In an increasingly digitalized world, NFTs are the latest cryptocurrencies to be all the rage these days. Highlighted by several record sales at the start of the year, this new form of technology, which means “non-fungible token”, is now in the spotlight. Behind this term hides a feature that can bring thousands, even millions of dollars to some artists, and has been for some time now.
As news travels fast, it didn’t take long to whet the curiosity of the general public. NFTs quickly became popular. If these have applications in the world of art, the idea is that they apply as well in other varied fields, such as video games, or sport.
What are NFTs?
NFT is the abbreviation of the English term “Non Fungible Token”. A token, or “token” is a digital asset issued by a blockchain. In the same category, we find bitcoins , or even XRP.
Created on a smart contract platform, Ethereum, NFTs are however very different from other crypto-currencies. Indeed, non-fungible means that each unit (token) is unique, and cannot be reproduced. Unlike bitcoins which are fungible, these particular units of currency are equal and identical. They can look like real money.
Coming back to NFTs, this so-called “ non-fungible ” property can be used for many things. But what literally sparks the craze behind these tokens is digital art and collectibles.
In other words, people have realized that a unique digital object can have significant monetary value, just like a work of art, because of its uniqueness. This is why we find a space that has recently developed in the field of digital art, video games and sports.
How NFTs work
NFTs mostly depend on the platform where they are created. In this case, we are going to focus on Ethereum, which has the most of these crypto arts .
As we are talking about ” ownership ” here, no authority, no one can cancel your ownership of an NFT or recreate one exactly the same. In addition, they are also “permissionless”, meaning that anyone can create, buy or sell them without any authorization. However, the uniqueness report remains, even if anyone can view it.
Alternatively, an NFT can be compared to a one-of-a- kind trading card , displayed in an open display case for everyone to admire. The only specificity is that it belongs to one and only one person at a given time. In practice, it can be represented through a digital work of art, an image. In itself, it is the very existence as a digital object in the blockchain that makes an NFT unique.
How to buy or trade an NFT?
NFTs can be bought and traded like any other Ethereum-based cryptocurrency. But the transactions of these tokens take place on a different platform, or rather a browser extension: Metamask . This allows interaction with various components of Ethereum , such as application exchanges. Also, Metamask can be considered as a digital wallet. It collects all tokens created on Ethereum, whether they are fungible or not.
Once the extension is installed, it is possible to obtain NFTs directly on the platform by paying a fee . The purchase can be made via debit card, such as Apple Pay or other payment methods. It should be noted that these are really monetary funds, and that vigilance is required. Indeed, once the funds have been acquired, it is necessary to ensure that the Metamask password, as well as the private key of the wallet, are stored in a secure place on the computer.
Finally, by visiting a website capable of selling NFTs or exchanging them, one only needs to log into the Metamask wallet and perform the transactions.
How to create an NFT?
Creating an NFT implies a desire to sell it afterwards. Because of this, you need to have a crypto wallet . The wallet thus created will be used both to store Ethereum and to pay minting costs. However, before you get to that, you need to decide which platform you are going to trade on. Once created, you can connect your wallet.
Here are, in detail, the 3 steps to follow in the process of creating a non-interchangeable token:
Step 1: Choose on which platform to sell the NFT
The first step is to choose the platform for selling NFTs. Each platform has its own peculiarities. This was mentioned previously. It is then necessary to choose the one which best corresponds to the needs.
Want to create a unique and authentic token? In this case, the choice is OpenSea, SuperRare or Known Origin. Of course, since Ethereum is the primary cryptocurrency used in NFT exchanges, using other cryptos would incur other fees. It is therefore time to favor a platform that uses Ethereum so as not to have to pay more.
Step 2 : Set up a wallet
Metamask is the extension most supported by applications dedicated to NFT exchanges. It is however not the only one. Several platforms support other extensions. We can cite Firefox or Chrome for the Web versions and iOS and Android for the mobile apps.
Some platforms, like Coinbase, develop their own wallet. Only, these wallets are not always based on Ethereum.
