Alongside yield farming in DeFi, one of the hottest trends in the crypto industry right now are Non-Fungible Tokens (NFT).
Most likely you heard the news about those highly subjective assets selling for millions of dollars. In February, the Nyan Cat meme GIF was sold for 300 ETH (~$568,000 at the time of sale), and in March the tokenized artwork of the famous artist Beeple was bought for almost $70 million.
In this article, we explore the latest trends in NFTs and explain how simple it is to create your own one.
Brief introduction to NFTs
NFT stands for non-fungible token. In simple words, these types of assets are digital certificates that verify the ownership rights of something, usually art.
Classic artworks, antiques, and historical artifacts are sold at auctions along with documents proving the authenticity of the objects. NFTs are “blockchain-certified” unique artifacts — images, text documents, video, and audio recordings. In other words, it is a form of digital asset with its ownership recorded on the blockchain.
These tokens can be bought, collected, sold, and even destroyed like physical objects. Blockchain technology provides the unique features of transaction transparency, allowing to publically track the history of NFT movement from owner to owner verifying other information about the asset.
NFTs are issued on a variety of blockchains, with Ethereum being the most popular one. The process of issuing a token is called “minting”. When NFTs are minted, issuers can set the resale commissions, usually ranging from 10–30%.
Non-fungible tokens can represent almost any physical or intangible object, including:
- Artworks
- Music
- Videos
- In-game items, like skins, weapons, etc
- Сollectibles (e.g., digital collector cards)
- Tokenized real-world assets, from real estate and cars to designer sneakers
- Video footage of iconic sporting and historical events
NFT classification by most popular categories
Some marketplaces feature cooking recipes and even sell entire startups in the form of NFTs, as if to prove that there are virtually no restrictions to this type of assets.
The evolution of NFTs
The concept of the first non-fungible tokens (Colored Coins) appeared in 2012 and involved the tokenization of assets on the Bitcoin blockchain.
One of the oldest projects of those distant times is Rare Pepe Directory. The images of the frog, adapted from a viral meme that emerged in 2008, were the first examples of unique digital artworks tied to cryptocurrencies. Thanks to them, the idea of developing standards for NFTs emerged in the community.
The first big hype in the NFT history was the CryptoKitties — a game that allows users to care, breed, and sell virtual cats. In early September 2018, a two-week-old NFT kitten named Dragon was purchased for 600 ETH ($172,000 at the time of sale).
Shortly before CryptoKitties, Larva Labs came up with the CryptoPunks — a project that released a set of unique NFT pixel avatars. A total of 10,000 CryptoPunks were released and initially distributed for free, but in mid-October 2020 the average price of CryptoPunks rose to 7 ETH.
The second half of 2020 and early 2021 marked a renaissance in the NFT segment. The chart below clearly shows an impressive surge in the volumes of CryptoPunks, NBA TopShot, and other NFT platforms.
Right now, NFTs are rushing into the mainstream, with many well-known personalities joining the trend:
- On March 15, Elon Musk posted a techno-track about NFTs on his Twitter account, saying that he would put it up for sale. NFT artist Mike Winkelmann, who goes by the name Beeple, offered $69 million for Musk’s track
- Twitter creator Jack Dorsey sold his first tweet for $2.91 million
- Canadian singer and Elon Musk’s girlfriend, Grimes, sold an NFT collection of unreleased music and art for $6 million at a Nifty Gateway auction
- In March, Sotheby’s announced its first-ever auction house sale of NFTs by digital artist Murat Pak
- In late February, an NFT token featuring Trump by Beeple resold for $6.6 million
- A tokenized copy of a burnt painting by Banksy called “Morons” found its buyer for 228.69 ETH (Over $400K at the time of writing)
News like this comes out on a daily basis and the hype is probably far from over. This means that it’s the best time ever to find out how and where to create and sell NFTs
How to create an NFT
Now for the part you’ve probably came to this article. How do you make one?
