Non-fungible tokens (NFTs) are a set of blockchain building blocks that allow you to create your own unique collectible crypto asset.
Those have been around as early as 2012 when the concept of Bitcoin Colored Coins first emerged.
These coins were simply satoshis – small fractions of a bitcoin – marked, or “colored in” with distinct information that could link the coins to real-world assets. For the most part, however, Colored Coins were used to create and trade artwork like “Rare Pepe” digital cards on Counterparty, a peer-to-peer trading platform built on top of Bitcoin’s blockchain.
These cartoon frog images adapted from a viral internet meme were some of the earliest examples of unique digital artwork tied to crypto tokens. This paved the way for the ideation and creation of new non-fungible token standards.
Types of NFTs
|1||Digital art||SuperRare, KnownOrigin, Async Art, Rarible, etc.|
|2||Digital music||Mintbase, InfiNFT, etc.|
|3||Virtual real estate||Cryptovoxels, Decentraland, etc.|
|5||Gaming assets||Axie Infinity, Sorare, Gods Unchained, etc.|
|6||Event tickets / Attendance receipts||–|
|8||Block chain domain names||Ethereum Name Service, Unstoppable Domains, etc.|
|9||Tokenized luxury goods, e.g. wine||–|
|10||Tokenized insurance policies||yEarn’s yInsure tokens, etc.|
|11||And any type of real or intangible item||–|
How to create NFTs
Creating your own NFT artwork, whether it be a GIF or an image, is a relatively straightforward process and doesn’t require extensive knowledge of the crypto industry. NFT artwork can also be used to create collectibles like sets of digital cards.
1. Choose your blockchain
Before you start, you will need to decide on which blockchain you want to issue your NFTs. Ethereum is currently the leading blockchain service for NFT issuance. However, there is a range of other blockchains that are becoming increasingly popular, including:
|#||Most popular marketplaces to create NFTs|
|1||Binance Smart Chain|
|2||Flow by Dapper Labs|
Each blockchain has its own separate NFT token standard, compatible wallet services and marketplaces. For instance, if you create NFTs on top of the Binance Smart Chain, you will only be able to sell them on platforms that support Binance Smart Chain assets. This means you wouldn’t be able to sell them on something like VIV3 – a Flow blockchain-based marketplace – or OpenSea which is an Ethereum-based NFT marketplace.
Since Ethereum has the largest NFT ecosystem, here’s what you’ll need to mint your own NFT artwork, music or video on the Ethereum blockchain:
• An Ethereum wallet that supports ERC-721 (the Ethereum-based NFT token standard), such as MetaMask, Trust Wallet or Coinbase Wallet.
• Around $50-$100 in ether (ETH).
If you are using Coinbase’s wallet you can buy ether from the platform with U.S. dollars, British pound sterling and other fiat currencies. Otherwise, you will need to purchase ether from a cryptocurrency exchange.
2. Choose your Ethereum NFT marketplaces
Once you have these, there are a number of NFT-centric platforms that allow you to connect your wallet and upload your chosen image or file that you want to turn into an NFT.
The main Ethereum NFT marketplaces include:
|#||Main Ethereum NFT marketplaces|
These makersplaces also allows you to create your own NFTs but you have to register to become a listed artist on the platform beforehand.
3. Create your own NFTs on OpenSea
Here’s how the process works on OpenSea, currently the largest Ethereum-based NFT marketplace.
3.1 Create your first Collection
Click the “Create” button to create your first “Collection”.
3.1 Connect your Ethereum-based wallet
At this stage it is asked you to connect your Ethereum-based wallet.
Once you’ve entered your wallet password when requested it will automatically connect your wallet with the marketplace. You may have to digitally sign a message in your Ethereum wallet to prove you own the wallet address, but it’s just a case of clicking through to proceed.
Digitally signing a message does not incur a fee, it is just to show that you have ownership over the wallet.
3.2 Create your collection
The next step on OpenSea is to hover over “create” in the top right corner and select “My collections”.