Once the crypto wallet is properly configured, you just have to copy your code to a secure place on your device. You can also use a physical safe for this. You have to be very careful with the code because even your platform cannot access your account if you lose the access code. A newly created wallet contains nothing in principle.
Step 3: Connect the wallet thus created
To connect your wallet, simply click on the “Create” button. A list of compatible wallets will then be presented to you so that you can make your choice.
Once logged in, your wallet can be used to buy or sell NFTs. However, we must remember the importance of the number of works of art that you will download. Indeed, the more you create a single work of art to sell, the higher its value. On the other hand, if you duplicate it in several original editions, this automatically decreases its value.
What is the ideal cryptocurrency to buy NFT?
Ethereum is the ideal cryptocurrency for making transactions on the NFT market. However, other cryptos can be used to buy one, depending on the chosen platform. Payment is usually made in Ethereum, but also in other cryptocurrencies where the token is registered.
In the guide below, you will find the steps to follow to buy an NFT:
- Buy Ethereum on the cryptocurrency market.
- Then transfer the obtained balance to your crypto wallet. If you have chosen an integrated wallet such as Coinbase, you can benefit from other features when opening your account.
- Once you have collected the necessary balance for the purchase, you can connect your wallet to the platform where your purchase will be made.
What is an NFT art?
Just like cryptocurrencies, NFT is also a purely digital asset. He then escapes all physical form. Its nature gives it a unique property. In this part, we will devote a few lines to NFT art.
NFT art, an opportunity for artists
NFT art is about works of art. Before, artists had to content themselves with publishing and republishing their works without actually enjoying them exclusively. Today, thanks to the NFT market, digital works of art will be able to conquer the world, while benefiting their creator. The exhibition is accessible from anywhere, anytime.
NFT art means for artists an opportunity to sell their work legally . This type of token is tokenized on the cryptocurrency service, the Blockchain. It is said to be “struck”.
Blockchain technology follows the same principles as cryptocurrencies. This entirely digital transaction system is immune to any form of piracy or fraud . This is also why you have to remember the access code to the wallet for fear of losing everything if you forget it.
NFT art, a new source of income
Currently, there are a number of non-fungible tokens that come with royalties . This involves the creative artist receiving a percentage of the value of all future sales. The rate varies from 8 to 10% depending on the platform.
However, the value of NFT art depends on the price of cryptocurrencies , Ethereum in particular. If the value of the crypto decreases, this will necessarily cause the price of the NFT to decrease, and vice versa.
What would be its global reach?
Previously, and even now, most artists sell their works only during exhibitions and auctions. This significantly limits the mobility of masterpieces and that of their creator.
With the advent of Blockchain technology in the artistic field, these sales can be made remotely , thus excluding any barrier. NFT art buying and selling platforms are taking more and more space in the digital world.
Artists will no longer have to wait for IRL events before earning income from their work. Thus, one can conclude a secure future for artists around the world as NFT art exchange platforms are gaining momentum over time.
Who can create an NFT?
Of course, anyone can create an NFT provided they have all the necessary tools for this purpose.
First of all, you have to master the workings of Blockchain technology in order to guarantee the security of your cryptographic portfolio. We saw above that digital token transactions are made exclusively in cryptocurrencies, Ethereum in particular.
Also, remember that the choice of platform is crucial. Choosing a platform or platforms that can lower the cost of minting and mining is only sensible.
Then, other elements are also to be taken into account if you want to succeed in the creation of NFT. These include market size (determined by the number of users of a Blockchain), secondary markets for trading NFTs, additional services, and mining fees . Blockchain’s carbon footprint should also not be ignored.
How to create an NFT for free?
Anyone can create NFT as long as all the necessary tools are in place. However, it should be remembered that in order to be able to sell it, you have to pay a fee.
In general, creating NFTs only takes a few minutes and it does so in a more or less similar way for most platforms . And since OpenSea is at the top of our ranking, we will take it as an example of a platform to create NFT for free.
