Connect with us

NFT

NFT FOR DUMMIES : The Most Guided Explanation Of NFTs

Published

on

NFT FOR DUMMIES

Its 2021 and there is a massive explosion of the idea so called Non-Fungible-Tokens, all over the world. While many people familiar with the Crypto World do have an idea what they really are, for most of us NFT’s are like some kind of magical crypto techy thing that doesn’t make sense. And what really doesn’t make sense is the fact that a collage of 5000 paintings selling for $69 Million Dollars. Never in the history of the art world has this ever happened!.

So, what exactly is this NFT thing?

Non-Fungible-Tokens or so called NFT’s are basically Crypto Tokens just like any other tokens(remember the fact that yes they are indeed just tokens). However, these tokens are unique and are “Non-Fungible”. Non-Fungible meaning they cannot be duplicated, replicated or replaced. While most of the Crypto Tokens are “Fungible” like Bitcoin as they can be duplicated and replaced.

For example, say, you have 5 BTC, and you give one to your friend. Do you think, your friend will own his version of Bitcoin, No. He will have the exact same kind of Bitcoin as yours.

This is not the case with NFT’s as NFTs are unqiue to each other and every NFT Token out there is different. Due to this, Today, NFT’s are used to represent digital assets and collectibles such as Original Artwork, Trading Cards, Music, Videos, Digital collectibles and anything digital. The reason why these tokens can represent digital assets is because of the way NFT’s are built.

NFT’s are entirely based on the blockchain technology and more specifically, they are based on the Ethereum Blockchain. Ethereum or Ether is a very special blockchain technology as they can hold additional data or information about a particular token. They work through a system called Smart Contracts (Will get to this later). NFT’s by being based upon this blockchain technology are able to utilize the blockchain technology to hold additional information about their tokens.

In our case, NFT’s can hold data like verification of ownership, history of ownership, prices and so on. Due to this reason, people cannot freely trade NFT Tokens as each NFT token has a owner. It is only the owner who decides whether he wants to sell his token or keep it with him.

This is what makes NFT’s really unique as it gives the token, a sense of rarity, uniqueness and sort of differentiated from the rest of the tokens. And it is in the Art Industry where such feature can be fully utilized where the owner of the Artwork can be verified, traced and it cannot be replaced. Because even if someone buys the NFT Artwork, he only becomes the new owner of the Artwork, but he cannot hold the title of becoming the Original Creator of the Artwork.

How do NFTs work?

nft for dummies : How do NFTs work?

NFT’s are entirely based on the Ethereum Blockchain, and it follows the methods provided by the Ethereum Network. As on 24th January, 2018, Ethereum finalized the ERC-721 standard that allowed developers to define unique assets, which is NFT’s.

This standard allowed users to set a name and symbol for their NFT, and also provide a JSON file that describes the unique properties of the NFT. Today, we see this as the Name of the Artwork, the Token ID of the artwork or digital collectible, description and so on.

With this today, companies like OpenSea, Rarible, Nifty Gateway have created a platform and NFT marketplace where users can literally create their own NFT out of their digital asset. The process of converting a digital asset into an NFT is handled and taken care of by the company, you just need to create and list them on their marketplace.

What is a NFT artwork?

nft for dummies What is a NFT artwork?

The question still may arise, what is an NFT Artwork?.

An NFT artwork is basically a digital artwork that users can buy from NFT marketplaces like Rarible, OpenSea and many other. However, this NFT Artwork is special because it is tokenized.

Note the word “Tokenized” as when a person converts his artwork or painting into an NFT. He is essentially encrypting the data of the Artwork within the blockchain where all the information about the Artwork gets stored. From here, the person has now basically converted his artwork into an NFT as when he does this, he also gets a Token ID. All of this process is called “Minting”.

NFT artworks can be listed on NFT marketplaces and it can be listed for sale, either for a fixed amount of price which is in the currency of Ether or ETH, or the NFT Artwork can be left for auction where collectors can bid on the NFT artwork and whoever makes it to the highest price wins the auction and gets the NFT.

Where can I buy an NFT collectible?

nft for dummies Where can I buy an NFT collectible?

NFT assets, artworks and collectibles are bought and sold on NFT marketplaces like Rarible, OpenSea and Nifty Gateway. We are actually lucky to have these marketplaces evolve and develop to an extent where we can actually use the platform to buy and sell NFT’s.

