In 2021, the number of NFT users doubled to approximately 550,000, and the market value of NFT increased by 37,000%. NFTs are currently an $11 billion industry and growing every day.
So, are NFTs the next big monetization opportunity for creators and brands? This seems to be the opinion of the leaders of most popular social networks.
Meta recently distributed digital collectibles to over 100 countries on Instagram and Facebook, Twitter allows NFT profile photos, TikTok has experimented with selling NFTs, and Reddit has just launched its own NFT marketplace.
Here’s everything you need to know about NFTs in order to take advantage of all the new features social platforms are launching.
What is NFT?
NFT is a one-of-a-kind digital identity certificate that exists on the blockchain to verify the identity and ownership of assets. NFT stands for Non-Fungible Token.
The NFT itself can be a digital item or represent ownership of a physical object. Only one person can own a particular NFT at a time. Because NFT transactions take place on a secure blockchain, the ownership record cannot be copied or stolen.
They are an important part of the move towards Web3: a blockchain-powered decentralized Internet where content and assets are securely controlled by individuals rather than corporations.
How does NFT work?
Think of NFT like a famous painting. It has been sold many times over the years, but there is only one painting that changes hands. This is a real item.
In other words: it’s not interchangeable. Indispensable. The opposite of interchangeability. What a fun word, huh?
In terms of investing, “non-fungible”means “irreplaceable.”An irreplaceable asset cannot be easily or accurately replaced by another.
Cash? Completely interchangeable. You can exchange a $20 bill for another and it will work just the same.
Your car? Not interchangeable. Of course, there are other cars in the world, but they are definitely not yours. They have different mileage, different wear and different fast food wrappers on the floor.
How to create an NFT
It’s easier than you think. To create and sell NFTs, you need 3 things:
- Blockchain wallet account supporting Ethereum (ETH): MetaMask and Jaxx are popular options. You can create NFTs with other blockchains like Polygon, but most marketplaces use Ethereum.
- Some ETH cryptocurrency (in your wallet).
- NFT marketplace account: Popular options are OpenSea and Rarible, although there are many options.
OpenSea is very beginner friendly, so I’ll demonstrate it.
1. Create an OpenSea account
Once you’ve set up your blockchain wallet, sign up for a free OpenSea account. Clicking on any of the top navigation icons will ask you to connect your crypto wallet, which will create your account.
2. Connect your wallet
The process is slightly different for each wallet. Follow the instructions to connect the crypto wallet of your choice. (I use MetaMask.)
3. Create your NFT
After you have linked your wallet and verified your account, go to Create. You will see a rather simple form.
You need to have a digital thing for NFT-itize. This could be an image, video, song, podcast, or other resource. OpenSea limits the file size to 100MB, but you can link to an external file if it’s larger.
Of course, it goes without saying that you need to own the intellectual property rights and copyrights to anything you want to sell, just like any other digital or physical product.
For this demo, I created a quick graphic.
The only required fields are your file and name. It’s so easy to get started.
Here is a summary of the optional fields:
- External reference. A link to a higher resolution file or full version, or to a website with more information. You can also link to your general website so that buyers can find out about you.
- Description: same as the product description on an e-commerce site. Explain your NFT what makes it unique and make people want to buy it.
- Collection: The category in which it appears on your page. They are usually used to group variations of a series together.
- Properties: These are the attributes that make this NFT unique from others in your series or collection. Or just more information about it.
For example, the NFT of an avatar usually lists what makes each avatar unique, such as eye color, hair, mood, etc.
- Levels and Attributes: These are often used in the same way, but are essentially properties ranked on a numerical scale rather than the text properties above. For example, how many editions or versions of NFT exist.
- Unlockable content: A text field that can only be viewed by the owner of the NFT. You can place markdown text here, including a link to a website or other file, instructions on how to use the bonus material, whatever you want.
- Explicit content: self-explanatory. 😈
- Offer: Exactly how much of this NFT will ever be available for purchase. If set to 1, then only 1 will always exist. If you want to sell multiple copies, you must enter the total here. This is encoded on the blockchain with NFT so you can’t change it later.
- Blockchain: You can specify the blockchain you want to use to manage NFT sales and records. OpenSea supports Ethereum or Polygon right now.
- Freeze Metadata: After it is created, enabling this option moves your NFT data to a decentralized file storage. This includes the NFT file itself, but does not include the unlockable content. You will never be able to edit or delete your ad and it will exist forever.
Here is my finished NFT:
Now, it was a quick thing to do this demo (cheers for learning together) so I don’t expect to be a millionaire overnight.
However, NFTs are not just for art. Here are other things you can sell as NFTs:
- Event tickets.
- Original song.
- Original film or documentary.
