NFT 101 - Issue #3
What is an NFT?Characteristics of NFTsNFT use casesWhat is the underlying value of NFT (art)?Who can create NFT?How do I create an NFT?
We made our first NFT community giveaway announcement on January 17, 2022. The deal was simple โ the first 25 people to send us their wallet address would each receive an NFT from NY Glamour collection, the collection we created to express our best New Year wishes for our community.ย ย
The replies were as fast as light, but greater than 75% of 25 lucky folks (who has made it into the fastest 25 list) sent us their email address and a handful of those were also tied to their PayPal account โ this is the inspiration of todayโs newsletter. Hopefully, youโd get a good kick-start to NFTs ๐
Although the first created NFT goes way back in 2015, it was just last year that it gains massive mainstream interest. Take a look at the following images.ย
This is the most expensive NFT so far; The Merge by Pak sold for $91.8 million.
This is another well-known NFT, a tweet posted by jack Dorsey in 2006. It is the first ever tweet which is now owned by the Oracle CEO Sina Estav who bought it for $2.9 million.
This is the most expensive CryptoPunk (aside from punk #9998) โ Punk #7523.
Now, you might be wondering what an NFT really is and where itโs value underlies to be a reason for such amount of money circulation. Weโve got that covered below. Before we dive right into it, we want to remind you to subscribe our newsletter (if you havenโt already) so as to receive the next newsletter straight to your inbox. Letโs get started.ย
What is an NFT?
NFT stands for Non-Fungible Token.
Investopedia defines the word โFungibilityโ as the ability of a good or asset to be interchanged with other individual goods or assets of the same type.ย
Accordingly, when we say something is Non-Fungible, the asset we are talking about is unique and cannot be copied or replaced with something else.ย
For example,ย
If you lend us $100, you wouldnโt need to receive that exact banknote you gave us when we repay you. Any $100 banknote is accepted as equally valuable as the one you gave us. This is Fungible asset.
In a parallel world,ย
The three images you have seen above are certified by the blockchain to be unique with a unit of data attached to them. So, even if you can save them for free and have a copy, you cannot be considered as an owner since you donโt have the proof of ownership (separate from copyright) which is tracked on the blockchain.
Characteristics of NFTs
Although NFTs cannot be copied, or substituted, they can be traded, collected, sold, and even destroyed just like physical items; also, their transaction and pricing history is visible to anyone with an internet connection since itโs recorded on the blockchain.ย
NFT use cases
Although NFTs seems to be trendier among people in the form of digital art, they have several use cases. Here are our top six:
1. Identity, credentials and health records
Any attributes that are completely unique to people โ ranging from appearance to education qualifications and medical histories can be confidentially stored using NFT.
2. Real-world assets
Work in this space is at an early stage, but itโs possible to tokenize real-world assets like property, with NFTs being used to prove that someone owns a piece of land, keep track of the status and changes through auditable records.ย
3. Art
Digital art files such as music, photos, videos and paintings can be tokenized to provide a new kind of "ownership". This ownership makes Artists beneficiary of their work from sells and even portion out a residual profit from future sales, to create a recurring revenue stream. On the other hand, by offering proof of ownership buyers of the creation can resale or showcase the piece in a virtual space. Even Twitter and Facebook are incorporating NFTs to their platforms now.
4. Gaming
With NFTs, players can create a source of income by their game performance and/or by trading coveted weapons and items in the game. Also, NFTs enable renting of in-game assets.ย
5. Certificate of Authenticityย
The authenticity of physical products can also be verified using NFT. Big brands such as Louis Vuitton and Gucci have been dabbling in NFTs as a way to certify the provenance of their products for a while now.ย
6. Collectibles
NFTs are dragging traditional collectorsโ items into the 21st century, such as baseball cards, coins, and stamps. Itโs even possible to buy tokenized versions of your favorite celebrities, sports stars or digital cards. For instance, the NBA is operating its NBA Top Shots programme on the basis of NFTs.
What is the underlying value of NFT (art)?
Value is created everywhere there is a demand. Thereโs currently a demand for NFTs, because people are excited for one or more of the following reasons (although the last one is hard to label as excitement).
They love the item theyโre buying.
They love technology; and are experimenting things.
They are making money off of it.
They fear missing out.ย
Who can create NFT?
Anyone.ย
How do I create an NFT?
The process of turning your work into an NFT is called "minting" which refers to the act of creating a new token on the Blockchain that will forever be attached to that content.
There are different blockchains to mint your work such as Ethereum, Polygon, Cardano, Solana and Tezos; and there are also different marketplaces:ย OpenSea, Foundation, Zora and Rarible.ย
If you are interested in experiencing NFTs firsthand, we will show you how to create and sell your first NFT for FREE (using Polygon and OpenSea) in the following simple steps.ย
Step 1: Make a digital file for your NFT
Thereโs no one way right for creating a piece of art that can be used as an NFT. Any image, video, audio or 3D model can work as long as itโs yours and doesnโt exceed 100 MB.ย
Step 2: Set up an Ethereum Walletย
If you havenโt one already, install one of the digital wallets that work with most major NFT marketplaces and blockchain apps (such as MetaMask, TrustWallet, Coinbase Wallet).ย ย
Step 3: Connect your wallet to OpenSea
Through the wallet that youโve installed, navigate to OpenSea website. Then, head to the menu icon and select โconnectโ.
Step 4: Create an OpenSea Collection
Click on your profile icon in the upper right corner, click โMy Collectionโ and then click โCreate a collectionโ.ย Thatโs where you upload logo, featured image and banner. You will also be required to pick a name, add description, customize url,โฆ etc. So, fill all the information required.ย
Step 5: Chose Polygon Blockchain
The reason you chose Polygon Blockchain is that weโre showing you how to sell NFT for FREE. In other words, your gas fee will be zero.ย
Step 6: Mint your work
Click on your collection and add an item. Upload the file youโve prepared on Step 1. After your work is minted, click on its page and click โSellโ.
Step 7: Wait for bids while promoting your work
After you list your art, anyone can find it and place a bid for your NFT. But, since there are literally a sea of creators out there, you'll likely need to promote your listing yourself (use your socials specially Reddit).ย
Conclusion
Through art and collectables, NFTs are introducing millions of people to cryptocurrencies for the very first time, challenging attitudes toward ownership and unlocking new revenue streams. But, this is not the only use case of NFTs as they can represent confidential records in other sectors such as health, real estate, education and more.
As exciting as NFTs could sound, care must be taken of what you buy (if you decide to buy before youโre well equipped) and from whom you buy the NFT. Itโs also recommended to protect your NFTs by enabling multi-factor authentication (MFA).ย ย
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