Anna KeyWed, Jan 19, 2022 10:10 PM
NFTs Set To Rule The World. NFT Explained Easy for Beginners
Back in March 2021, Beeple (real name Mike Winkelmann), a now-famous artist, sold his landmark NFT – EVERYDAYS: THE FIRST 5000 DAYS – for an astonishing $69.3 million. The digital picture represents 5000 days of everyday work: from 2007 to January 2021. The buyer Vignesh Sundaresan, who goes by the name MetaKovan, explained his decision to purchase a $69m JPEG by acknowledging the new movement of artists - ones who combine art and crypto. MetaKovan says that Beeple might become one of the biggest non-fungible token artists of our generation.
Beeple’s ‘Everydays: The first 5000 days’
NFT: Meaning Explained
No doubt, Beeple made NFTs go mainstream. He set the tone for the NFT marketplace by setting a precedent of a successful multimillion deal involving a collection of NFTs.
So what does NFT stand for?
NFT stands for ‘non-fungible token’. This does not help, however, if you are a beginner and are simply not familiar with economic terms. A fungible product is, first and foremost, a product replaceable by a product of the exact same value, or a mutually interchangeable product.
For example, money is fungible. It is possible to exchange $1 for another $1 or 1 BTC for another 1 BTC. Some products are, however, unique. They have specific unique characteristics that cannot be replaced. This could be your personal computer, a painting, a song, or a digital piece of art, like an NFT. These products are called ‘non-fungible’.
Simply put, each non-fungible token is a unique cryptographic token. NFTs exist on a blockchain, most of them are built on the Ethereum blockchain. It is possible to buy, sell, and trade NFTs. These digital assets can be used in various ways, e.g. to represent real-world items or individuals’ identities.
Since no two NFTs are the same and each one is even given a certificate of authenticity, it creates scarcity and raises their value.
The first-ever tweet published by Twitter CEO Jack Dorsey on 21 March 2006, was sold for $2.9 million as an NFT back in 2021. The tweet saying “just setting up my twittr” is an example of a unique non-replaceable digital asset.
As we have mentioned before, most NFTs are supported by the Ethereum blockchain. Blockchains are used for storing information. The two most popular NFT standards are ERC-721 and ERC-1155. The former represents a single asset, while the latter allows transferring multiple assets using a single token and is often called semi-fungible due to its inability to track transfer history. Currently, the most widely used standard is ERC-721.
NFT: How It Began
What is the first-ever known NFT? Who started NFT art? Where do NFTs come from? Let’s take a quick trip back in time.
2021 was indeed a big year for NFTs. Non-fungible tokens blew up. They became almost impossible to escape. ‘NFT’ even topped the list of the most used words of 2021. Despite getting worldwide recognition last year, NFTs have been around since 2012.
The concept of NFTs was created long before the Ethereum blockchain was introduced. In December 2012, Meni Rosenfeld first mentioned the so-called ‘Colored Coins’ concept – special Bitcoins marked with an ownership stamp. Those Colored Coins would run on the Bitcoin blockchain, but due to some Bitcoin restrictions, the project was never fully realized. However, it set the tone for future non-fungible token developments we have today.
Similar to cryptocurrencies like Bitcoin and Ethereum, NFTs are obtained through mining. Mining creates liquidity for the NFT market, however for some first-timers, mining could seem like a burdensome and confusing process, involving high gas fees and costs. Miners use their computers or special machines to extract valuable information from available data.
There is a lot of controversy surrounding the mining process, as it is extremely damaging to the environment. Since the NFT crypto art craze is pretty new, it is still unclear if non-fungible token miners are significantly worsening the situation (or not?). After all, crypto miners would still be using their big computers, polluting, and paying high gas fees even if NFTs did not exist. As some analysts point out, NFTs are still a small portion of the overall Ethereum transactions history.
2014 – First NFT
The first-ever known NFT is known to be created on 3 May 2014 and the person behind it was Kevin McCoy. “Quantum”, the first-ever minted Non-fungible token, “presents an ongoing, abstract, cycle of birth, death, and rebirth”.
In late November 2021, the digital asset was sold for over $1.4 million.
2016 – The Beginning
This is when things took off for NFTs. More and more people became hooked on NFTs and started coming up with new exciting projects. During the two years, from 2014 to 2016, one of the most prominent and notable developments was Counterparty – “Bitcoin Extension”, which made it possible for users to create their own digital assets. 2016 is also known as the year the “meme age” began. One good example is the still-famous Rare Pepes NFTs, which were released on Counterparty.
