NFTs: What they are, how to create and how to buy them
NFTs, the short term for non-fungible tokens was a topic nobody talked about until the beginning of 2021 (see image below from Google Trends). It’s given a huge boost to the significance of digital art and a lot of people still want to know about it. If you’re here, then you’ll find out what it is, why it blew up, how to make one and how to buy one. This blog will give you a total overview, so grab your favorite drink and enjoy the, uhm… show?
What is an NFT?
There’s different terms for it, like crypto art for its relevance to blockchain technology (check out the video below if you want to know more about it), but in this blog we’ll use the term NFT. The long term is ‘non-fungible token’ which is a difficult way of saying “official”. Aside from the technologically complex process that makes this possible (again, more on that in the video below), owning an NFT is exactly like saying you own the original piece of art. In digital art this is different since you can copy and paste images from everywhere, but just like in a museum - just because you bought a copy of the Mona Lisa in the giftshop doesn’t mean you own the original. NFTs brings you the possibility of actually owning the Mona Lisa.
NFTs don’t only have to include art pieces on a canvas, it could also include videos, animations and music. People who publish these items usually sell them for blockchain based currencies (e.g crypto currencies) such as Bitcoin or Ethereum. What has made the topic of NFTs stand out is the amount of money people have spent on it. NFT artist, Beeple, sold the most expensive NFT ever at $69 million. This work was a collage of the first 5000 pieces that Beeple created on consecutive days for 13.5 years! Logan Paul sold $3.5 million in NFTs of a Pokemon card with his face on it. Jack Dorsey, Twitter’s CEO, sold the first tweet ever for $3 million. And while anyone can say they have a copy of these items, there’s only 1 person in the world who owns the original.
Why did NFTs explode?
Although NFTs have been around, as you can see in the graph above with the little bumps, they exploded in 2021. This was the result of a few shifts, such as the wake of decentralized finance, video games and art.
DeFi, short for decentralized finance, is argued to be that which jumpstarted the NFT industry. While the concept is easy to explain, the code is insanely complicated. DeFi allows anyone with internet access to be able to lend, borrow and bank without the need for middle men. The modularity of the system that is built on Ethereum is what makes it so interesting. Then, in June 2020, an innovative lending protocol made it possible to earn their cryptocurrency ($COMP) just by owning it. This eventually was called yield farming and initiated a storm of interested participants.
Another popular protocol is a decentralized exchange. The exchange allows anything to be put on it and due to its decentralized nature it cannot be shut down. In the beginning of 2020, Rarible was initiated as a decentralized exchange. While the token price increased 12x in two months so did the interest in NFTs.
Game designers felt that NFTs were a great way to copy the trending micro transactional nature of video games. Games such as Gods Unchained and Hearthstone, both trading card games, were all run on NFTs. The trend grew so quickly that Ubisoft even decided to jump on board and introduce NFTs to Raving Rabbids, allowing users to steal NFTs from each other.
These three ships largely drew the interest and the latter in games brought the appeal to artists. In an artists’ mind there was finally a path to true digital ownership of a piece. This also meant there was finally a path to being paid for just that.
How do I create an NFT?
Give yourself 7 minutes and you’ll create your first NFT.
We’ve mentioned a few decentralized marketplaces but the easiest is OpenSea (Website https://opensea.io). When you’re there, click “Create”. They’ll ask to sign in with your wallet. If you don’t have one, we recommend setting up a wallet on Rainbow (http://rainbow.me). Back to OpenSea, click to “use a different wallet”. Then select WalletConnect. Scan the QR code with the Rainbow app. Click connect on your wallet to authorize the connection. Now click “Create” again on OpenSea. Upload your item. We suggest adding some properties to make it easy for people to find your art piece. Select Ethereum as your Blockchain. Nice, you have now created an NFT on the blockchain.
But, now some extra smart steps to take. Click on “Untitled Collection” then “Edit”. Here you can upload a logo, name, category and description for the collection. Set your royalty rate here as well. This is the percentage you will receive when someone sells your item, for every single transaction. You can allow the payment methods here.
Finally, the fun part. Go to your wallet. Find or swipe to collectibles. Tah dah!
How do I buy an NFT?
Buying an NFT can be an exhilarating experience, so we hope you enjoy it. Most NFTs are traded on Ethereum. So if you want to buy one, you need ETH. Coinbase or Binance would be good platforms to purchase ETH with. However, this wouldn’t be the place to store your NFT. If this is your first time setting up an account, be sure to save the keyphrases and never to share them. Ever.
After you have purchased some ETH, transfer the amount to a wallet (like Rainbow: http://rainbow.me) by pasting your Rainbow wallet address in Coinbase or Binance. After the transaction is confirmed, you will be ready to shop. It will still stay a gamble, but there are strategies to find the right NFTs. For example, go to https://opensea.io/rankings and look at the potential by analyzing the on and outflow of ethereum in 24 hours or 7 days. This will tell you the momentum of the project. If you find a project with a floor price (e.g. minimum cost to buy your NFT) you can afford, then be sure to find the project’s online accounts. Community engagement is an indication of the project leader's ability to source ideas. When you’re doing your due diligence, read the project’s roadmap and uncover the future that it has in store.
When you’ve found the collection page, filter on “Buy Now”. Click “Properties” to discover whether the traits are common or rare. The latter often comes with higher prices. When you’re ready to buy, click “Buy Now” then hit “Wallet Connect” and select “Rainbow”. If you see the gas fee, this is an extra fee that you pay for using Ethereum. Press “Confirm”. After a few minutes the NFT will be in your wallet!
This was it, the huge blog about NFTs. What they are, why they exploded, how to create your own and how to buy one. Have one you want to share? Feel free to comment below. If you’re ready to make art on your iPad but you’re looking for extra grip, then be sure to check out our product. A special huge shout out to Cantino’s Twitter. Follow him here: https://twitter.com/chriscantino
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