The Beginner’s Guide to Non-Fungible Tokens (NFTs)
It’s 2021, and the world of cryptocurrency is fast expanding into new domains and territories. The technology that supports and powers the cryptocurrency landscape, known as a blockchain, was up until recently only used for cryptocurrency transactions. However, NFTs have changed all that by putting the technology that powers crypto to ever more innovative uses.
As with most projects in the crypto sphere, NFTs started off slow in 2017 and gradually picked up popularity over time. It wasn’t until the year 2021 that the scope and prominence of NFTs skyrocketed up to previously unimaginable heights.
For those who are new to the world of cryptocurrency and blockchain, NFTs might be a little confusing to wrap one’s head around. In this article, we will provide a complete beginner’s guide to NFTs, outlining what they are, how they work, what you can do with them, and how you can start creating and selling your own NFTs today. So let’s get into it!
What is an NFT?
NFT stands for non-fungible token. Unlike most crypto, such as Bitcoin and Ethereum, NFTs are not designed to function as currency. Instead, NFTs are an example of an alternate use-case of blockchain, whereby the very same blockchain technology that powers cryptocurrency transactions is used for an entirely different purpose.
If you trade one Bitcoin on a cryptocurrency exchange, the value you receive in return will be equal to one Bitcoin. This is because cryptocurrencies are designed to be interchangeable, and no single cryptocurrency has a unique identifier. Each NFT, on the other hand, does have a unique identifier. This is where NFTs get their name; for instance, like two physical paintings, no two NFTs are alike and are hence non-fungible.
NFTs can hence be thought of as digital tokens that use blockchain technology to secure the ownership and authenticity of a unique and one-of-a-kind asset. Through blockchain technology, the history of the asset’s ownership can be verified, and hence its authenticity confirmed.
What Can I Do with an NFT?
Even after knowing what an NFT is, it is easy to wonder what the user value is in all this. Today, NFTs are used to create unique digital artworks, songs, and games that can be bought off of NFT marketplaces. Since the world of NFTs is still very much in its early stages, people are still discovering more and more innovative ways to put these digital assets to good use.
Recently, the NBA started using NFTs to transfer the old-school world of sports card trading onto the digital sphere. Today, an entire trading ecosystem is being built around these digital trading cards. In a different vein, a project known as Decentraland uses NFTs to build entire augmented realities for users to interact with.
While lots of NFTs are simply static images that are unique and verifiably authentic, many other NFTs have actual in-game uses as well. One example of this is the popular NFT based game CryptoKitties. This game was released on the Ethereum network in 2017 but has exploded in popularity in the last two years.
The concept is simple; each digital kitty is represented by a unique NFT, which gives it a one-of-a-kind genetic make-up. Kitties can then be bred to produce more unique kitties, which can then be bought and sold in an effort to develop a collection over time.
It may not sound like much, but at its peak, CryptoKitties congested over 10% of the Ethereum network. In fact, this is the use-case that brought everyone’s attention to NFTs.
Where Can I Buy NFTs?
Depending on the type of NFT you wish to buy, you will find different NFTs in different places. Most kinds of gaming NFTs can be found as in-game purchases, while digital artwork NFTs can be found on digital art auctions.
That being said, most NFTs are available on any one of the large number of online NFT marketplaces that exist today. Using any of the following NFT marketplaces listed below, you can find some of the popular and trending NFTs for sale or auction.
1. OpenSea
OpenSea is a very user-friendly NFT marketplace that does not require any verification to use. All you need is some crypto funding. The site has a very large number of collections to browse through and choose from and even offers a ranking feature that shows you trending and interesting pieces.
What’s more, OpenSea is an NFT marketplace that makes creating and selling your own NFTs extremely straightforward. More importantly, there is no coding required, giving OpenSea a very low barrier to entry. It should take about three minutes to create your first digital artwork on OpenSea, and the process is completely free.
Since OpenSea is free and easy to use, most of the collections available on OpenSea are digital collectibles rather than artworks created by individuals.
2. Rarible
Rarible is another popular NFT marketplace where users create, buy and sell individual artworks. While the marketplace is just as democratic and almost as user-friendly as OpenSea, you do have to pay for each artwork you mint on Rarible. This means that, unlike OpenSea, you will have to create an NFT block for your piece and put it on the blockchain.
Due to this, Rarible is a much less crowded marketplace and offers much fewer digital collectibles. NFTs created on Rarible are hence more likely to be seen by potential bidders, which is part of why you pay anywhere between $40–80 for each artwork you create here.
3. Foundation
Foundation is an NFT marketplace that of the three mentioned in this guide is the most difficult to use and is also the most exclusive. In other words, before you can even post artwork on Foundation, you will have to get a certain number of up-votes from other artists and users in the community.
Due to the exclusivity of the Foundation NFT marketplace, you will find that artworks here are of better quality and go for much higher bids than those on other platforms.
For established artists who already have a large following on other platforms, this is definitely a good place to sell their work as NFTs. In this case, you might even be able to get an invitation from a community artist on Foundation and skip the long queue of people waiting to get enough up-votes.
How Can I Make My Own NFTs?
Learn more here
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