Here are the top 10 NFT Marketplaces where NFT collectibles can be bought and Sold:

  1. OpenSea
  2. Rarible
  3. Foundation
  4. Nifty Gateway
  5. Super Rare
  6. Christies
  7. Super Farm
  8. Enjin
  9. FansForever
  10. Axie Infinity

How to Create an NFT?

nft for dummies How to Create an NFT?

Alright, so you thought of buying an NFT but somehow, you realized that you’ve got some real artistic skills and you want to turn your art into an NFT and sell it on NFT marketplaces like Rarible and OpenSea.

Well, creating an NFT is actually pretty easy. Here are the simple steps that you need to follow in order for you to be able to create an NFT and list it on NFT marketplaces.

  • 1. You will need your Digital Artwork, Digital Collectible or asset ready.
  • 2. You will need a Crypto Wallet, Like, MetaMask, Coinbase…and so on.
  • 3. You will need to connect your Crypto Wallet to NFT Marketplace. This allows you to create an account in those Marketplaces and also create and upload your Artwork there.
  • 4. Upload your work, painting, digital art or collectible and list it on their Marketplace. You will need to set a price, type of auction and the Royalty fee.
  • 5. Once you do that, your NFT will be visible to the public, you will just need to wait and watch how well your NFT does.

But clearly, these are the steps in general that is going to help you create your NFT. It’s really that simple however, if you are not that nerdy type and you do get stuck at some things, then I have made a complete tutorial on how to exactly create an NFT, Create your Wallet, Connect them with the NFT marketplace, to uploading your first NFT Artwork and listing them on the marketplace.

Check the Tutorial here: HOW TO CREATE A NFT ON RARIBLE? ULTIMATE STEP BY STEP WALK-THROUGH GUIDE

How much does it cost to create an NFT?

Creating NFT’s is really easy, especially on NFT platforms like Rarible, it doesn’t take a lot of time creating your NFT. You will just need to create a crypto wallet, connect it with the Rarible platform and create your NFT.

Same is the case with other NFT platforms.

However there are some costs associated with NFT. The creation of NFT’s is called minting and different NFT platforms have different fees depending upon their prices.

The three most common fees associated with creating NFT’s are:

Listing fees – Listing fees are basically fee charged to you for listing your NFT on a NFT platform or marketplace. This fee is mostly a fixed amount that creators need to pay to the NFT platform.

Gas fees – Gas fees is basically fees paid to Miners. Essentially, when a transaction happens in the blockchain world, especially for the Ethereum blockchain, there will be certain amount of Gas Fees associated. This fees is paid to the Miners who help the blockchain network process transactions faster and more efficiently. To know more about Gas fees – Check this article.

Service fee – After that, there is service fee where if you ever sell an NFT artwork or asset, the NFT marketplace charges you a certain percentage of Service fee. (This is also how, NFT marketplaces make money). This fee can range from 2.5% to 8.5% depending upon which NFT marketplace you use. Also this fee is charged to the buyer as well as the seller. Its 50/50.

Apart from these fees, some marketplaces also charge Gallery Fees, one of them is Super Rare. Gallery Fees is basically fees charged to the creator to display their artwork on their website gallery.

It may feel that getting into NFT’s can be costly if you are just thinking to make a couple of hundred bucks. Because Gas Fees can rack up very quickly and Service fees and Listing fees are compulsory for many platforms.

However, there are platforms like OpenSea that allows compensation for Gas Fees if the bid is very high.

So, Every NFT is unique to each other. Explain Why there are hundreds of the same NFT artwork or collectible in some marketplaces.

nft for dummies

This is a great question and this is the beauty of NFT’s or Non-fungible-Tokens. Yes, in theory every NFT is unique.

However, creators have the option to sell unlimited numbers of the same NFT or they can sell a limited number of them else what most people do is they sell only 1 edition of the NFT.

So, if you are selling a Baseball Card NFT that you just created, you can decide if you want to sell 10 editions of it or 20 editions of it. Of course, you’d have to list each of those separately and each of those would have a different Token ID, even though they all look the same.

The thing here that differentiates each one of those Baseball Card NFT is numbers. So, these cards would come in editions, as Baseball Card Edition #1, Baseball Card Edition #2, Baseball Card Edition #3…etc. Here, creators can make use of this Edition thing to make their Baseball card even more valuable. With the Edition #1 being extremely valuable because it is the first one.

You see, this is the point and beauty of NFT’s here. Moreover, creators are now getting even more creative by giving additional bonuses for purchasing the 1st Editions. This could a ticket to the live match or game or it could be a Canvas edition of the Baseball card or something like that.

This is basically called “Fractionalization of Tokens” where a single NFT gets denominated into even smaller parts. While each part becomes an NFT and is unique to each other.