The creation of the token
Once the collection is created, you can add whatever items you want to hit to it. To do this, click on “Add a new item” before signing the action on your Metamask. Then add the file you want to link to the NFT.
Many formats are acceptable: jpg, png, Gif, svg, mp3, mp4, webm, wav, ogg, glb, gltf. The token must have a name and the size of the file to be linked must not exceed 100MB .
Other features for your NFT
You can also add other characteristics to the newly created token. For example, a blocked content is only admissible by the owner, therefore the buyer of the token.
Finally, we must remember that you must define the number of copies you want for the token. Before you sell the NFT thus created, it must undergo a pre- verification where its authenticity is verified . If all goes well, you can sell it with peace of mind.
How to verify the authenticity of an NFT?
The term non-fungible determines the uniqueness of an object. And the main distinction between an NFT and a cryptocurrency is that each NFT has its own unique value. A creator can create two different NFTs for the same artwork. The value of the two coins may vary.
This authenticity can be guaranteed, as each token has verifiable metadata and a transaction log. These can help prove ownership registration . And the blockchain ensures the security of these tokens, keeping every piece of data safe and nearly impossible to replicate.
The fastest and easiest way to verify the authenticity of an NFT is to examine its metadata using a blockchain explorer, such as Etherscan.io. You then either have to find the asset on the blockchain or ask for the wallet address of whoever is transmitting the asset to make sure it exists and is in their possession. To do this, here is how to proceed:
- Check NFT metadata on blockchain explorer.
- Determine the location of the NFT hash. This indicates where the NFT is stored on the blockchain.
- In the blockchain explorer, you must enter the hash of the NFT. The NFT metadata will then be displayed. Moreover, this data makes it possible to identify whether an NFT is authentic.
How to avoid NFT scams?
New scams are always taking the NFT scene by storm, which is why one should not embark on this adventure without help. The best way to avoid existing and new scams is to stay informed . For this, it is absolutely necessary to find other NFT enthusiasts.
Before purchasing an NFT from a marketplace, research should be done to ensure that the purchased works are from a verified account.
Also, check the history and portfolio of any interesting project. This is where blockchain transparency comes in handy. On the NFT exchanges, one must look at the number of transactions and buyers for the NFT collection with EtherScan.
It should also be noted that in order to buy NFTs, one must register with a wallet that transacts on the Ethereum blockchain. As in the case of Metamask, its users have recently been the target of a phishing scam. The latter involves bogus advertisements that request users’ wallet private keys or 12-word passphrases. To this end, you should never enter information into the pop-up window.
Also, for any cryptocurrency transaction, one should always go directly to the verified website. You should never use links, pop-up windows or your email to enter your information.
What is the point of buying NFTs?
The interest in buying NFTs is simply based on the technology with which they are designed. On the one hand, artists create limited editions for their works of art. For their part, consumers seem rather attracted to limited edition items.
However, anything that is rare has more value according to the law of scarcity. Especially when the object is designed in a single copy. It goes without saying that its price is considerably high.
There are, in addition, these various objects and articles sold in the form of non-fungible tokens. Many are willing to spend a fortune to get them exclusively. This is the case of the very first tweet from Jack Dorsey, its founder. Indeed, “just setting up my twttr”, was sold for more than three million dollars.
Finally, art fans are willing to offer a fortune for a rare or even exclusive work of historical and monetary value. Works of art have long been sidelined, artists only win with auctions. Today, the market promises to be more than flourishing and transactions easier than ever.
The value of an NFT
In a way, many NFTs are just a digital image. A simple right mouse click saves to your computer. Otherwise, they can be anything digital: drawing, music, AI brain, etc. Even if these reside on an Ethereum blockchain , it is possible to copy a tiny part of them. However, the platform entry transparently tells you who created the NFT and who owns it.
This is how an NFT takes on its full value. If you are an NBA fan, it is possible to acquire an official NFT representing your favorite player. In this regard, some NFTs can be considered more valuable than others, all depending on who owns them.
