In this article, we have prepared an NFT guide for you. You may have seen the term NFT in the headlines lately. Often you come across news about some large amount of money, such as a piece of art recently sold for $ 69.3 million adorning headlines.
BUT you’re probably wondering what exactly these booming NFTs are all about. If you’re not sure what an NFT – or an immutable token – is or exactly how it works, we’re here to help.
This guide explains everything you need to know about NFTs, including what they are, how they work, why they cause some controversy, and how to get involved.
What is NFT?
NFT is, in essence, a collectible digital asset that holds value as a cryptocurrency. Just as art is viewed as a value-holding investment, so are NFTs now. But how?
First, let’s explain the term. NFT stands for non-exchangeable token, non-replaceable token and non-exchangeable token. So it’s a digital token that is a kind of cryptocurrency like Bitcoin or Ethereum. But unlike a standard cryptocurrency on the Bitcoin blockchain, an NFT is unique. Therefore it cannot be changed.
So what makes an NFT more special than an ordinary cryptocurrency? The file stores extra information, which puts it above pure currency and makes it, well, paramount.
NFT types are very diverse, but they can take the form of a digital art piece or a music file – anything unique that can be stored digitally and considered to be of value can be NFT. Essentially, they look like any physical collector, but instead of getting an oil painting on canvas to hang on your wall, you get a JPG file, for example.
How Do NFTs Work?
NFTs are part of the Ethereum blockchain, so they are separate tokens that contain extra information stored within them. This extra information is the essential part that allows them to import art, music, video (etc) formats in the form of JPGs, MP3s, videos, GIFs, and more. Because they hold value, they can be bought and sold just like any other type of art – and just like physical art, value is largely determined by market and demand.
That doesn’t mean there is only a digital version of an NFT art available on the market, though. Like art prints of an original being made, used, bought, and sold, copies of an NFT are still valid parts of the blockchain – but they do not hold the same value as the original.
And don’t think you hacked the system by right-clicking the image of an NFT and saving it. This will not make you a millionaire because the file you download does not hold the information that makes it part of the Ethereum blockchain.
Where Can I Buy NFT Tokens?
NFTs can be purchased on a variety of platforms, and which one you choose will depend on what you want to buy (for example, if you want to buy baseball cards, you go to a site like the best digital trading cards). You will need a wallet specific to the platform you purchased, and you will need to fill this wallet with cryptocurrency. Sale of Beeple’s Everydays – as evidenced by the first 5000 days in Christies (above), some pieces are also starting to be made to more common auction houses, so these are also worth watching. If you missed it, this Beeple piece cost $ 69.3 million.
Due to the high demand of many NFT types, these are often released as ‘drops’. This means avid buyers run wild as the downfall begins, so you’ll need to sign up and pre-fill your wallet.
Here is the list of sites that sell NFT:
- Nifty Gateway
- Axie Marketplace
- NFT ShowRoom
NFTs are also making waves in different video games as in-game purchases. These assets can be bought and sold by players and include playable assets such as unique swords, skins, or avatars.
NFTs are also making waves in different video games as in-game purchases (to the taste of parents everywhere). These assets can be bought and sold by players and include playable assets such as unique swords, skins, or avatars.
Who Uses NFTs?
NFTs are definitely having a moment with the creators of NFT art, including artists, actors and brands from the cultural spectrum. In fact, it seems like every day brings a new player to the NFT market.
Stepping into the NFT space for artists adds another space and format for creating and sharing art, and offers fans another way to support their work. With pieces ranging from small, quick-made GIFs (Rainbow Cat above, sold for $ 690,000 by NyanCat) to more ambitious works, artists can offer the public a range of ways to buy art and make money in the process.
We’ve talked a little bit about those who are incorporating NFTs into video games, something that rocks the concept of purchasing in-game assets. Until now, all digital assets purchased within a game still belonged to the game company. Players were purchasing them temporarily, just to use them while playing the game. However, NFTs mean that the ownership of the assets passes to the real buyer; This means that these assets can be purchased on the game platform and sold with extra value applied depending on who owns them along the way. In fact, games based entirely on NFTs are beginning to be made, which proves how they are shaking the industry.