This makes it affordable for collectors to buy the NFT, and if they are not able to own the 1st Edition, they can still own the 2nd Edition and still bank a lot of money in the future.

What are NFT Royalty Fees?

Okay, you may have heard of something called Royalty Fees and yes they exists in the NFT world too.

Essentially, when creators and artist create an NFT, they are allowed to set a Royalty fee. Most platforms have a fixed rate for each artists like 10% to 20%. However, marketplaces like Rarible allow creators to set their own Royalty fee.

Royalty fees are basically fees earned by the Creators if his NFT Artwork or Collectible gets resold.

Meaning for example Lets say you’ve set a Royalty fee of 10% on your NFT and, you’ve just sold an NFT for $100 USD to the user XYZ. The user XYZ, who is good in marketing sells to another user ABC for a whooping $1000 dollars.

In this scenario, you may feel a little bad because you’ve just made a $100 on your NFT.

Well, guess what, due to the Royalty Fee system, the resale of your NFT for $1000 dollars will bring you $100 dollars into your bank account.

This means every time, your NFT gets resold, you get 10% of the sale as profits.

How does the Buying Process of NFT’s work?

Now let’s say, you wanna actually buy and collect NFT’s instead of actually creating one. But you are quite not sure how the buying process of NFT’s really work.

There are basically two ways you can buy an NFT:

Direct Buy : Direct buy is basically when you buy the NFT without participating in the auction and competing with other buyers. During this time, you are able to buy the NFT directly at the price it was listed for. However, it is still upto the seller to make the final decision as to if he wants to sell or not.

Auctions: Auctions is where seller lists the item for sale in the auction and many buyers try to compete with each other by bidding their highest price to win the auction. If the seller finds a price that is suitable for him, he decides to sell the NFT to the highest bidder. Normally, what I’ve seen is that, most NFT sales eventually become an auction. And it is here where things can go really crazy.

HOW DO I BUY AN NFT?

Buying an NFT is pretty simple and straight forward, however, you will still need somethings.

Firstly, you will need a Crypto Wallet. A Crypto Wallet is basically a wallet from where you are able to trade different Crypto Currencies. You will need the wallet to buy crypto-currency with Fiat money or real money. And you will also need the wallet to connect it with a NFT marketplace.

Once you have your Crypto Wallet ready and you also bought some Crypto Currency, for NFT’s you will need Ethereum or ETH, you will now have to connect your wallet with the NFT marketplace.

Also when you create an account on any one of the NFT marketplaces, you don’t need any email or have to set a password. You can directly create an account through your wallet and you will be connecting to the NFT platform through the wallet itself.

Once you’ve connected your wallet to the NFT platform, you can now browse through their collection and buy NFT collectibles. The process is super simple however, don’t get carried away as sometimes while you are bidding, you could end up bidding hundreds of dollars. Unless, if you are willing to spend, I’d say, spend wisely.

What are some of the top most expensive NFT’s out there?

nft for dummies top most expensive NFT's out there?

NFT’s have really shocked the world. And the fact that the legendary marketer Gary Vee says that it is the first time after 20 years that I have felt the same feeling for NFT as I had felt for Web 2.0. This just means NFT’s are going to get huge and right now, its currently in the bubble.

When the bubble explodes, we could see less of whats happening currently or we could even see more of whats happening currently. Only time will tell but I think, we all should be aware of whats happening and definitely try out luck on NFT’s.

Here are some of the most Expensive NFT’s ever sold:

  1. Beeple’s “Everydays 5000” – $69 Million Dollars
  2. Crypto Punk #3100 – $8 Million
  3. Beeple’s Crossroads – $6.6 Million
  4. Jack Dorsey’s First Tweet – $2.9 million
  5. Steve Aoki, Hairy – $888,888.88
  6. The Complete MF collection by Beeple – $777,777.77
  7. Chris Torres, Nyan Cat – $561,000
  8. NY Times NFT – $560,000
  9. Trevor Jones, Genesis – $552,603.98
  10. Crypto Kitties, Dragon – $390,000

Whats Next?

So, this was NFT for Dummies, all the necessary information about NFT to get you started on your NFT journey.

The question still arises, Is NFT a Good Investment?, well that’s a topic for our next blog article!.

Advertisement
Click to comment

Leave a Reply

AFFILIATE DISCLOSURE

Our site contains links to products and services related to NFT, Art and Design Industry. When you buy or purchase products or services from those links, we may earn a small commission that helps us grow our site.

Trending