NFTs have transformed the way we buy, collect, and sell digital items. From art to real estate and luxury goods, NFTs have the power to revolutionize industries. The question is: How? NFT Evening breaks the complex world of NFT's down and guides you every step of the way. With NFTs impacting music, art, physical assets, tickets, events, and more, use this guide to learn more about them and how to create your own NFTs.
What is an NFT?
NFTs (non-fungible tokens) are unique digital assets that can represent digital and physical items. These assets are defined as “non-fungible.” This means that one NFT can’t be swapped with another whereas assets like cryptocurrency or fiat are “fungible”, and can be traded with one another.
Example: A $10 bill you own can be exchanged with a $10 bill your colleague has as they both have the same value. However, a painting by an art maestro that you own can’t be exchanged as it is one-of-a-kind. |
Traditionally, physical artifacts and assets have a certificate of authenticity to prove both originality and ownership. In the digital world, NFTs act as a digital certificate of ownership that one can buy and sell. As digital files can be infinitely replicated, this “certificate” is stored on the blockchain—a decentralized, public ledger (or database).
As the underlying technology provides ownership certificates, NFTs give the token holder ownership rights. Learn more >
Example: A digital artwork. No matter how many copies of the artwork exist in the world, only one person, the NFT holder, owns the original. This has made it possible to prove the authenticity of a piece. |
NFT value is strengthened due to the fact that they are non-divisible—they exist as a single token and can’t be divided into smaller denominations.
Defining blockchain
A blockchain stores information, including transaction details, which can be viewed by anyone. The data stored on a blockchain is “immutable”, which means that it can’t be edited or deleted.
What does blockchain have to do with NFTs?
With blockchain technology, anyone can verify the ownership and authenticity of an NFT—and this is precisely what makes NFTs valuable.
NFT: Buying and selling explained
Step 1: Get a wallet
To store NFTs and cryptocurrency, get an NFT compatible crypto wallet:
- Software/ Hot wallet—Store NFTs online
Example: Metamask - Hardware/ Cold wallet—Store NFTs offline
Example: Ledger and Trezor
Learn more >
An NFT’s safety depends on the wallet used. Cold wallets are the most secure as they aren’t connected to the internet, and are safe from potential cyber-attacks. However, most NFT websites are only compatible with software wallets. If you use a hardware wallet, you would need to transfer your assets from one wallet to another to access certain sites.
Compare crypto wallets >
Step 2: Ensure compatibility
Blockchain type and cryptocurrency acquisition
While most NFTs are purchased using cryptocurrency, not every NFT is compatible with every blockchain.
Example: Ethereum-based NFTs are sold in Ether (ETH). NFTs on the Solana Blockchain, are purchased with SOL. |
Both ETH and SOL (and many other currencies) are available from crypto exchanges in return for fiat currency such as Pounds or Dollars. Most exchanges accept a range of payment methods including; PayPal, wire transfers, credit or debit cards. There are also a range of exchanges active worldwide, including; Binance, Coinbase, FTX, and Kraken.
Layer 2 solutions and using a Bridge
Some NFTs use an Ethereum layer 2 scaling solution to allow transactions to be processed much faster and cheaper than Ethereum. This is because they don’t use “Proof of work” as their consensus.
Example: Polygon, xDAI, and Immutable X. |
To benefit from layer 2’s advantages, assets must be bridged to that specific side chain. For bridging assets from Ethereum to Polygon, the Bridge dashboard is available. This handy tool makes bridging assets easy. There are also comparable bridges for both IMX and xDAI, although neither are as popular as Polygon.
Step 3: Finding NFT marketplaces and buying NFTs
An NFT marketplace is where NFTs are created, sold, and bought. Popular marketplaces:
- OpenSea: The most popular marketplace to date supports blockchains, Ethereum, Polygon, and Klatyn. It offers a number of digital assets including collectibles, music, in-game items, and more. It also supports over 150 payment tokens.
