The Best NFT Guide: Everything You Need to Know
If you have not heard of NFTs by now, you have probably been living under a rock. In less than a year, NFTs have found their way into industries of all kinds and transformed the way we buy, collect, and sell digital items. From exquisite art pieces to eyebrow-raising items such as the image of a digital rock or even someone’s DNA sequence, the NFT industry has seen it all (or has it?). If you are late to the party, now would be the best time to get in the game!
First, let’s get to the basics: What is an NFT?
NFTs (short for non-fungible tokens) are unique digital assets that represent both digital and physical items. These assets are “non-fungible”, which means one NFT cannot be swapped with another. On the other hand, assets like cryptocurrency or fiat are “fungible”, and can be easily traded with another.
To illustrate, a $10 bill that you own can be exchanged with the $10 bill your friend has as they both have the same value. As opposed, your house or a painting by an art maestro that you own cannot be exchanged as it is one-of-a-kind. Additionally, NFTs are non-divisible. They exist as a single token and cannot be divided into smaller denominations like fiat.
Now, in the real world, traditional artefacts or other assets often come with a certificate to prove their authenticity and ownership. In the digital world where files can be infinitely replicated, NFTs pretty much work as a digital certificate of ownership that one can buy and sell. However, here, this “certificate” is stored on the blockchain, a decentralized, public ledger (or database).
A blockchain stores all sorts of information, including transaction details, which can be easily viewed by anyone. Furthermore, the data stored on a blockchain is “immutable”, meaning, it cannot be edited or deleted. What does all this mean for NFTs? Because of blockchain technology, anyone can verify the ownership and authenticity of an NFT in just a few clicks. This is precisely what makes NFTs valuable.
NFTs can be anything
From art to real estate and luxury goods, NFTs have the power to revolutionise many industries. The primary reason for this is that NFTs can represent pretty much anything—artwork, music, documents, real estate, or even alcoholic beverages—you name it! Another reason is the underlying technology that provides ownership certificates. Put simply, NFTs give the token holder ownership rights.
Take the NFT of a digital artwork for example. No matter how many copies of the artwork exists in the world, only one person—the NFT holder—owns the original. This has made it possible for digital artists to prove the authenticity of a piece. And this is why the NFT industry has witnessed iconic sales like the $69 million sale of artwork by digital artist Beeple. Buyers are confident about the authenticity and originality of a piece of art and don’t mind spending millions of dollars on a valuable asset.
Long story short, NFTs are a game-changer. Just look at what they are currently doing in these four industries:
Music
Music NFTs have not only paved the way for musicians to add scarcity to their songs but also to earn what they deserve. Earlier, these artists had to depend on record labels to sell their music, something that wasn’t even accessible to a majority of upcoming artists. If they went the record label route, they’d also lose a huge chunk of their earnings to the labels. Today, however, thanks to music NFTs, singers can release their songs on their own and continue to earn royalties with every resale. They also have the power to set a royalty of their liking.
For this reason, several established music artists, including Grimes, Whitney Houston, and Snoop Dogg has released their music NFTs. American rock band, Kings of Leon even released their entire album as an NFT early this year! Even though the music NFT scene is still at a nascent stage, plenty of music-focused NFT platforms have come up to make minting music NFTs a cakewalk. Some of these include OneOf, Catalog, and Tripcip.
Art
Art is one of the biggest industries that have reaped the most out of the NFT craze. While traditionally artists were forced to pay exorbitant sums to galleries and auction houses to exhibit their artworks, NFTs have made it possible for artists to showcase their works hassle-free. Without gallery costs and the gatekeeping of the traditional art scene, artists old and new alike can now create freely.
Emerging artists like Fewocious, Trevor Jones, and SlimeSunday are already creating waves in the crypto art scene. Even world-famous artists like Damien Hirst, Oleg Tselkov, and Philip Colbert have hopped on the bandwagon! Still uninspired? Then check out these great artworks made by professionals on Fiverr!!
Physical items or things
Amazingly, NFTs can represent ownership of physical things as well. One industry that can surely benefit from this is real estate. With NFTs, you’d no longer need an estate agent, fill tonnes of paperwork, or pay various fees involved. If you convert your house deeds into smart contracts, you can easily transfer the ownership and won’t need a notary in the future.
