Non-Fungible Tokens (NFTs) can be anything digital made distinctive by proof of ownership, but the current excitement is around using blockchain technology to sell digital art.
Each NFT is distinctive, although part of the identical Ethereum blockchain, with extra information. That additional information is the critical part that holds value, and for that value, it can be bought and sold just like other types of art. As with physical art, the value is set mainly by the market and by demand.
NFTs are designed to give you something that can’t be copied: ownership of the work (though the artist can still retain the copyright and reproduction rights, just like physical artwork). To put it in terms of physical art collecting: anyone can buy a Mona Lisa print. But only one person can own the original.
Over the years, artists and creators only relied on advertising agencies to get in the limelight. The downside here was these creators didn’t get their work’s actual value. Fast forward today, NFTs are changing this narrative by stimulating the growth of the creator economy.
What are Non-Fungible Tokens?
Simply put, Non-Fungible Tokens are units of data stored on a digital ledger. This digital ledger is what is referred to as the blockchain. Blockchain technology works via a decentralized system — it certifies that the digital asset is unique and interchangeable.
NFTs have found their way into the art world, including the music, graphics, and movie industry. These digital assets are not restricted and are readily available in NFT marketplaces. NFTs are usually monitored on the blockchain to provide the owner with proof of ownership.
NFTs are different from other known cryptocurrencies that we know. The NFTs are “Non-Fungible,” meaning they can’t be exchanged for one another. Fungibility is required when it comes to trading and is fundamental for currency exchange.
How does one mint an NFT?
Minting refers to the conversion of your digital art into a tamperproof NFT on a blockchain. This NFT remains on the blockchain forever unless you opt to burn it — a process that destroys it permanently.
It is crucial to note several blockchain technologies support most NFTs. This is crucial to minting an NFT.
These technologies include:
- Binance Smart Chain
- Flow by Dapper Labs
As of now, the Ethereum blockchain is the most used for minting NFTs. It is closely followed by the Binance Smart Chain due to its reduced fees.
It is pretty easy to mint an NFT on the Ethereum network. Users need to set up an Ethereum wallet that supports NFTs and get an account on any available NFT marketplaces.
Is NFT token a cryptocurrency?
Although built using the same blockchain technology that powers cryptocurrency, an NFT is NOT a cryptocurrency. Just like physical money, cryptocurrency is “fungible” in nature such that they can be traded for one another and still get an equal value; one BTC is equivalent in value to a similar BTC, although the price will change according to the exchange.
On the contrary, an NFT stands for a non-fungible token. Each token represents a one-of-a-kind digital token with unique properties and cannot be interchanged for its equivalent. For instance, you cannot swap Everydays: the first 5000 days for Rick and Morty because they are both NFTs.
Each NFT file has its unique digital signature, which acts as a digital proof of ownership that makes it challenging to be swapped for one another.
How do NFT tokens work?
As stated earlier, NFTs are hosted on the Ethereum blockchain, although other blockchains also support them. An NFT is a unique token generated and managed by a smart contract, meaning it meets the ERC -721 specifications. NFTs come in the form of digital objects which represent real-world objects; they could be digital artwork, virtual plots, virtual land, in-game items, or a video clip, among other digital things.
These digital goods are tokenized then bought and sold online in NFT marketplaces. They come with exclusive ownership rights –hence they can have only one owner at a time. Besides, NFTs are encrypted with unique data, making it easy to verify ownership and difficult to steal or counterfeit them.
When you create an NFT, you generate a unique code usually stored in smart contracts as per the token. The smart contract then allocates the digital item a unique identifier that incorporates both the contract address and the code.
Ultimately an encryption key pair is created — a public key and a private key to represent ownership. The original creator of the NFT token is the holder of the private key — they also exercise control over the public key.
When sold, the buyer gets the right to transfer the token to their digital wallet as proof that their copy is the original. They are also issued with the private key as proof of ownership of the legitimate file. NFT ownership rights are transferred to the individual who purchases it.
However, its copyrights will remain with the original creator. The public key also remains under the possession of the original artist and serves as a certificate of authenticity for the NFT. The original owner is also guaranteed a share of all the benefits resulting from any future sales of the NFT.
Where can I buy NFT tokens?
Having gone through this article, I know you are now wondering, “where can I buy these NFTs?” To buy, sell or trade NFTs, you must access any of the many NFT marketplaces. That said, you’ll need to get a digital wallet to store your NFTs and cryptocurrencies.
Besides, you have to buy some cryptocurrency, depending on the currencies acceptable by your preferred provider. Once your digital wallets are ready and funded, you can scout for an NFT marketplace online; alternatively, you can use this list as your guide.
Ranked among the largest NFT marketplaces, OpenSea offers a diverse collection of non-fungible tokens. Their selection ranges from; NFT art, digital collectibles, trading cards, and censorship-resistant domain names.
OpenSea allows you to buy, sell, trade, or mint NFTs. It features over 700 different projects by NFT creators. Digital artists can also create their digital art hence processing smart contracts, ensuring living artists get the most out of their hard work.
Nifty is the most popular online auction platform used by renowned digital artists. Nifty has sold NFTs by Beeple, Grimes, and LOGIK, among other famous NFT artists. This platform is centrally focused on digital art, but other exclusive digital collectibles are also available.
