Non-Fungible Tokens, better known as NFT, is the latest crypto industry buzzword. With blockchain as the underpinning technology, NFTs can bring joy to many lives–especially the artist community.
Let’s decipher NFTs into simple terms and know their vast (from gifs to real estate) applications.
What are NFTs?
In simple words, an NFT represents ownership of any asset–digital or physical.
The wording–NON-FUNGIBLE–indicates that no two NFTs are equal, unlike, say, a US dollar, which is equivalent to any other US dollar.
This makes each non-fungible token unique.
NFTs are as valuable as the market makes them. Ownership credentials of NFTs are kept on blockchains. So, it cannot be tampered with.
For instance, if you own an NFT that represents a piece of land, it means nobody can change that by foul play. You can sell the plot of land, but even that transaction will always be available for public verification.
Twitter’s Founder, Jack Dorsey, sold his first-ever tweet–“just setting up my twttr”– as an NFT for USD 2.9 million on 22nd March 2021.
The buyer, Mr. Sina Estavi from Malaysia, is a chief executive of a crypto firm, Bridge Oracle.
It’s a piece of human history in the form of a digital asset. Who knows what will be the price of the first tweet of human history 50 years from now.
He compares his purchase with the best known painting–Mona Lisa by Leonardo da Vinci.
Some people may be ridiculing his decision, but experts agree that the Twitter founder’s first tweet on that very platform is indeed a valuable asset. So, it might pay him over time.
NFTs are way more than just a fancy tweet or painting.
Regardless, let’s see how you can create an NFT for free right from your personal computer.
How to Create an NFT?
The first step is to decide on the blockchain to host your NFT.
Each blockchain has its own sets of protocols, supported wallets, and marketplace for NFTs.
There are numerous blockchains like Ethereum, Free TON, Polkadot, Cosmos, etc.
At present, Ethereum is the most powerful of them all.
So, I’ll explain an easy way to create an NFT on the Ethereum blockchain and make it available for purchase.
#1. Creating an Ethereum Wallet
A wallet is your personal space where you keep your blockchain-related items: currencies, tokens, etc.
There are tons of available options to create your Ethereum wallet.
I’ll illustrate with Metamask, a hot wallet for storing your crypto tokens.
A hot wallet remains connected to the internet. Almost all the crypto hacks you hear about involve hot wallets.
A cold wallet doesn’t stay connected to the internet all time time. They connect to the internet (become hot) only during a transaction. The rest of the time, they remain hidden from the prying eyes of cybercriminals.
I won’t suggest spending on cold wallets if you’re a newbie. Instead, make a hot wallet–it’s free.
And the fastest way to get started is to download Metamask as a browser extension.
So, install the browser extension and go through the registration process. It’ll hardly take five minutes.
You can also check this tutorial if you’ve any problem with this step:
Just like you picked Ethereum among different blockchains, now you must put your finger on a platform to create and sell your first non-fungible token.
Your best options for an NFT marketplace are Opensea, Mintable, Nifty Gateway, Rarible, Mintbase, etc.
Or let me make it easy (and free) for you.
I’ll illustrate about putting your NFT in the Mintable marketplace without paying anything upfront. Let’s do it sequentially.
Signing-Up at Mintable
First, open the Mintable marketplace and click Create Account.
Linking Your Wallet
Now login and click Connect a Wallet.
Afterward, click Connect a Wallet in the pop-up to connect the Metamask wallet. This step will only be possible after the Metamask registration and enabling it as a browser extension. Click Next and confirm to all pop-ups to complete the linking process.
Now we’ll start the actual Minting process. Select Mint an item next to NFT university.
Click Create a new item.
Next, select Advanced in the top left button. With this option, you can have both–Gasless or Traditional–options.
Gasless transactions are free but won’t show your NFT in your wallet just yet. Instead, they will be held on Ethereum–somewhat similar to a stealth mode–until a sale (transfer).
After a transfer, its history will be shown in your wallet, with you as the original creator. Click here to read more about this.
Interestingly, you’ll be paying a greater transaction fee (5%) with the gasless than if you’ve gone with the traditional way (2.5%).
But with the traditional method, you pay the transaction fee upfront to show it in your wallet, even if your NFT sits on the blockchain without any sales forever.
So, choose Gasless if you’re only trying this out for the first time.
But, Traditional is the way to go if you’re a professional artist.
Since I’m not a big-time artist and this is for illustration only, so we’ll proceed with the gasless option.
