We hear about them more and more these days, yet there are not many people who can actually tell you what NFTs actually are. Most of the language surrounding them is all about how they represent a new frontier in online trading.
If you are also a little confused about what exactly NFTs represent or if you are curious how exactly people (or even yourself) can create and sell them, we have created a small but comprehensive list of answers to the questions you might have.
To begin with:
What Is An NFT?
NFT stands for Non Fungible Token, but to get to the root of it first, we have to start with the very concept of what a token is – a word that refers to digital information, recorded on a blockchain. It associated a specific right to a subject, ownership of an asset or access to a specific service.
One of the best examples for this are bitcoins: fungible tokens used as cryptocurrencies.
While it is possible to exchange a certain bitcoin for another bitcoin and maintain the same value for the exchange, NFTs are one of a kind and cannot be replaced.
That being said, what distinguishes non-fungible tokens from other tokens, as can be seen from the term, is precisely their lack of fungibility: as NFTs represent something unique, they are not interchangeable.
In short, NFTs are unique digital items that can be bought or sold for prices as small as pennies all the way to thousands of dollars, or more.
How Do NFTs Work?
Any digital object can become an NFT. First, it must be coined, which is the equivalent of a coin being minted in the physical world. This means that the assent needs to be inserted within a blockchain in the form of a non-fungible token.
When we say that any digital object can become one, we mean it: it can be digital artwork and music and it can also be memes and even tweets.
However, it’s worth keeping in mind that, since the NFTs are, after all, digital in nature, they can be duplicated without too much hassle. This means that ownership of the original file is often impossible to determine.
How Do You Create An NFT?
Since this content can be purchased via blockchain, you will first need a crypto wallet to be able to access the trading platforms and manage any currency you might make from selling your work.
There’s a few of these available and they are pretty straightforward to use.
After that, you have to figure out what platform to use. Some require taxes for the energy costs incurred by the blockchain, which means that one NFT can cost a few hundred of dollars to be minted.
There are, however, platforms that do this at zero cost, so do your research before diving in headfirst.
The range of multimedia content in which these NFTs can be minted is pretty wide and there are several methods you can use.
As far as images and photos go, you can create a photo montage, illustrations and overall just regular digital artwork, GIFs, pixel art and everything else you can think of.
You will have to create a profile once you register and you will be able to upload your NFT in a number of different formats ranging from the regular old JPG and PNG, MP3 and WAV all the way to 3D model files exported to GLB and GLTF.
Some platforms will limit the size of your file however, so that’s another thing to keep in mind.
After you upload your NFT, you might have options to add some extra features to it, such as exclusive content that the buyer might be able to access once they purchased your NFT.
You can then go public with your NFT and set a price. If you don’t know how much to value your item for, the best idea would be to do a little browsing and find items that are similar in nature to yours and see how much, on average, they are quoted at.
Word of Warning
Keep in mind that NFTs represent a decentralized market, subject to very loose rules and regulations. This means that, often enough, it’s not possible to guarantee that the creator of an NFT is the work’s actual author/owner.
The theft of digital works is, unfortunately, quite prevalent in the NFT world.
Can You Get Free NFTs?
In short, the answer is yes: there are some websites that offer them for free but of course, this is limited.
You can also sign up for an NFT-based PC game where NFTs are given as rewards to players.
Some companies even hand them out via giveaways on Twitter, so check with your favorite gaming/animation/etc. Company’s socials to see if anything is available.
What About Environmental Impact?
One of the most discussed issues surrounding NFTs is the impact creating them has on our environment. You might be wondering how a digital creation have anything to do with climate change and the easiest way to explain it is that the process by which NFTs are added to the blockchain and the related business transactions involve large energy consumption.
According to a survey, the carbon footprint of a single NFT present on the SuperRare marketplace (based on the Ethereum blockchain) would be equivalent, in terms of CO2 emissions, to the electricity consumption of a month of an EU citizen or a two-hour flight.
Financial Opportunities of NFTs
With all the pros and cons mentioned above, NFTs are becoming very prevalent in the digital landscape and it is true that they do have investment potential for both collectors as well enthusiasts from different sectors such as music and art.
Based on everything discussed in this article, if you’re looking to invest in, or create NFTs, you have to think well and hard and limit the risks to your investment.
Best way to do this is to do a lot of research on whatever it is you want to trade. We hope this article was able to give you a basic starting point on NFTs and that you now have a better understanding on what they are, how they work and how you can move ahead with maybe even creating your own.