Homeowners can even sell fractional ownership of their property to multiple small investors. The investors, in turn, can sell these on secondary markets and earn an income. Black Manta Capital Partners, for instance, successfully held a real estate token offering for a Berlin estate last year.
Similarly, the wine and whiskey industry also benefits hugely from NFTs. NFTs not only help in certifying authentic, vintage wine and whiskey barrels but also help to democratize the process. Meaning, more and more people will now have access to wine investing, which traditionally catered to just the society’s high and mighty.
Tickets and Events
Event tickets are another hot NFT use case. Both real-life and online events can use NFTs as tickets. As these can’t be hacked or forged, they can even function as keys to your website.
A notable example is the VeeFriends NFT collection which gives select holders exclusive access to the founder, Gary Vee. Meanwhile, top NFT collectibles, Bored Ape Yacht Club, recently held the first annual Ape Fest for its holders. There’s even an annual music festival dedicated to the NFT community, called Tiki Bar Festival!
Some virtual and offline events also give attendees NFT attendance badges to prove they attended a crypto or NFT event. Called POAPs, or Proof of Attendance Protocol, these are given for free to all attendees! These are issued by POAP’s official smart contract and features an image and the metadata of the event’s date and time.
How NFT buying and selling really works
Those wanting to get their hands on NFTs must first acquire a wallet. Essentially, a crypto wallet is where NFTs and cryptocurrency is stored.
Storing NFTs, Crypto wallets and Blockchain Safety
NFTs can be safely stored, sent, and received using a crypto wallet. Firstly, the particular crypto wallet must be NFT compatible but there are also other conditions. Basically, there are 2 main options to choose from: software/hot or hardware/cold wallets. While software wallets store NFTs online, hardware wallets keep them offline.
Essentially, an NFT’s safety depends on the wallet used. Cold wallets like Ledger and Trezor are the most secure wallets as they are not connected to the internet and are safe from potential cyber-attacks.
However, most NFT websites are only compatible with software wallets, such as Metamask. Therefore, those using hardware wallets still have to transfer their assets from one wallet to another to access certain sites. Luckily, there’s a lot of different types of crypto wallets with a lot of options for different use cases.
Different blockchains and acquiring cryptocurrency
Most NFTs are purchased using cryptocurrency. However, not every NFT is compatible with every blockchain. For example, Ethereum-based NFTs are sold in Ether (ETH). On the other hand, 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, for example, pounds or dollars. Most of these exchanges accept a range of payment methods including; PayPal, wire transfers, credit or debit cards.
Plus, there are a range of exchanges active worldwide, the most popular including; Binance, Coinbase, FTX, and Kraken.
Layer 2 solutions and using a Bridge
Some NFTs use an Ethereum layer 2 scaling solution. These solutions allow transactions to be processed much faster and cheaper than Ethereum, as they don’t use “Proof of work” as their consensus.
The most popular layer 2s for NFTs include Polygon, xDAI, and Immutable X. However, to reap the 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.
NFT marketplaces to buy NFTs
An NFT marketplace is where NFTs are created, sold, and bought. While there are plenty of marketplaces to choose from, the most popular of the lot is OpenSea, which has been dominating the space for a long time. It supports blockchains Ethereum, Polygon, and Klatyn and offers a slew of digital assets including collectibles, music, in-game items, and more. Additionally, it supports over 150 payment tokens.
Rarible is another favourite Ethereum-based marketplace among NFT enthusiasts. Like OpenSea, Rarible too offers a range of NFTs. It is user-friendly with an attractive interface and offers excellent customer service.
Certain marketplaces, meanwhile, are known for specific types of NFTs. For example, curated marketplaces such as SuperRare or Foundation feature some of the best 1/1 artworks, especially from renowned artists. Conversely, celebrities often drop their NFTs on Nifty Gateway. When it comes to music NFTs, OneOf and Catalog are the best options.
Buying an NFT
When it comes to buying NFTs, early backers reap the most benefits. The best way to get in first on an upcoming NFT drop is to track an NFT drop calendar. Otherwise, users can simply purchase something from secondary markets.
The major benefit of minting (or buying) NFTs at launch is the mint price. Most likely, the launch price will be the lowest the NFT will be available at and will increase in secondary markets. Some projects, like Neo Tokyo Identities, which was free-to-mint, went on to have prices upwards of 12 ETH on OpenSea. Additionally, when buying at launch, collectors can buy multiple NFTs in a single transaction, thereby saving on transaction fees.