Their vision entails teaming up with top-ranked artists and brands to create high-quality NFTs exclusively available on Nifty and nowhere else. A new collectible is usually released on this platform every three weeks, and this trend is bound to continue until they reach a billion people.
Rarible is a simple, user-friendly platform, ideal for experts and newbies. Anyone can mint NFTs on this marketplace — it does not require any knowledge in programming to mint.
This marketplace is community-owned with a particular focus on art assets. The owners hold the ERC-20 RARI token, which is usually awarded to its most active users.
Super Rare allows digital creatives to collect and trade unique, single-edition digital artworks. Like most marketplaces, Super Rare is on the Ethereum blockchain. Each artwork on the platform is a digital collectible secured by cryptography and tracked on the blockchain.
BakerySwap is a decentralized exchange and an automated market maker (AMM) on Binance Smart Chain. It utilizes a multi-functional crypto hub offering a variety of decentralized finance services called BakerySwap.
BakerySwap also hosts a crypto launchpad and a non-fungible token supermarket. The non-fungible token supermarket usually hosts meme competitions, arts, and NFT games.
The Atomic market is a shared liquidity NFT market smart contract, such that anything listed on one platform also reflects on all the other market markets.
AtomicMarket is a shared liquidity NFT market EOSIO smart contract used by multiple websites to provide the users the best possible experience.
Shared liquidity means that everything listed on one market also shows on all other markets blockchain technology for NFTs. Malicious collections are often blacklisted on this platform, making it more reliable.
Other platforms worth a look include Myth Market, Foundation, KnownOrigin, Enjin Marketplace, and Portion.
How many NFT tokens are there?
Although this is still an emerging space, it is becoming increasingly popular. The association of NFTs with art is very prominent and often confusing for most people. For instance, most people think that the terms NFT and NFT art can be used interchangeably. Well, NFT art is only one type of NFTs — there are several types of NFTs.
Types of NFTs
Some of the popular entries in the NFTs list include the following:
- Event tickets
- Legal property documents
- Domain names
This is the most popular NFT. NFT art is the most preferred avenue where most digital artists buy and sell digital art. NFT arts are not unique but limited, creating scarcity and a sense of authenticity resulting in value creation. Beeple’s Everydays: The first 5000 Days is one of the most expensive NFT art ever sold.
Collectibles are valuable items that are often sought after by traditional collectors. NFTs first emerged with the development of cryptokitties, which is a perfect example of a digital collectible. Today, there are other new additions to the non-fungible token list in the digital collectible category.
Event tickets can also be tokenized as NFTs. Event managers, especially those looking to sell tickets for VIP seats, can make good use of this category.
Tokenizing these tickets will allow those attending to authenticate their tickets and identity easily. They will also give the buyers exclusive bragging rights as every seat location is unique.
Legal property documents
Legal property documents are tokenized to help in the identification process of the actual owner. Tokenizing also helps weed out scammers and simply the ownership transfer process.
Game developers have been adopting NFTs to enable players to win digital in-game items such as digital swords, shields, and other collectibles.
Tokenization of gaming items into digital assets has also facilitated the transfer of tokens between players or different games through an NFT specialized blockchain ledger.
How to buy NFTs
Since most NFTs are Ethereum-based tokens, most marketplaces for these collectibles accept only Eth tokens as payment. If you already have an account with a cryptocurrency exchange, you can purchase Ethereum on it and send your crypto to your MetaMask wallet.
To bid on NFTs, you’ll need to open and fund a crypto wallet on an NFT marketplace. A crypto wallet, like a digital wallet on an e-commerce platform, stores cryptocurrencies needed to purchase an NFT. A wallet needs to be funded with the crypto required to buy a targeted NFT. General steps involve the following:
- Buy Cryptocurrency: Join and fund a cryptocurrency marketplace like Coinbase to purchase ETH.
- Get a Cryptocurrency Wallet: Signup for a “Non-custodial” wallet like Metamask, which is where you can store and control your cryptocurrency and digital assets.
- Transfer Your Cryptocurrency: Transfer your ETH coins to your wallet (Metamask or other), which gives you the control to purchase NFTs across the various marketplaces.
- Join the NFT Marketplace, Rarible: Join a marketplace for NFT artwork. You will be asked to sync your digital wallet (Metamask or other) to the site, which will allow you to purchase and then store your digital assets.
What’s the future of NFT Tokens?
Applying the same techniques about utilizing NFTs to provide a framework for thinking, we can see how world-spanning platforms and networks, on-demand services, and artificial intelligence are changing the nature of business, education, government, financial markets, and the economy as a whole.
Utilizing NFTs as tools for understanding how all the parts of modern digital businesses work together to create marketplace advantage and customer value, we begin to understand more how the blockchain must be utilized to the maximum extent. Also, ultimately, NFTs cannot succeed unless their ecosystem succeeds along with them.
The NFT market will likely grow further because most NFTs can be virtually created, inspired by tangible objects. The underlying technology results in a highly efficient way of managing and securing assets in the digital world.
Non-fungible tokens are diverse and operate in an open marketplace. Therefore, we can all create, buy and sell NFTs and earn from this technology.
Are you interested in owning an NFT? There’s an easy way. Read more about fractionalized NFTs.