- An image, video, or audio file that comes with a bonus, such as a consultation, service, or other exclusive benefit.
- Former Twitter CEO Jack Dorsey even sold his first tweet for $2.9 million.
How to buy NFTs
The exact process will depend on which market you’re buying from, but here’s how to buy NFTs on OpenSea.
1. Register with OpenSea
If you haven’t already, register with OpenSea and connect your crypto wallet.
2. Find NFTs to buy
On the NFT details page, you can learn more about the item, what it is, and any special bonuses or things to know about it. For example, this NFT painting uses artificial intelligence to constantly change over time—forever. I don’t even know how it’s possible, but it sounds cool.
3. Add the required amount of ETH to your wallet.
Whether you are going to pay full price or make an offer, you need currency to buy it. In this case, it is Ethereum (ETH). Add enough to cover the purchase price to your crypto wallet.
You will also need a little more to cover the “gas price”. “Every blockchain transaction has a transaction processing fee, just like payment processing fees in e-commerce. Gas prices fluctuate throughout the day depending on demand and other factors.
4. Buy or make an offer
Just like on eBay, you can make an offer that the seller may or may not accept, or if you really want it, you can buy it right away.
The currency of the sale is ETH, so for this NFT, offers are listed in WETH. It’s the same currency, although WETH is like pre-authorizing a credit card before selling.
5. Show off your new NFT
The NFTs you own will be displayed in your gallery on the marketplace or in the wallet in which they are stored:
You can even buy home monitors like Tokenframe, which connect to popular NFT wallets and display your NFT art collection.
Should you invest in NFTs?
Now I see it: 2095. A representative of the Y21K generation taps on the neural interface above the ear. Replays of the 2024 Antique NFT Roadshow are shown on a holographic TV screen…
But seriously, investing in anything comes with risk, and NFTs are no different. Do your own research and make sure you’re comfortable using words like “blockchain”, “stablecoin”, “DAO”and other cryptographic terms before diving into them.
Investing in NFTs can lead to:
- Huge profits – like a really ludicrous return on investment of 79,265% in one year for an illustrated monkey. Bored Ape Yacht Club NFTs were “minted”(created) at $189 in 2021, with the cheapest one now priced at $150,000.
- Long-term financial assessment.
- Search and support of new artists.
- Be cool.
But investing in NFTs can also lead to:
- Losing some or all of the value of the NFT overnight.
- Unbalanced overall portfolio if traditional assets are ignored in favor of NFTs.
- The loss of all your crypto assets if the wallet or blockchain they are stored on suddenly ceases to exist.
Frequently Asked Questions about NFTs
What is NFT and how does it work?
NFT (Non-Fungible Token) is a digital asset on the blockchain that certifies ownership of a digital item. Anything can be NFT: digital art, music, video content, and more. Each NFT represents one unique asset.
Why would anyone buy NFTs?
NFTs are the perfect investment for fans looking to support their favorite artists and for investors willing to take the risk for potentially high future returns.
In 2021, Kings of Leon became the first group to release an album as an NFT collection, earning over US$2 million. It included special NFT-only perks, such as front-row concert seats and an extended version of the album.
How do you make money from NFTs?
If you are a creator, you can earn from NFTs by selling your work. It’s competitive and not guaranteed, but this 12 year old has already made $400,000.
If you are a collector or investor, NFTs work just like any other high-risk, high-reward speculative investment, such as real estate.
What is the most expensive NFT ever sold?
Pack’s “merger”is the most expensive NFT ever sold for $91.8 million. It also holds the record for the most expensive piece of art ever sold by a living artist, including on our physical plane of existence.
What are NFTs used for?
NFTs are used as proof of ownership of digital assets such as art, music, videos, and other files. Because NFT transactions use blockchain technology, their ownership records are 100% verified, eliminating fraud. Buying an NFT is like signing an unbreakable smart contract.
What are some examples of non-fungible tokens?
NFTs are digital tokens on the blockchain that are bought or sold to transfer ownership of a digital file, such as a work of art, music, or video. NFTs can also represent physical items.
Can NFTs be fake?
Yes. NFTs prove ownership, but someone can still copy or steal the contents inside, just like any digital file. Fraudsters may try to sell these files as new NFTs.
To avoid being scammed, buy from reputable marketplaces, buy directly from the artist’s official website or from a verified marketplace account, and verify the contract address on the blockchain that shows where the NFT was created before buying.
Can I just draw something and make it an NFT?
Certainly. An NFT is a digital asset, which can be an image file. Many artists sell digital paintings and illustrations on NFT markets.
However, many successful artistic NFTs use AI software or programs to create thousands of unique variations, such as the popular CryptoPunks collection.
How to pronounce NFT
Most people say it like it’s spelled “En Eff Tee”. Just don’t call it “graceful.”