In the last few months, non-fungible tokens (NFTs), which are built on Ethereum, have exploded onto the scene, ushering in a new era of technology. The token represents a crypto trading marketplace allowing the trading of digital assets. The digital property is appreciated to be a one-of-a-kind asset and stored on the digital ledger. Featuring a wide range of artworks, this NFT is a trending investment opportunity for millions of dollars. The boom skyrocketed with some mind-blowing deals like $6 million worth of sales of the images and short video of Grimes setting the auction soaring earlier this year. NFT saw a gold rush for series of digital assets in February for digital assets.
The artwork ‘Death of the Old’ that featured flying cherubs, swords, crosses, and glowing lights made proceeds of over $380,000. In total, the short videos ‘Earth’ and ‘Mars’ reaped about $5.18 million in sales. Similarly, the Nyan cat meme, which originated on YouTube, was sold for $600,000 as a one-of-a-kind edition of the famed GIFs.
People are still baffled by the new crypto art platform. Consequently, experts have varying opinions about whether it is a bubble or a solid investment platform poised to change the game of crypto trading.
What is NFT?
NFT is a platform that enables sales of a form of unique artwork like images, videos, music, painting, photos, graphic creations, among others that are available for a said amount for which the buyer has ‘rights’ on the piece of art. The rights are the critical reason for collectors of such artworks to invest a considerable amount on items that are anyway available on the internet. The novel platform is gaining ground now even though it has been in the market since 2014. Since 2017 there has been a financial inclusion of a whopping $174 million on the platform. In contrast to ordinary digital creations, which are unlimited, each of the one-of-a-kind assets is identified by a unique code, making them create scarcity. According to this model, a hypothetical value is created in the market based on demand assumptions. As a result of the high demand, the investor bids hoping for better profits.
How to create one?
The trendsetting cryptos in 2021 saw a boost in sales since last year, which resulted in a 55% increase from $250 million to $389 million. Creating an NFT may sound complicated, but it is a straightforward process that allows anyone with no prior experience in the crypto business to create unique digital assets. The first step is to determine which blockchain technology will be used to issue the token. The NFT token is currently based on Ethereum, so the coins are issued using Ethereum. A variety of blockchain technologies, such as Binance Smart Chain, Flow by Dapper Labs, Tron, EOS, Tezos, and Cosmos, can have a similar effect and be explored by designers. There are definite compatible marketplaces and wallet services for each of the NFT.
Process of NFT creation
- Pick the asset: This platform primarily benefits the designers, photographers, and artists who wish to earn money by selling their artwork. Thus picking the digital assets is the first step in NFT creation. The assets can be any digital creation that can be converted into a multimedia file.
- Cryptocurrency: To be able to mint the NFT, the seller must pay for the platform or the marketplaces. Since Ethereum is the technology with high yields presently for NFT, it is advised to have a digital wallet to purchase Ethereum. It can be connected to the platform that you wish. Due to the highly variable nature of NFT pricing, the operating price may not be the same every day during the minting process.
- Create a digital wallet: For instance, one can create a digital wallet by downloading MetaMask and complete it by agreeing to security terms to set up the account. The cryptocurrency must then be added to the account. With ETH added to other digital wallets, including Alpha Wallet, Pillar, Trust Wallet, and Enjin, funds can also be added in the same manner. Usually, you can buy ETH with a debit card or digital payment options like PayPal, etc.
- Pick a marketplace: The next step requires choosing a marketplace that allows the creation and listing of the token. Some of the marketplaces for NFT are For Basketball: NBA Top Shot, For Soccer: Sorare, For Virtual Real Estate: Decentraland, For Video Games: Axie Infinity, For Tweets: Valuables, For Music: The Musician Marketplace. The popular options are Mintable, Rarible, or OpenSea. In this case, since the wallet provider is MetaMask it must be connected to the platform. OpenSea can also be used as it has comparatively less fee than other platforms yet; it requires a wallet to be linked before creating an account.
- Create the NFT: The marketplaces offer options to create a digital collection in the account profile. For instance, after connecting the wallet to OpenSea, the menu lists various options to build digital assets. The sellers must complete the information and save it to start the minting process. The next step is to load the artwork with complete details of it and create. Describing the artwork is as important as the whole process as this will enhance sales.
How to sell one?
Getting ready for the sale can be accomplished in different ways. The seller can choose to sell even the newly minted token for a fixed price, auction, or royalties after it has been created. Fixed price allows the sellers to sell the art pieces instantly on platforms like eBay. An auction allows the sellers to pick the best bid, followed by a timed auction where the seller places an ambitious price for a certain period for buyers to bid. In variable, the option ‘Unlock once purchased’ provides the potential buyer to get the original artwork through a secured link. The platform charges a listing fee, a commission on the sale, and a transaction fee for transferring funds from the buyer’s account to the seller.
What is the Future of NFT?
With the global trends in the NFT market, it paints an optimistic view of the future. The factors that contribute to the growth can impact the NFT ecosystem. Additionally, the value creation by big brands like Warner Music, Formula 1, Louis Vuitton, and so on poses a bright picture for investment opportunities. Yet underlying challenges like massive carbon emissions cause environmental challenges through the system. However, it promises efficient business transactions in various sectors like real estate, entertainment, finance, and technology. The boom in the market gives investors a positive outlook. Even with the amusing financial gains depicting the sales volumes of $2.5 billion this year, it has some setbacks.
Thus, NFT’s continued development and a deeper understanding of sustainability are necessary factors in expanding the market. Also, the decentralized mechanism of the platform may increase the trading of virtual assets. By solving challenges such as energy consumption and taxation, NFTs could face a promising future in growth.