The admiration and the extensive popularity of non-fungible tokens (NFTs) have gained substantial momentum recently. It has put the world of digital art and collectibles by storm.
You have probably heard of Mike Winkelmann, a.k.a. Beeble, an American digital artist who sold his NFT piece (a collage of digital images) and made USD 69 million at an auction. And there is similar news of an artwork sold at Christie’s auction house (the first example of an NFT artwork) for USD 131,250. All of it shows what NFTs (non-fungible tokens) can do to our lives.
And if you are searching for ways to create an NFT and begin trading?
You’re at the right spot.
But NFTs are much more than just digital artwork and stories of people who made millions and billions out of this new trade.
This blog will briefly discuss the NFTs and how they work – from the basics to the advanced and from creating an NFT to selling it. It will also help you get a clear idea of this booming industry growing on the internet.
Let’s dive in by answering the most critical question –
What is an NFT, or what do you understand by an NFT?
First, NFT stands for Non-Fungible Token. Here, non-fungible refers to some entity that cannot be exchanged or interchanged. And by its definition, an NFT is an authentication certificate or a digital asset (or non-interchangeable data stored on a blockchain) representing the objects in the real world. And by “Token,” we mean the interchangeable item. These items are the ones that you can trade online, such as art, cars, music, collectibles, videos, in-game items, GIFs, etc., provided all such things are unique.
For example, years of the old tweet can be an NFT, too, like Jack Dorsey (the former CEO of Twitter) used his tweet as an NFT and made millions of US dollars.
Now, if you carefully read the above paragraph, you’ll find that an NFT is a digital asset stored on the blockchain. And for your information, not any blockchain, but Ethereum, because it provides utmost security to your NFT.
But why the blockchain and not any other means of technology?
For the same reasons – provide a secure ledger for its trade and preserve its uniqueness. And blockchain is the only technology that can do it safely, making it easy for anyone to buy and sell NFTs.
Remember, each token’s value may increase or decrease since it depends on the growth of the NFT market.
Again, making it easy for you to understand, a simple example of a non-fungible item can be a picture of a signed dollar (using unique color ink for the signature).
Furthermore, there are a few defining features of an NFT that you can follow:
- No probability of making its copy.
- No other token can replace it.
- No two individuals can own the same NFT.
- It has a unique code, differentiating it from every other digital replica.
- It’s an authentication certificate that gives you its ultimate ownership.
- It can help people verify the right of a digital asset.
How does an NFT work in the real world?
It’s a digital era, and an NFT’s purpose is simple – maintaining all digital assets’ uniqueness and authenticity through rightful ownership.
To understand better, consider an example –
Suppose you have a $1000 bill. You know you can swap it for two equal denominations, say $500 bills, or exchange it for something, say for your friend’s $1000 bill. It prompts you that currency notes or bills are a fungible asset since they are interchangeable. On the other hand, non-fungible assets are the ones that you can smoothly exchange.
For instance, when you create an NFT, it will be unique. Unlike cryptocurrencies, no one can replace them with another token.
Hence, NFTs are like cryptocurrencies?
No!, not exactly!
Because, in experts’ views, NFTs are those digital assets that are transferable and secured by a digital ledger based on blockchain technology called Ethereum or any other Crypto per se.
And Cryptocurrencies are most secure and highly protected by blockchain technology.
Remember, Cryptocurrencies are fungible assets.
Wondering about what blockchain is?
Blockchain is a digital ledger or a system that tracks digital information using ultimate security. Neither you nor anyone can hack, change or cheat on such a system that stores all transactional details of your digital assets such as Cryptos, NFTs, etc., within a well-established network of thousands of computers connected worldwide.
NFTs are based on blockchain technology to verify the authenticity and ownership of each digital asset. And blockchain makes it easy to have the right to ownership of an NFT, fixed in a blockchain and making it highly secure, so nobody can even think of interfering.
Moreover, it allows you to manage the ownership of your NFTs using a unique ID that only exists for your asset. So, whenever one creates an NFT, the relevant details get stored in the blockchain.
Developing or creating a new block (a block is a location where data is stored and encrypted).
Now, let’s get back to NFT business. Based on the concept of blockchain,
There are two basic steps to create an NFT –
- Authorizing or validating information, and
- Pushing or recording info into the blockchain.
A few examples of NFTs or things that can be NFTs –
- Digital art
- In-game avatars
- Computer Games
- Event tickets
- Domain names
- Signatures (digital or otherwise)
- Legal documents
- Music, or any kind of unique item in its digital form.
As mentioned earlier, each NFT is unique and comes with a set of unique properties –
- Having a Unique Identifier (or UID) linked to a blockchain address.