Well-known artists were expected to receive large sums of money for their work. This was something to be trusted when an anonymous group of ‘art enthusiasts’ recently burned an original Banksy to turn it into NFT. But other sales are more surprising. For example, it was Beeple’s first entry into the NFT market and although he was recognized as a digital artist, this auction was not expected to yield the third highest price ever paid for a living artist.
NFTs have been an attractive revenue stream for brands, as demonstrated by all the brands that have jumped on the bandwagon lately. Taco Bell sold taco-themed GIFs and images (see above) in a single market, and 25 items sold out in just 30 minutes. This was a serious development. Each NFT initially had a $ 500 gift card for its original owner to spend, which could explain its popularity. However, these TacoCards are currently sold in the secondary market, with the most expensive card being sold for $ 3,500. And to be clear, this does not include a gift card.
There is NBA Top Shot in the NBA. A way to sell digital collectibles in the form of business cards embedded with iconic moments in the game. With a plan to add virtual gems, accessories and clothing that can be used on social media, the NBA is looking for ways to expand this revenue stream as much as possible.
Even tweets are valuable as Twitter co-founder Jack Dorsey sold the first tweet for $ 2,915,835.47.
Musicians also sell the rights and originals of their work and short videos for clips of their music, and you can even buy 3D assets such as digital real estate and furniture.
In fact, a ‘digital home’ was recently sold for $ 500,000. The ‘House of Mars’ (see above), designed by Toronto artist Krista Kim, has been described by the digital art market SuperRare as ‘the world’s first digital home’. Created with the help of an architect and video game software, the owner will be able to explore the mansion on Mars using virtual reality, including sunbathing outside (in the Martian atmosphere).
Why Should NFTs Be Controversial?
There is a lot of money to be made in the NFT market. However, you may also have heard that there is some controversy surrounding NFTs, particularly regarding their impact on climate.
NFTs use enormous amounts of energy in their creation. So much so that many protesters worry about the real impact of madness on the environment. According to CryptoArt.wtf, a site set up to calculate the carbon footprint of NFTs (currently offline), a piece called ‘Coronavirus’, consumed an incredible 192 kWh in its creation. This is equivalent to the total energy consumption of a person residing in the European Union for two weeks. But this must be a particularly big piece, you ask? No, a ‘simple’ GIF can equal the same consumption.
Artists can help by striving to create carbon-neutral artwork (Beeple has promised to do this forward, as the tweet above explains). But because of the way cryptocurrency systems are built, the problem goes deeper than that.
Ethereum, Bitcoin, and the like are built on a proof of work system (like a complex puzzle series) to keep their users’ financial records safe, and this system uses an incredible amount of energy. In fact, Ethereum alone uses the same amount of energy as the entire Libyan country.
ArtStation was so concerned about the impact on the climate that it recently stepped back into its decision to sell NFTs after a huge backlash. However, this may not be controversial forever as there are organizations trying to make a difference.
Can Anyone Do an NFT?
You have learned so many details. So now you may be wondering: can anyone do NFT? Well, when someone draws this Gucci Ghost (above), we can assume that they managed to sell it for $ 3,600.
Technically yes, anyone can sell an NFT. Anyone can create jobs, turn it into an NFT on the blockchain (in a process called ‘mint’) and put it up for sale in a market of their choice. You can even add a commission to the file, which pays you every time someone buys a part, including resale. As with buying NFT, you need to set up a wallet and be filled with cryptocurrencies. And this cash requirement is where the complications lie.
Hidden fees can be prohibitively astronomical, with a ‘gas’ fee for each sale (the price of the energy required to complete the transaction), as well as the selling and buying fee. You also need to factor in conversion fees and price fluctuations depending on the time of day. All this means that the fees can often be much higher than the price you get when selling NFT. However, different rates are added to different sites, and some may be more attractive than others. Therefore it is worth doing your research.
Whether NFTs stay here or not, they’ve definitely become a new toy for the uber-rich, and if you can make it through, there is real money to be made. NFTs add new meaning to digital art and the prices seen on sale show that it is a true part of the future of art and collection in general.
Would you like to start creating now? You will need one of the most powerful laptops available, and even one of these best drawing tablets.
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