NFTs have exploded onto the crypto scene and it’s hard to escape the hype! Everyone from celebrities, musicians, digital artists (and even 12 year olds) are successfully creating and selling unique digital assets on the blockchain.
The volume of the global market for non-fungible tokens (NFTs) in 2021 reached $17.6 billion, which is almost 215 times more than in 2020 - $ 82 million, according to the report Nonfungible.com.
If you are new to NFTs, it can be tricky navigating the landscape. How to know if an NFT project is a good investment? Why pay for something intangible? Can’t I just copy and paste it?
This beginner’s guide to NFTs is everything you need to know about non-fungible tokens. We explain what NFTs are and how they got started, we review NFT terminology and conclude with a useful guide on how to buy, sell and mint NFTs.
Non-fungible tokens or NFTs are cryptographic tokens on a blockchain with unique identification codes and metadata that cannot be replicated. NFTs can be used to represent any real-world items like artwork, sound and video clips, text, real-estate and so on.
Tokenizing these real-world tangible assets allows them to be bought, sold, and traded more efficiently, while reducing the probability of fraud. Anything of perceived intrinsic value can be minted as a non-fungible token. Let’s start with some examples of well-known NFTs.
The first known ‘NFT’, entitled ‘Quantum’, was created by Kevin McCoy and Anil Dash in May 2014, consisting of a video clip made by McCoy’s wife, Jennifer. ‘Quantum’, was minted way before the crypto art market exploded and sold for $1.47m USD in June 2021, during Sotheby’s “Natively Digital” auction.
‘Quantum’ by Kevin McCoy
In 2007, a digital artist known as Beeple, created the first NFT digital artwork called ‘Everyday’s: The First 5000 Days’. Beeple created a new digital picture every day for 5,000 days and it quickly became one the most unique bodies of work to emerge in the history of digital art. It was the first NFT to be sold at Christies and sold for a staggering $69m USD.
‘Everyday’s: The First 5000 Days’ by Beeple
The founder of Twitter, Jack Dorsey auctioned an NFT of his first tweet for $2.9m to raise awareness of NFTs, so that early adopters could profit from the sale of unique digital assets. The proceeds from this sale were converted to bitcoin and donated to Give Directly Africa Response.
Jack Dorsey’s first tweet
Crypto Kitties are NFT collectibles and are purchased using Ethereum. Crypto Kitties launched in 2017 and was the first blockchain-based NFT game to achieve mass adoption. The game represented a real-world use case for NFTs and it eventually became the most prominent decentralized application on the Ethereum protocol. With millions of transactions on its platform, the highest selling Crypto Kittie in 2021 was Founder Cat #40, with an estimated value of $1,064,022.75 USD.
Gucci became the first luxury brand to explore NFTs with a 4-minute film inspired by their “Aria” collection in collaboration with Alessandro Michele. It was sold at Christie’s auction for $25,000m USD.
The world’s first digital home entitled Mars House, was recently sold for more than $500,000. The new owner paid digital artist Krista Kim, 288 Ether for the virtual property. Kim comments on her Instagram account:
“As a Techism artist, I am challenging the power of NFT as an art medium. Mars House will live forever as an NFT, so let it represent an art movement for humanity through the power of digital technology. Let this remind future generations that we are here to create a new and better world at a pivotal time in history. […] We are ready to change the world”,
Making people laugh is extremely profitable, but only if it catches the public’s imagination. Popular memes have generated millions as NFTs and one such example is ‘Charlie Bit My Finger’. The meme was seen by over 880 million people, and became one the most-viewed viral video of all time. The original 2007 video “Charlie Bit My Finger”, sold for $760,999, and the family who created it took down the original from YouTube for good.
‘Charlie Bit My Finger’ NFT
NFTs have given rise to a plethora of new terminology, some of which is technical or generated from online community forums such as discord. Let’s learn what the key NFT terms are and how to use them.
Fungible tokens are a representation of a digital asset on a blockchain that are interchangeable. For example, CoinField Coin (CFC) is a fungible token because each coin is worth the same at any given moment no matter where it was issued. Trade one CFC for another and you get exactly the same thing. Fiat currency and gold are also examples of fungible assets i.e 1 Euro is 1 Euro, whether it was issued in Spain or Italy. Most importantly, a fungible asset doesn’t have any uniqueness, and the units are standardized.