Here is an example to illustrate our point: for a gamer, it is possible to buy an NFT linked to an online game. The latter can be the subject of a particular and unique prestige in the game. Only the holder of the NFT will be able to acquire. If we stay in this area, the value of this NFT can quickly climb. Sometimes it can be difficult or even impossible to obtain such an item. Moreover, this type of cryptocurrency, no one can take it from you, not even the owners of the game.
The same is true in other areas. Being a nascent and growing space, a lot of hysteria around the subject appears. Transactions worth several million euros have already been carried out. Sometimes, some NFTs sell for a huge sum. Or else buy at a derisory cost, then resell with an exponential profit.
To this end, we would also like to point out that the market is subject to a lot of scams. For example, a cryptocurrency whale might buy a lot of NFTs to sell to their own account, another Ethereum address. This action artificially inflates NFT prices. In this case, just because an NFT has been exchanged for a lot of money does not necessarily mean that it requires a large sum to acquire it.
How do NFTs increase in value?
NFTs have become popular due to the skyrocketing valuations they have recently updated. Beeple sold an NFT for $69 million at Christie’s while Twitter founder Jack Dorsey sold his very first tweet for 1,630.58 Ether. This sum was equivalent to approximately $2.9 million at the time of the sale. These staggering numbers lead one to wonder how these NFTs are valued.
Like any other work of art, the NFT is evaluated according to the notoriety of the artist in the physical world, the nature of the work of art. The effort put into creating the artwork, the story behind the artwork, and the social currency of the artist are all considered.
For artwork NFTs that also have a physical presence, their price ranges from 1-10% of the physical artwork . However, it is the creators of the NFT who mainly decide the price. According to the expert, there are no rules to determine the value, but a few factors define the cost of an NFT. The first factor concerns the rarity, that is to say the “hard to obtain” character of an NFT. Like any other work of art, the NFT is evaluated according to the notoriety of the artist in the physical world, the nature of the work of art. The effort put into creating the artwork, the story behind the artwork, and the social currency of the artist are all considered.
Second, the usefulness of an NFT, which derives from its actual application, in the physical or digital world. This characteristic of NFTs gives them immediate value, which accumulates over time depending on the popularity of the underlying project. Also, some NFTs are tied to real-world objects , giving them tangibility value backed by the property’s immutability.
Investing in NFTs: a good or bad choice?
If the idea of buying an NFT because you like it is one thing, investing in it is another. Once again, we would like to remind you that the domain is still very recent. And like bitcoins, the price of cryptocurrency takes into account several other parameters that affect the economy. Like a work of art, some time had to pass before it could be recognized as such.
It is therefore difficult to say whether or not investing in one or more non-fungible tokens represents a good or bad choice. Otherwise, if you plan to invest in NFTs, you will have to immerse yourself in a complex world, where each NFT market differs according to the transactions. In addition, these can be expensive, due to recent network congestion. Be aware that it is quite possible to find people who would pay hundreds of thousands of euros for this type of “trading card”. This is what makes NFTs so messy on the one hand, and interesting on the other.
What is the difference between NFTs and cryptocurrencies?
Both NFTs and crypto are built on the blockchain, using the same technology and principles. Therefore, they tend to attract the same players. NFTs can be considered a subset of crypto culture. Also, it usually takes a cryptocurrency to buy and sell NFTs .
But the main difference is in their name. Cryptocurrency presents itself as a currency. Like any other currency, it has only economic value and is fungible. This means that, for the same cryptocurrency, the cryptographic token owned does not matter much. But NFTs are not fungible and have value that goes far beyond economics.
Initially, the advantage of NFTs was to enable true ownership of digital assets that mirrors that of the “real world” . But they can do so much more. NFTs allow creators to continue to receive royalties when their works are resold, which is not possible with a physical painting, for example. NFTs are committed to removing intermediaries from digital publishing. They offer artists of all types the opportunity to sell directly to their admirers.
Samuel Edwards is the name you must have heard many times while reading reports related to Finance, that’s what he is good at. From Major Investments to Stock Market Updates, he got ’em all. Be ready to blow your mind by the mind-blowing reports of Finance World from Samuel Edwards.