- Verifiable ownership or authenticity.
- Trade occurs only via blockchain-based NFT market.
Note: You can trade NFTs only via a blockchain-based NFT market because blockchain (a decentralized database or unchangeable digital ledger) provides speedy and secure transactions.
Why Are NFTs Even Relevant?
NFTs relevancy comes from the fact that they allow you to tokenize digital assets – from artwork to real estate, i.e., make money out of anything that can be transformed into an NFT and start trading to make a ton of money just like that! However, it’s difficult as being said. And in this world, there is a saying; things move quickly in the crypto-world.
At present, most digital assets stand a chance to get copied or replicated. As a result, organizations using NFTs are expanding their base to create unique digital assets with authentic ownership. Meaning no two NFTs will be the same, bringing tremendous opportunities for every kind of business or niche.
For example, in-app music streaming services like Spotify, Apple Music, or Amazon Music could make playlists of famous artists and sell them to their fans.
Today, the ultimate challenge concerning NFTs is to have authentic ownership of a digital asset. And once it gets resolved, you can easily prove your ownership over a digital asset. It will also eliminate the copy/paste problem.
You can use NFTs to –
- Boost earnings of digital content creators and artists all over the globe.
- Have digital assets and start trading to get a handful of experience.
- Enhance gaming experience on desktops and mobile phones using in-game avatars or assets.
- Improvise your brand’s awareness among target groups.
Prediction; there is a possibility that banks may allow NFTs as collateral for disbursing loans!
How to Create & Sell an NFT?
Let’s get to know what minting is in NFT’s terminology before jumping into creating one.
Minting an NFT refers to turning a digital file or asset into an NFT (i.e., making a digital file unique using available means and tools) on the Ethereum or similar blockchain. This NFT is stored on a decentralized database, making it possible to edit, modify, or delete. Yes! You can do it.
Now, back to creating an NFT. Creating and selling an NFT isn’t a piece of cake. And it’s not “just selling your favorite pet’s photo as an NFT,” be very clear about it. There are many YouTube videos to know the same, but all it boils down to – how to do it?
So, let’s better understand an NFT and know how to spin your head around it.
If you observe technically, there seem many ways to trade any digital file as an NFT. And similar to the other things in the market, there must be some facilitators/regulators to run trading and the whole NFT marketplace smoothly. Right? And also, if you have thought about selling your NFT using a marketplace like “OpenSea,” you will encounter limitations to the file formats they support.
As mentioned before, people mostly use Ethereum to trade NFTs in the online space, so when you create an NFT and want to sell it for an increased price, you will need to use Ethereum like service while paying a gas (transaction) fee. This fee can vary depending on your needs. Whatever you do with the blockchain – from minting to trading NFTs – will cost you a gas fee!
Remember, just paying a gas fee doesn’t entitle you that transfer will occur. And you won’t get back your gas fee even if your transfer fails. But, in most cases, it will. So, worry little!
Finally, let’s discuss the step-by-step process to list your NFT on an online marketplace:
Step-1: Perform thorough research and select an NFT marketplace –
Thorough research would give you a better understanding of available marketplaces online and allow you to find a valid one to sell your NFT. However, there are only a few marketplaces that use different blockchains. So it won’t take much of your time.
List of Top NFT marketplaces and the type of blockchain they use –
- OpenSea – Ethereum blockchain
- Rarible – Flow blockchain
- AtomicHub Wax blockchain
Note: Rarible and OpenSea use the “lazy minting” system, i.e., creating NFTs on such marketplaces without even losing your penny!
But wait! What is lazy minting anyway?
It is a way to create an NFT and put it on the online marketplace for its sale instead of writing it on a blockchain. It saves gas fees! That’s cool! Right?
And now, out of curiosity, you may have a question – how much do these platforms charge?
Well! Here’s the deal –
You only need to pay the gas fee charged with the transfer charges when one buys your NFT. That is, pay the gas fee only when you close a deal! Once that’s done, your NFT gets written on the desired blockchain.
However, be aware of the initial charges from OpenSea for novice users. And when you have listed your first ever NFT on OpenSea, you will be charged USD 200-USD 400 for initializing your account. It is a one-time fee, so you need not worry!
Step-2: Setting up a wallet for crypto
A crypto wallet is like a bank account that helps you store your NFTs and crypto assets that you create or buy. Besides holding your private keys, a crypto wallet keeps your crypto assets safe and accessible. Such wallets can be both physical and digital.
For example, Coinbase – is a digital wallet with a ledger that looks like a USB stick.
Now, you might think – How does a crypto wallet work?