Creating your own NFT is not harder than uploading a youTube video, and does not require deep technical knowledge or even knowledge of cryptocurrencies.
First of all, you should decide on which blockchain you want to issue your NFT. Most NFTs are issued on Ethereum, but there are other noteworthy platforms, including:
- Binance Smart Chain (BSC)
- Flow by Dapper Labs (Creators of CryptoKitties)
- Tron
- EOS
- Polkadot
- Tezos
- Cosmos
- WAX
A shameless plug: our own Nimera Blockchain will also support NFTs, but the feature is in development right now.
Ok, back to the article. Each blockchain has its own NFT standards of interaction with different wallets and marketplaces. For example, a token issued on Binance Smart Chain can only be sold on platforms that support BSC-assets.
Let’s consider the process of issuing NFTs on Ethereum — the largest NFT ecosystem so far.
You will need:
- An Ethereum wallet like MetaMask, which supports ERC-721 and other NFT standards
- ETH to pay transaction fees (given the current dynamics of gas prices, you’ll need at least $50-$100)
There are many marketplaces that allow you to connect a wallet and download a file to turn it into an NFT. The list of most popular platforms includes:
In this case, we will explore the process of issuing a token on OpenSea, the largest NFT marketplace. However, most of NFT marketplaces have the same interface, so the process will be similar on other platforms.
After clicking “Create”, you will be asked to connect an Ethereum wallet.
After you integrated your wallet, select “My Collections” and click on the “Create” button.
An appearing window allows you to upload an image for the new collection and add its name and description. At this point you simply create a folder for your NFTs.
Now you can create your first NFT. To do this, you need to click on the “Add New Item” button. Then the Ethereum wallet will ask you to sign the message again.
A new window will appear for you to upload an image, audio, video or 3D model as the basis for your NFT.
OpenSea and many other marketplaces allow you to configure various options. For example, authors can enable the “Unlockable Content” option, which is only available to buyers.
When everything is set up and the fields are filled in, click the “Create” button at the bottom and confirm the creation of the token via Ethereum wallet. The NFT will appear in your collection. Congratulations, you just created your first NFT!
How to sell the NFT
To sell an NFT on OpenSea, you have to put it in the collection first. Then select it and click “Sell”, and a page with pricing parameters will appear. There you can define the terms of sale, whether it is an auction or a fixed price.
Most NFT platforms allow you to sell tokens for ETH and ERC-20 tokens, but some marketplaces only support their native token. For example, VIV3 only accepts FLOW tokens.
By clicking on the “Edit” button next to the file from the collection, you will need to sign the message using the wallet.
Scroll the page down to see options to set up a royalty and select assets that you would like to receive as payment.
Royalties allow NFT creators to earn a commission each time their token is released. It is a potential source of passive income automated through smart contracts.
Selling a tweet
Inspired by Jack Dorsey’s example, many users turn tweets into NFTs in hopes of selling them for crypto assets. To do so, they are using the Valuables platform.
The screenshot below shows the Twitter founder’s tokenized first tweet and the $2.9 million bid made by Bridge Oracle head Hakan Estavi.
Dorsey was not the only one among famous personalities who tested the service — the head of Binance Changpeng Zhao received $6600 for one of his tweets. This NFT was later resold for $121,000.
Any Twitter user can tokenize their tweet on Valuables and bid on tweets created by other people. All you need is a MetaMask wallet and integration of your Twitter account.
Conclusion
NFT has yet to prove its viability. So far, the buzz around this segment resembles the “ICO boom” of 2017. At that time, new projects appeared like mushrooms after the rain, many just to vanish with money collected from inexperienced investors.
Beeple, who sold a token for nearly $70 million, compared the current market condition to the dot-com boom. He pointed out that the bubble that burst back then didn’t destroy the whole internet.
Most likely, the hype around NFT won’t go away either. The developers will improve the existing standards and fix potential vulnerabilities. In the end, the industry will have the most viable projects with a compelling value proposition. And far as creating and selling, hey, now is the perfect time to hop on the NFT hype-train!