This is a pretty much useless GIF that I created for this demonstration. But you might wonder if one can download it with a simple right-click, then why purchase it at all? Well, that’s the thing with NFTs. They can be copied, like a duplicate of any precious art form. But, there can be only ONE proud owner of the original. This fact primarily commands the price.
So the next step is to list the item. Enter the Listing title, Listing subtitle, upload your file, enter Item description, fix the price, set the sales method (Fixed, Auction, and Auction with Buy Now), and hit LIST THIS ITEM.
Confirm this by selecting Proceed from the next screen.
Click Sign on the Metamask pop-up.
And Yay! Your creation is live on Ethereum.
You can check out your token by clicking View your item.
I’ve priced my gif at just 50 ETH (short for Ether, a cryptocurrency) or 180,617 USD at the time of this writing. Check it out and purchase it 😅 if you feel like parting your fortune with me.
How do NFTs Work?
NFTs are managed with the ERC-721 token standard. It is a set of protocols that govern NFT ownership credentials to avoid duplicity.
This ensures unique ID and metadata to every non-fungible token, even if they get minted from the same smart contract.
In a nutshell, smart contracts are Ethereum wallets controlled by code. Just like with a regular wallet, every transaction with them is immutable and transparent.
For a simple analogy, assume smart contracts as your partners in a computer game, like counterstrike or chess. They can play with (or against) you, but they can’t play on their own.
So when you mint a non-fungible token, a unique ID and metadata get created. It helps in authenticating the original NFT and its maker.
As for the Mintable NFT marketplace, you can find the metadata with each item by simply scrolling down the item page.
For instance, the NFT I just minted has this metadata:
It clearly shows the original creator and the token ID.
So, let’s say I transfer (sell) this to you. Then, you will have this in your wallet, and the token ID will vouch for its authenticity as an original. Any copy created by foul play will have a different ID–identifying the fraud.
Though the artist can decide to make other copies as well, it can’t be duplicated if you purchased it with copyright transfer. That said, this is valid for a single blockchain at a time.
However, if the artist is a fraudster, then you may find copies of any particular art on other blockchains. But a legit artist would stick to one blockchain or at least wouldn’t sell the same NFT on different blockchains.
This unique token has many use cases. Arts is a well-known application at present. But, as the industry matures, you would be able to use NFTs in numerous other streams as well.
This section will discuss some of the lesser-known fields which can use them for a better consumer experience.
#1. Application of NFT in Art and Digital Creatives
It is the de-facto application area where everyone is trying to sell a token in millions.
Not just GIFs and images, you can also mint music and videos into NFTs.
And just like with images, music and videos can be copied all over the internet. But the bragging rights to own the original remains with the legit buyer.
For instance, this short video of Gucci Ghost last sold for USD 3,600 seven months back.
Back then, its creator–Trevor Andrew–listed it for USD 200. Then it changed several hands, and presently it is listed for USD 16,300 by its now-owner Danny.
You can check the complete purchase history by visiting the item page on Nifty Gateway.
Similarly, a person named Rabono purchased Cryptokitty #896775 for a staggering USD 172,000. This Cryptokitty goes by the name Dragon.
Her latest price is 600 ETH which is equivalent to USD 2,068,794.00 at present.
You can buy the kitty here. There she is (a copy):
#2. Other Applications of NFTs
Don’t mock NFTs already.
They have plenty of use cases other than digital arts. Some of them are:
a) Tickets for an event (movie, live performance, soccer match, etc.) can be tokenized as NFTs. As every seat location is unique and no two can be the same.
b) Legal Docs, Invoices, Signatures, etc. You can convert any legal property document into an NFT. It can help in identifying the actual owner. This will reduce scams in real estate and ease the selling process. Additionally, it will reduce the necessity of middlemen (local administration). So, the transfer will be economical and quick for both the seller and the buyer.
Similarly, you can tokenize invoices and signatures. It’ll end the misuse and will hold a permanent record of every transaction.
c) Supply Chain Management using NFTs can provide evidence about the originality of any product. For instance, you can check any medicine for its authenticity by tracking it to its genuine manufacturer.
d) Anything distinctive can be converted into a non-fungible token to ensure fair use. For example, your college degree, driver’s license, personal ID, passport, etc., can be issued as an NFT to prevent forgery.
Wrapping Up 😎
You can apply NFTs everywhere you see something unique, be it art, legal documents, personal identification cards, or any branded product.
It assists in discerning the originals and puts an end to counterfeiting.
On a side note, if you’re a serious artist willing to pay an upfront fee for minting your NFT, then try Opensea. It’s the biggest NFT marketplace at present.