer of $69 Million Beeple
A digital asset investor who goes by the handle Metakovan and refuses to give his full name, announced that he is the buyer of the record-breaking $69.3 million digital artwork that sold Thursday.
The image file is connected to a non-fungible token (NFT), which was “minted” just last month, and serves as its certificate of authenticity recorded via blockchain technology.
NFT & Art in today’s world
NFT artists are now making millions of dollars from their work. But if you’re a traditional artist looking to enter the growing space, pivoting solely to NFT art may be more difficult than it seems.
As an artist, there are several benefits to pursuing NFT art. For one, it mimics the global shift towards remote work during COVID-19. Unlike the 1980s when artists used to cluster in major cities like New York, NFT art has made it possible for artists around the world to achieve financial success.
I think that’s definitely a huge selling point,” Winkelmann said. “If this stuff takes off, you will be compensated well.”
Just how “well” is well? In October, a Miami art collector shelled out almost $67,000 a 10-second video art clip created by Winkelmann, Reuters reported
In February, the same video resold for $6.6 million, of which Winkelmann received a 10% cut.
However, while NFTs present artists with the chance of financial success, flourishing in the space may still be “tough,” Winkelmann says.
“There are a reason ‘starving artists’ is an accurate term in a lot of ways,” Winkelmann said. “I think it’s going to be hyper-competitive because at the end of the day, who wouldn’t want to just make whatever the hell they want and have people pay them for it.”
As a result, Mark Sabb, founder of artist collective Felt Zine, doesn’t recommend pivoting to NFT art while abandoning other streams of income.
“Do everything,” Sabb said whether it be commissions, shows, or selling prints. In the end, diversification of income will help raise the value of an artist’s NFTs. And in turn, this can give artists the power to turn down “bad clients.”
Here is one more reason for the government to regulate, rather than ban, cryptocurrencies. The underlying technology, the blockchain, has many versatile uses, one of which sold for $69.3 million in an auction by Christie’s. The development is significant on two counts.
Regulate products, do not ban them, for bans could stunt underlying technologies.