Simple. Foremost, a crypto wallet never stores your crypto assets written on a blockchain. What it does .” eep your private keys [say, passwords] to help you access your crypto assets. It’s like the working principle of bitcoins, NFTs, etc. Such private keys in your digital wallet authenticate your ownership of a crypto asset.
Again, remember – your digital wallet must be compatible with the blockchain you are using.
For example, you won’t be allowed to use an Ethereum-based wallet to buy a Wax blockchain-based NFT.
Here are some most popular crypto wallets:
- MetaMask, and
- Coinbase Wallet, etc.
Step-3: Connecting the crypto wallet to a marketplace –
Once you are over with the second step, it’s time to connect your crypto wallet to the desired marketplace.
For instance, if you’re selling or would want to sell your NFT on OpenSea, kindly visit their website and click “create.” It will redirect you to a new tab containing a list of all popular crypto wallets compatible with OpenSea. Once you have figured it all out, choose the crypto wallet you wish to connect with your OpenSea account. And that’s it! Your crypto wallet gets plugged into the OpenSea marketplace for NFT trading.
Step-4: Creating your NFT –
Finally, let’s get to the core part – creating your NFT. If done cleverly, it can change your life overnight, just like Beeble and other NFT traders. Although, the odds might not always favor you!
So, to create an NFT on OpenSea, you can follow the following steps –
- Open any web browser and search for the website; OpenSea.
- Then, go to → “My Collections” mentioned in the top right corner of your profile → Click on “Create a Collection.”
- Now, fill in all the required details and upload the file you want to sell as an NFT. Here, you can select the file format, name your file, mention external links to your social media, and add a description, if you may!
- Next, pick the blockchain you wish to mint your NFT. Here you can select either Ethereum or Polygon or any other blockchains.
- So, before moving any further, cross-check the information concerning your NFT since, after this step, you will not be allowed to edit it. Because once it’s written on the blockchain, there is no going back!
- Finally, click on the button “Create,” and voilà! Your NFT is now ready for trading.
Step-5: Taking on to decide pricing strategy –
Once you have created your first ever NFT for trade, then comes the next part, where you need to decide the price of your NFT so that you can sell it.
There are three basic strategies to set a price tag for your NFT:
- Fixing the Price: Here, you give a fixed price for your NFT and put it out there for its sale.
- Timed Auction: You can put up your NFT for auction. And the best part is – that you’re allowed to decide the duration of your auction.
- Bidding: Once you put up your NFT in the online marketplace, it will be open for people to start bidding on your NFT to buy it. In this option, you get to choose whether to accept the offer or reject it.
Once you have decided on the price tag, select the suitable currency to receive for your NFT.
Post that, you can release the content to the buyer. The content could be anything – from a “Thank You Note” to an “Invitation” to your private Discord channel if both parties agree to further the deal!
Step-6: Minting your NFT –
You know what minting is – turning your idea (digital art, etc.) into a digital asset called an NFT so that you can associate a price tag to it and sell it. And for this, initiate a digital wallet – Ethereum wallet and do a transaction. You can do it all using “OpenSea,” it will charge a gas fee to initialize your account. So if you’re a novice user, you will need to pay for minting your NFT, else no need!
Step-7: Listing your NFT –
Once you’ve finished working on your pricing strategy for your NFT, then go ahead and list your NFT for sale on OpenSea by clicking the button “Complete Listing.”
Note: You can only list your NFT after signing a few transactions using your crypto wallet. Once it’s over, you will see a screen announcing your NFT is now listed for sale.
Cost to list your NFT on OpenSea
In experts’ views all around the globe, listing an NFT on OpenSea can cost you USD 200 – USD 450 if you’re a first-timer. It may seem high since this includes the gas fee you pay to record your NFT on a blockchain. This fee may vary from time to time, and you can check it out using a few popular gas fee trackers to get the info for the live gas fee on different marketplaces.
Let’s ask a simple question – are NFTs worth the all hype or just another fad? Maybe or maybe not! That’s because, on the one hand, quite a significant number of NFT traders are making billions of dollars, and on the other hand, it’s tough to make the first NFT and sell it for even a thousand bucks.
No doubt, with many creators and businesses joining the bandwagon and cashing in on such digital assets, NFT is here to stay.
Along with that, the NFTs’ sales are skyrocketing. Sales are up from around USD 41 million in 2018 to a jaw-dropping USD 44 billion and more in 2021. As an entrepreneur, it would be best to invest in NFTs as a creator or a service provider in this industry.
And if you have a fantastic idea that you would like to implement and make a fortune out of it, our team at Quokka Labs would be happy to assist you in making your vision a reality. Contact us and get your Free Consultation Now!