However, the main drawback of purchasing at launch is that the buyer won’t know what NFT they are buying. The NFT could be a rare asset or a common NFT with a lower resale value—there’s no way to know until after the mint. Alternatively, the project may even fail to pick up.
On the other hand, there are several pros to buying on secondary markets: verified collections are more secure, users can buy exactly what they want, avoid gas wars, and won’t have to face many technical issues. However, it will cost much more to mint, especially for blue-chip NFT projects.
On the other hand, NFTs on the Solana blockchain come at a much cheaper price. Compared to Ethereum, minting is much faster on Solana and the average transaction fee is just around $0.00025.
NFTs and the hidden gas fees
Before minting NFTs, it is essential to understand gas fees or transaction 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 their computational effort.
However, a transaction extends further than buying or selling. Any request on the blockchain must be processed and validated by miners. That means gas must be paid for trading NFTs, making and accepting bids, changing sale prices and even creating a collection.
Actually, the price depends on both the network activity and how fast the transaction is processed. The busier the network, the higher will be the gas fees. Sometimes, it can even go up to hundreds of dollars.
Furthermore, when network activity soars, people can opt to pay higher gas fees. Then, the miners prioritize their transactions — a situation called “gas wars”. This usually happens during a project launch when a number of people are trying to get their hands on new NFTs. Some projects even offer mint passes and whitelists to guarantee the chance to mint exclusive items.
While high gas fees can be a deterrent in buying NFTs, there are several measures that can be taken to pay the least gas.
Starting an NFT collection
For those looking to create their own NFTs, the process is a cakewalk with the help of professionals. Even those who lack creative or coding skills can take the help of these great freelancers from Fiverr to create NFTs.
Coders/developers – A developer can help create generative art NFTs, games, or even interactive communities. Essentially, coding knowledge is necessary for an NFT website. Plus, discord bots, 3d modelling, and gaming will all need specific coders too. Finally, if creators want to incorporate specific conditions into the project’s smart contract, an expert blockchain developer is a must-have. These don’t come cheap but can make the difference between releasing a successful collection or not. All of these important developers can be found on Fiverr.
Artists/designers – An NFT artist or designer has the power to make or break a collection. When looking for artists for a generative project, make sure their software is capable of saving elements in layers. Layers allow the coder to guarantee random combinations of characteristics at mint. Additionally, most generative projects have 100+ traits. This is to ensure diversity in the NFTs. However, the higher the number of traits, the more the artist will charge. Professional artists from all walks of life are only a few clicks away on Fiverr.
Web designers – The website’s UI/UX design is also extremely important. Many collections have great ideas and fantastic artwork. However, the website is a project’s hallway entrance. To make sure the website is accessible, it should be aesthetically pleasing, and easy for the coder to write. Thus, make sure to get a website UI/UX design made. Fiverr has many options for website designers with responsive design including those with experience in NFT sites too!
Creating an NFT Marketplace
Those who want to dive deeper into the NFT space can also create their own NFT marketplace. For this, the first step is to identify a suitable blockchain. While Ethereum is the most popular, it offers low scalability and high transaction fees. Alternately, Solana is fast becoming a strong contender to Ethereum with its high transaction speed and low gas fees. As mentioned before, there are several Ethereum layer 2 scaling solutions as well to choose from.
The next step is to identify the audience. Will the marketplace cater to just NFT art like Foundation? Or will it support a range of NFTs like OpenSea? Depending on the target audience, one can customize the marketplace and decide on the features it will offer. Of course, 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. Features like filters, buying and auction, multiple wallet support, push notifications, ability to add properties, and more can make the marketplace attractive to buyers.
When it comes to creating an NFT marketplace, there are mainly two ways to go about it: use ready-made scripts like OpenSea’s SDK or take the help of a developer to create the marketplace from scratch. While the first option is cheaper, it has limited customization options. With the second, on the other hand, one will be able to make a unique marketplace that meets all their requirements. For this too, there is plenty of help available on Fiverr.
Ultimately, it is important to know more about NFTs before making the jump. Amid the growing competition in the space, it’s essential to take all the available help to make a collection or NFT marketplace that truly stands apart. For starters, there are several NFT beginner’s guides that cover everything from what the top NFTs are to how to create and sell NFTs!