However, Bitcoin users were not fond of the idea of filling in their blockchain space with images that represented no real value. Therefore, many started to look for other solutions. And this is when the Ethereum blockchain came into play.
2017-2018 – Ethereum Takes The Lead
When the Ethereum blockchain came into play, users were introduced to an opportunity to create & develop their own tokens. Blockchains that support smart contracts (token standard is an essential part of the smart contract standard) often include instructions for users on how to develop and maintain new tokens. This is when John Watkinson and Matt Hall created Cryptopunks.
10,000 limited collectibles were launched using the old ERC-20 standard, and then later Cryptopunks inspired the development of the current ERC-721 standard. After becoming a huge success the project appeared in many influential auctions, publications, and news outlets around the world. Cryptopunks became the ultimate go-to inspiration for modern crypto art, including the NFT movement.
Today, Cryptopunks NFTs are worth millions of dollars, just for their historical value and scarcity alone. Combine that with the NFT craze in 2021 and you can get the whole picture and understand the reason behind why collectors are willing to pay millions to obtain a non-fungible token like that.
CryptoKitties is another viral project created in 2017-2018 that has heavily influenced today’s NFT world. CryptoKitties is a blockchain-based game where players can adopt, breed and trade virtual cats. The game became such a huge success that it even caused turbulence in the Ethereum blockchain maintenance. Each breedable cat on the platform is unique and cannot be copied. CryptoKitties quickly went viral and proved the power and potential of NFTs.
2018-2020 – NFT Games Rise To Popularity
After several NFT projects went viral and more people started to show interest in NFTs, non-fungible tokens rose to fame. Starting 2018, NFT gaming and metaverse projects have been taking the spotlight. Decentraland was the first-ever Metaverse to enter the market.
Decentraland Metaverse is a virtual reality platform running on the Ethereum blockchain. Here, users trade digital plots, build real estate, create game and art projects, and simply have fun. What distinguishes Decentraland from, let’s say, Minecraft is the fact that everything you create is your own property.
2021 – NFTs Go Mainstream
In 2021 we saw other blockchains (Cardano, Solana, etc.) start getting into the world of NFTs. Now, more than ever, we have seen new standards of unique digital assets. 2021 also marked the year of Facebook’s decision to rename the company to Meta. Since NFTs are a huge part of Metaverses, this triggered the demand as well.
Most Popular NFTs
What are some popular NFT examples you need to know about in 2022? We have already mentioned CryptoPunks, CryptoKitties, and Decentraland – all of these NFT projects have heavily influenced today’s NFT marketplace.
One of the most well-known and talked about NFT collections today - Bored Ape Yacht Club. The Bored Ape Yacht Club is a limited collection of 10,000 street art-inspired algorithmically generated avatar NFTs. Avatars have several attributes (or possible traits) that let us distinguish them from one another: background, clothes, earrings, eyes, fur, hat, mouth.
All Apes are styled differently and have diverse facial expressions. Some Apes are bought by celebrities and big brands, others are used in marketing and advertising or purchased by regular people. The collection is popular among celebrities. A-listers like Eminem, Snoop Dogg, Steve Aoki, Jimmy Fallon have also become part of the BAYC family.
Besides the Bored Ape Yacht Club, it is possible to collect Mutant Ape Yacht Club NFTs – created by “exposing” a Bored Ape to the special mutant serum or by minting one in the public sale.
Cool Cats is another NFT collection of 9,999 unique characters launched in June of last year. Each character is based on a blue cat animation and has special attributes. As of today, the most expensive Cool Cats NFT was auctioned for $3.5 million. Even Mike Tyson is already in on the trend.
The non-fungible tokens list is expanding. There have been many other NFT projects launched recently that have caught the attention of NFT and crypto enthusiasts.
And we believe there are many more to come.
How To Make NFT Art and Sell It
To start an NFT collection, you need to choose an NFT platform where you can auction off your non-fungible token and then set up a digital wallet that stores both NFTs and cryptocurrencies, the latter of which you will use to pay for the fees and/or eventual payment if you manage to sell an NFT. If you wish to know more about how to create an NFT, the first step is to find the most suitable NFT marketplace.
In order to sell your non-fungible token at your desired NFT platform, you will need to purchase some cryptocurrency, such as Ether (abbreviated as ETH), which is the primary fundamental cryptocurrency for Ethereum, the open-source blockchain platform where NFTs were first launched.