Non-fungible tokens on the other hand are units of data that represent a unique digital asset stored and verified on the blockchain. Non-fungible tokens don’t have any inherent value. For example, a non-fungible token derives its value from the assets or goods represented by them. NFTs use various token standards and deploy different types of smart contracts.
Minting a digital asset refers to the act of tokenizing, i.e. uploading it to a given marketplace platform and issuing a token to guarantee its authenticity.
NFTs are minted through smart contracts that assign ownership and manage the transferability of the NFT’s. When someone creates or mints an NFT, they execute code stored in smart contracts that conform to different standards, such as ERC-721. This information is added to the blockchain where the NFT is being managed.
Gas is the term for the amount of Ethereum required by the network for a user to interact with the network. These fees are used to compensate Ethereum miners for the energy required to verify a transaction and for providing a layer of security to the Ethereum network by making it too expensive for malicious users to spam the network.
An NFT project is a collection of digital assets that are all distributed as part of a road map. Typically, the artist or creator will give a ‘Roadmap’ for their concept, which is intended to assist you grasp the scope, purpose, and direction of the project. Understanding a project’s tokenomics is crucial and helps determine whether or not you want to participate.
The Floor Price is the least amount of money you can spend to become a project member (i.e. own a NFT). The floor price is set by the person who owns an NFT in a certain project and is selling it for a lower price than all other vendors in that project.
When you flip an NFT, you buy it and sell it quickly (usually within a few days) in order to make a quick profit.
PFP refers to a profile picture and is one of the most popular types of NFT. PFP’s are algorithmically generated and unique for each owner. Its only purpose is to act as a unique profile picture, and examples include Crypto Punks and Bored Ape Yacht Club.
Non-Fungible Tokens (NFTs) on the Polygon network is now supported on D’CENT Wallet’s Collectibles Tab. This update brings to total of 3 different blockchain networks (Polygon, Ethereum, and Klaytn) that D’CENT Wallet users can manage NFTs to Receive, Showcase, and Send from the Collectibles Tab.
D’CENT Wallet is created by IoTrust (Korea), a company founded by security experts with over 15 years of security know-how and engineering experience in developing deeply embedded security solutions based on secure-chip technology (SE and TEE). D’CENT Wallet aims to protect users’ digital assets by combining software and hardware security solutions. Users have the choice of using the Biometric Wallet, Card type Wallet, or the Software Wallet.
There is a misconception that you need to be technical to mint an NFT – this is certainly not the case. Follow these simple steps to mint an NFT and become a first-time creator.
Some NFT’s have fetched millions of dollars, but a common question asked is are they worth it? As with any investment, it’s important to DYOR (do your own research) and exercise caution. Similar to any physical artwork or asset, you need to be sure that the NFT has the ability to grow in value.
Here are three things to consider before buying an NFT:
1. How legitimate and rare is the NFT? Checking the properties of an NFT to confirm that it’s legitimate is a crucial step as scammers can upload copies of popular NFTs, but cannot replicate the properties. Go to the properties section of the NFT’s page and check the properties and rarity of the NFT. The goal of a good investment is to get an NFT with the lowest percentage of commonness among the collection.
2. Is the seller verified? Make sure the seller has a blue verification tick next to their account name to prove that they can be trusted and are not impersonator accounts.
3. What is the NTFs liquidity? Similar to cryptocurrency, NFT’s are driven by supply and demand. Naturally, if there is a surge in the demand the price will increase but there are no guarantees that prices will keep on increasing. It is important to note that the only way to liquidate your NFT is to find a buyer.
NFT is a unique digital item, its originality and ownership are proven using blockchain technology - a database for the purchase and sale of digital items. The record value of the NFT was set last year when a collage by the digital artist Beetle was sold at auction at Christie's for $69 million.
The number of NFT buyers last year increased to 2.3 million people from 75 thousand in 2020.
In addition, people have learned to make money on the resale of tokens. In 2021, investors received $5.4 billion from NFT trading. More than 470 token holders have earned more than $1 million.
The most popular NFT category is collectibles, with sales of $8.4 billion. Gaming NFTs represent the second most popular category, with sales of $5.2 billion. At the end of 2021, there was a wave of popularity of the so-called metaverse: the sale of tokens in this area reached $ 514 million.