From there, click the blue “create” button as shown below.
OpenSea window: Creating an NFT collection
A window will appear that allows you to: 1) upload your image for your collection, 2) add a name and 3) include a description.
This part is essentially just you creating a folder for your newly created NFTs to go in.
OpenSea window: NFT collection creation.
Your Collection has now been created.
OpenSea window: Your collection is now created.
3.3 Add a banner to your collection
Once you’ve assigned an image for your collection, you will then need to add a banner image to the page by clicking on the pencil icon in the top right corner (red).
Your page should end up looking something like the image below.
OpenSea window: Add a banner image to your NFT collection.
3.4 Create your first NFT
Now, you’re ready to create your first NFT.
Click on the “Add New Item” button (blue) and sign another message using your wallet.
OpenSea window: Upload your NFT.
You will arrive at a new window where you can upload your NFT image, audio, GIF or 3D model.
OpenSea window: Final step to create your NFT.
On OpenSea and many other marketplaces, you also have the option to include special traits and attributes to increase the scarcity and uniqueness of your NFT. Creators even have the opportunity to include unlockable content that can only be viewed by the purchaser. This can be anything from passwords to access certain services to discount codes and contact information.
Once you are finished, click “create” at the bottom and sign another message in your wallet to confirm the creation of the NFT. The artwork should then appear in your collection.
How much does it cost to make NFTs?
While it costs nothing to make NFTs on OpenSea, some platforms charge a fee.
With Ethereum-based platforms, this fee is known as “gas.” Ethereum gas is simply an amount of ether required to perform a certain function on the blockchain – in this instance, it would be adding a new NFT to the marketplace. The cost of gas varies depending on network congestion. The higher the number of people transacting value over the network at a given time, the higher the price of gas fees and vice versa.
Top tip: Ethereum gas fees are significantly cheaper on average during the weekend when fewer people are transacting value over the network. This can help keep costs down if you’re listing multiple NFTs for sale.
How to sell NFTs
To sell your NFTs on a marketplace, you will need to locate them in your collection, click on them and find the “sell” button. Clicking this will take you to a pricing page where you can define the conditions of the sale including whether to run an auction or sell at a fixed price.
Ether and other ERC-20 tokens are the most common cryptocurrencies you can sell your NFTs for, however, some platforms only support the native token of the blockchain they were built upon. VIV3, for example, is a Flow blockchain marketplace and only accepts FLOW tokens.
By clicking on the “edit” button next to the collection image on OpenSea, signing the message using your wallet and scrolling down, you have the option to program in royalties and select which ERC-20 token you’d like to receive for selling the NFT. Royalties allow NFT creators to earn a commission every time the asset is sold to a new person.
This has the potential to create lifelong passive income streams for artists and other content creators automatically thanks to smart contracts.
How to buy NFTs
Before you rush to buy NFTs, there are four things you need to consider first:
• What marketplace do you intend to buy the NFTs from?
• What wallet do you need to download in order to connect with the platform and purchase NFTs?
• Which cryptocurrency do you need to fund the wallet with in order to complete the sale?
• Are the NFTs you want to buy being sold at a specific time, i.e. via a pack or art drop?
As you can probably guess by now, certain NFTs are only available on specific platforms. For example, if you want to purchase NBA Top Shot packs you will need to open an account with NBA Top Shot, create a Dapper wallet and fund it with either the USDC stablecoin or supported fiat currency options. Check the the 10 largest platforms for non-fungible token (NFT) collectibles for more information.
Where to buy NFTs
Is now a good time to get into non-fungible tokens?
The NFT craze is far from being over. Major brands and celebrities have signed deals to release their own non-fungible assets soon.
More artists, brands and icons flock to the space to create their own distinctive tokens. With more blockchains competing to produce better NFT services too and a growing range of platforms to choose from, now is a great time to take part in the space.
Mat is the founder of cashtipsandtricks and has been working in the financial sector in Luxembourg for the past 10 years and brings his insights as an investor and entrepreneur.