What are NFTs?
NFTs, which stand for non-fungible tokens, are digital assets with a representative value. These tokens can stand in for almost anything, most commonly collectibles, art, music, and real estate. The key element is that the NFT must be unique. NFTs are recorded on a blockchain and ownership is distinguished by identification codes and metadata. Non-fungible means that the good is not interchangeable as it is identified by a unique code. Using NFT as a technological tool, anything you view as collectible or unique can be minted and put onto a blockchain. While NFTs are often bought and sold using cryptocurrencies, they are not cryptocurrencies themselves as they are not traded at a standard.
NFTs rely on smart contracts and digital agreements documented on a blockchain. Smart contracts are created without attorneys and are irreversible as, once agreed upon, they are put into a vault. The contracts are typically made up of a series of statements that a computer will then execute. Though the NFT market has been very volatile due to the cryptocurrency market, it continues to gain popularity, especially among millennials and Gen Z, and it had a peak year in 2021. While some investors are skeptical about the long-term feasibility of NFTs, others view this time as comparable to the beginning of the internet.
CryptoPunks is an NFT collection minted by Larva Labs that contributed to the growth in the NFT market in 2021. The 10,000 CryptoPunk tokens are unique characters on the Ethereum blockchain. The different attributes of each character are computer generated, making some rarer, and thus more valuable than others. They gained popularity among owners who used their punks as online identities, creating a new category of NFTs, “Profile Picture Projects.” CryptoPunk #5822 sold for $23.5 million, making it the fifth largest NFT sale.
Why do people buy NFTs?
The natural question to those unfamiliar with the market is why spend so much on a digital token? For many, collecting a rare digital item draws them to buy an NFT in the same way that collecting a rare piece of artwork appeals to art collectors. The role of digital art in the art industry is growing in importance. In 2021, digital works accounted for 11% of High Net Worth collectors' spending. NFT facilitates the acquisition of certified digital artwork by art collectors and provides collectors with a new medium of art.
NFTs can open a world of engagement between a creator and a fan. Many people buy NFTs because of their love for an artist's work and their desire to connect with the artist. Buying an NFT allows a fan to have a unique piece of a creator’s work, thus giving them a role in the creator’s story. These creator-fan connections can develop into a community of people who share a unique interest in a particular creator. These communities are often strengthened by the virtual platform of NFTs providing easy ways to interact and communicate with those who share your interests.
For others, NFTs are an investment. Most buyers of NFTs are cryptocurrency investors or industrial investors. With the rise of the cryptocurrency price and the decline of the US dollar, NFTs are providing a new way to store value. Also, NFT assets may be more liquid on the market compared to traditional art forms. Many people are beginning to wonder "Can NFTs Finally Make Art an Asset Class?"
Sometimes, when you buy an NFT you buy the right at the same time, for example the licensing right. In the case of CryptoPunks, this means being able to use your punk as a profile photo. When digital works are created through the Creative Common Zeros (cc0) license, creators allow anyone the right to create and sell derivatives of their work. Promoting others to build on their work and create new content form it can increase the value of the original work by allowing fans to interact more deeply with the work itself and create a personal connection to it, as in the case of making your CryptoPunk a representation of your identity.
How do I make an NFT?
Though creating an NFT can sound like a technologically complicated task, you don’t need to be a software developer to do it. There are three basic steps to the process: prepare, mint, and share your NFT.
Part One: Prepare your NFT
Think of an idea for a unique asset. An NFT can be any digital asset. Create something rare and collectible that will draw in investors and followers
Choose and set up a crytoWallet. A crypto wallet provides access to your digital asset, allowing the owner to authorize transactions and keeping crypto assets. There are many options but Metamask is the most common.
Part Two: Mint your NFT
Prepare a smart contract. If you can code in a programming language used by blockchains (Ethereum uses Solidity) you can do this yourself. If not, you can use a smart contract template on a blockchain platform like Ethereum, NFT marketplace such as Opensea and NFT publishing tool such as Etcheve.
Part Three: Share your NFT
Get into a marketplace.
Distribute your NFT on a marketplace. If you minted your NFT on a platform such as OpenSea you will have already completed this step. If you minted by yourself or using tools, you can also list your NFT project in many different marketplaces.
2. Publish on your own website and in your own market.
You can also publish on your own channels if your website and social media account attract a large number of visitors. You can accomplish this with the assistance of website hosting and NFT publishing tools.
3. Promote it.
Spread the word about your creation through social media posts, twitter, newsletters, followers, family, and friends. For many successful projects, the creators build a community to support their project and encourage followers to help them promote.