If you are reading this you have probably come to a point in your life where you need to properly educate yourself of NFT. Is it worth something? Will it last? Is it something you can make use of? But let’s start with the top. What does NFT stand for?
Does it make any sense for you? Right, sorry. “Non-fungible” means that it’s unique and not replaceable. For example, a bitcoin is fungible — trade it for another bitcoin, and you’ll have exactly the same thing. A one-of-a-kind artwork, on the other hand, is non-fungible.
If you haven't spent last year in the bunker, you definitely heard of the NFT concept. NFT images are trumpeted literally at every corner, they are promoted by celebrities, people start buying into them, some NFTs have already brought millions of dollars to their owners.
- Image of Edward Snowden's face made from pages of the court's decision has turned into an NFT titled Stay Free that sold for $5.4 million.
- The first tweet in the history of Twitter, made by the company’s founder Jack Dorsey, was sold for almost 3 million euros.
- World-famous gif of a flying cat Nyan Cat went under the hammer for 600 thousand dollars.
HOW DO NFTS WORK?
At a very high level, most NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency, like Bitcoin or Dogecoin, but its Blockchain also supports NFTs, storing extra data that makes them work differently from, say, an ETH coin.
WHAT’S UP AT THE NFT MARKET?
NFTs can really be anything digital (such as drawings, music, X-ray of your teeth), but a lot of the current hype is, of course, around digital art.
HOW TO MAKE MONEY ON NFTS
The quest for digital goods existed long before the NFTs. Many gamers have bought skins in CS: GO, Dota 2 and other famous games. Yes, in those days, users were buying not NFTs, but the skin codes software, but this hardly changes the essence.
Real money, though, is swirling around collectibles. Let’s look at the most expensive NFTs. This includes the collage Everydays: The First 5000 Days (almost $70 million), the T206 Honus Wagner baseball card ($3.25 million), and The Merge project, which has become a real record holder, brought its author 91.8 million dollars.
But to make money on NFT, you don’t need to create something new. As with any asset, the price of an NFT changes over time, so you may purchase a project at the market’s bottom and sell at the top, earning on the price difference. But, as with any speculation, there are no guarantees. There is always a risk, when it comes to investing, NFTs are no exception.
NFT’S TRAPS AND PITFALLS
Unfortunately, there is a risk of fraud as well. Despite the absolute transparency of working with tokens, their creation does not at all guarantee that the author actually owns the property. And these cases are quite often.
Some insurance in this case can be the use of specialized online platforms that take care of the copyright protection of the content creator. But you will not get a full guarantee even there.
HOW TO CREATE AN NFT
So, here’s the most thrilling part – how to create an NFT. Any specialized platform like OpenSea can be used to create an NFT. In addition to registering there, you will need a wallet in the Ethereum system and, in fact, digital content to which you will link the token. The scheme of NFT creation depends on the platform you choose. Rarible
Axie Marketplace, Larva Labs/CryptoPunks, Nifty Gateway – are the most popular ones, but there are already dozens of them.
Normally, you will need to log in to the system through the Ethereum wallet and upload the necessary images, animation, music, or even 3D animation to it. For example, the same OpenSea supports files of JPG, PNG, GIF, SVG, MP4, WEBM, MP3, WAV, OGG, GLB, GLTF formats and weighing no more than 100 MB.
The non-fungibility of token is ensured by the unique combination of the object to which it is linked and your identifier in the system – a unique key that signs any token passing through your account. As a matter of fact, such individual signature enables any user to trace the entire way that NFT has gone since its creation, and all the owners of this certificate.
IN A NUTSHELL
Many people (and some respectable media as well) mistakenly equate an NFT to a digital object. But in fact, the NFT is a digital certificate denoting your rights to an image, animation, music, or any other object. At the same time, such a certificate does not always mean the transfer of exclusive rights to the content to you.
For instance, NFT can allow you to listen to some tracks, attend a certain event, or even right your name in a famous meme history. However, you will not receive any ownership rights of the object itself.
However, there are also situations when NFT certifies the fact of buying exclusive rights to an object. Moreover, recently we are noticing more and more cases when not only digital assets, but quite tangible things and even intellectual property (know-how) are sold that way.