Purchasing ETH directly with your preferred digital wallet would be the easiest and fastest method but depending on preference, there are many cryptocurrency exchanges that can be utilized alternatively.
After securing enough ETH inside your digital wallet and connecting it to your preferred non-fungible token platform to your digital wallet, you will then be able to make and receive payments.
It’s important to note, however, that there are many fees to selling NFTs and unlike purchasing other cryptocurrencies quite easily, the value of Ether can fluctuate highly. Initial listing fees may accumulate over time, as each purchase of your NFT can lead to general transaction fees for each transfer of funds, as well as a commission fee on your behalf.
Make money with NFTs
Finance analysts have estimated NFTs in their entirety to have a total market capitalization of 7 billion dollars, with monthly sales of digital tokens being around 2 billion dollars, garnering the attention of even premier prominent auction houses to join the NFT craze. One NFT mentioned above, a digital collage of images, produced as “EVERYDAYS: THE FIRST 5000 DAYS” by US artist Beeple, was the first NFT ever offered at a Christie’s auction.
Despite being the first NFT ever offered at the said auction house, it managed to sell online for 69.3 million dollars- the most expensive NFT sold to this day. Other NFTs that are viewed as rare collectibles instilled on rarity, have been sold for tens of millions of dollars. Similar to cryptocurrencies, they may also be considered as potential investment opportunities, as their value may rise over time.
For the general crypto-enthusiast, however, it is wisely important to remember that making any sufficient monetary yield with NFTs, in general, is brimmed with weak prospects. It’s important to note the myriad of fees that comes with starting an NFT collection.
There are many fees that add up, from initial listing fees to later prospective processing fees that are obligatory to further generate your NFT. Even after making an NFT sale, there is another commission fee and the transaction fee for the money transfer between your wallet and the buyer’s.
Future of NFTs
Similar to cryptocurrencies, NFTs can be regarded as investment opportunities with the potential to grow in value. Not only do they have further potential for upending the art market, as they are becoming increasingly popular in the art and collectible scene, but they also create new ownership opportunities such as in next-generation music or digital land purchases in virtual worlds.
Possibilities regarding the use of NFTs are extensive, with some observers seeing them being used for exclusive access to special sales and/or products, from event tickets to software licenses, fan club memberships, and anything tied to providing consumers a more virtual interactive experience.
This openness can allow for further collaborations with huge sectors, from the multi-billion dollar video game industry to even multinational corporation brands that have begun to expand and experiment with NFT applications into their products.
How to get started with NFT?
To start an NFT collection, you need to choose an NFT platform where you can auction off your NFT and then set up a digital wallet that stores both NFTs and cryptocurrencies, the latter of which you will use to pay for the fees and/or eventual payment if you manage to sell an NFT.
How do NFTs work?
NFTs use a digital ledger to provide a public certificate of authenticity or proof of ownership, but do not restrict the sharing or copying of the underlying digital files.
Can you make money with NFT?
Yes, it is possible to make money with NFTs. For the general crypto-enthusiast, however, it is wisely important to remember that making any sufficient monetary yield with NFTs, in general, is brimmed with weak prospects. It’s important to note the myriad of fees that comes with starting an NFT collection.
Are NFTs worth it?
Similar to cryptocurrencies, NFTs can be regarded as investment opportunities with the potential to grow in value. Possibilities regarding the use of NFTs are extensive, with some observers seeing them being used for exclusive access to special sales and/or products, from event tickets to software licenses, fan club memberships, and anything tied to providing consumers a more virtual interactive experience.
Can I make NFT art and sell it?
Yes, you can. In order to sell your NFT at your desired NFT platform, you will need to purchase some cryptocurrency, such as Ether (abbreviated as ETH). After securing enough ETH inside your digital wallet and connecting it to your preferred NFT platform to your digital wallet, you will then be able to make and receive payments.
How to invest in NFT Crypto?
If you wish to invest in NFT Crypto art, you need to open an account on one of the exchanges of your choice, purchase enough cryptocurrency and connect your Wallet to the preferred NFT platform. Now you can make your investment.
How to start selling NFT art?
Similar to making your first NFT investment, you need to purchase cryptocurrency and connect your wallet to an NFT platform. Upload the file you would like to make into an NFT, set up an auction, add a description, and pay the listing fee.
How much does it cost to create an NFT?
Some experts say that creating an NFT can cost as little as $70 to $100.