- Rarible: The Ethereum-based marketplace offers a range of NFTs, is user-friendly, and offers excellent customer service.
- SuperRare and Foundation: The marketplaces offer 1/1 artworks from renowned artists
- Nifty Gateway: The marketplace is popular amongst celebrities and they often drop their NFTs here.
- OneOf; Catalog: Marketplaces that cater specifically for music NFTs
See more curated marketplaces >
Step 4: Buying an NFT
The rule of thumb is that the earlier you back an NFT, the more you’ll benefit. You can achieve this by using an NFT drop calendar to track upcoming NFT drops. Alternatively, you can purchase from secondary markets.
The major benefit of minting (or buying) NFTs at launch is the mint price. The launch price is most likely to be the lowest that the NFT will be available and will increase in secondary markets. What’s more is that when buying at launch, collectors can buy multiple NFTs in a single transaction—saving on transaction fees.
The drawback of purchasing at launch is that you won’t know what NFT you’re buying as there’s no way to know until after the mint. Alternatively, the project may even fail to pick up. However, the pros of buying on secondary markets are:
- Verified collections are more secure
- Users can buy exactly what they want
- Can avoid gas wars
- Don’t have to face many technical issues.
Remember: It will cost much more to mint, especially for blue-chip NFT projects.
Step 5: Be aware of hidden gas fees
Any transaction on the blockchain is carried out by “miners” who use powerful systems to solve complex algorithms. The gas fee is the amount paid to these miners to compensate for their computational effort.
A transaction extends further than simply buying or selling. Any request on the blockchain is processed and validated by miners—meaning that gas is paid for trading NFTs, making and accepting bids, changing sale prices, and even creating a collection. The price depends on the network activity and the transaction process speed. The busier the network, the higher will be the gas fees.
Gas wars
When network activity soars, you can choose to pay higher gas fees and miners will prioritize your transactions. This usually happens during a project launch when a number of people want to purchase the new NFTs. Learn how to pay the least gas >
Step 6: Starting your NFT collection
To create NFTs, you need to have a certain skillset or hire an expert who has the skillset to assist you. Learn how to create your own NFTs or get help from freelancers from Fiverr to create NFTs.
Hire a developer for: Generative art NFTs; Games; Interactive communities; An NFT website; Discord bots; 3D modeling; Gaming; A smart contract; and much more. All this expertise can be found on Fiverr.
Hire an artist or designer when: You’re looking to create NFT art for a generative project, make sure that your seller’s software is capable of saving elements in layers. Layers allow the coder to guarantee random combinations of characteristics at the time of mint. Additionally, most generative projects have 100+ traits. This is to ensure diversity in the NFTs.
Remember: The higher the number of traits, the more an artist will charge.
All this expertise can be found on Fiverr.
Hire a web designer: To ensure website accessibility, it should be aesthetically pleasing. Make sure to get a website UI/UX design made. Fiverr has many options for website designers with responsive design and NFT site experience. All this expertise can be found on Fiverr.
Step 7: Creating an NFT Marketplace
- Research, identify and choose a suitable blockchain that’s best for you
Example: Ethereum offers low scalability and high transaction fees while Solana offers high transaction speed and low gas fees.
- Identify your target audience
Ask yourself if the marketplace will cater to certain aspects (Example: NFT art like Foundation) or if it will support a range of NFTs (Example: OpenSea) - Depending on your target audience, customize the marketplace and decide on the features it will offer.
Tip: One of the most important features of an NFT marketplace is the storefront, where users can create, sell, and buy NFTs. A convenient and user-friendly search option to easily find what collectors are looking for, is equally important. - When creating your NFT marketplace, choose to:
Use ready-made scripts like OpenSea’s SDK: The cheaper option but has limited customization options
Get help from a developer: Create a unique marketplace from scratch, that meets all your requirements.
Recommendation: Familiarise yourself with NFT beginner’s guides and become an NFT expert.