As the blockchain and NFTs continue to skyrocket, it is also leaving those on the outside asking questions such as ‘why’ and ‘what’, perhaps ‘when’ and even ‘how’. From the surface, the NFT world seems complex, technical, and difficult to navigate, especially for a beginner. In fact, even trying to set up an account to buy and sell might seem daunting.
Consequently, it has left many feeling reluctant to enter the NFT space. However, if you take the opportunity to learn the basics, it will soon become second nature!
Follow me in this article as we demystify the hurdles and intricacies of the NFT space, which will hopefully provide you with a better understanding of the NFT space!
So what is an NFT?
NFT stands for, ‘non-fungible token’.
Simply put, it is a digital asset that is unique and upon the metadata being locked, it cannot be changed. At the most popular, NFTs take the form of images, which many refer to as JPEG’s, meaning compressed images. But NFTs can be many other things including videos, GIFs, or audio.
Most NFTs are not interchangeable, this is what allows them to accrue their value. For example, a pound coin is fungible, you can interchange them and they will still hold the same value. On the other hand, NFTs are non-fungible, meaning that they are unique and their value can change.
However, dependent on the token type this may change. The Metadata of some NFTs are open and therefore, in theory, the image can change. For instance, some collections have changed their image before the metadata is locked. Although the conception is that NFTs don’t change, we are already seeing experimentation where not all of what is referred to as NFTs are actually non-fungible. This is an interesting thought!
Where images exist on publically shared and company servers, contrastingly, NFTs live on the blockchain, an entity owned by no single party, and hence the reason they are decentralized.
So why can’t I right-click and save the NFT?
NFTs are a part of the Ethereum blockchain, once they are purchased the owner has verifiable ownership of that NFT, and nobody else.
How? Well, NFTs also contain identifying information in what is known as ‘smart contracts’, they are lines of code that settle an agreement between the buyer and seller, without the need for a middle man.
Although you can save someone else’s NFT onto your device, there is no value in doing so. The owner of the NFT has ownership of the asset, and it is stored and tracked on the blockchain forever.
Where is the value?
As well as having ownership of the NFT, you may also be given the right to exclusive content, access to join private groups, the right to intellectual property (IP), the right to use the NFT in the metaverse, and much more.
NFTs are minted before they can be purchased, the term ‘mint’ is the process of uploading the NFT onto the blockchain, which then allows it to be collected, sold, and tracked.
Prior to this, you must set up a digital wallet. There are a number of wallet providers, however, the most trusted and widely used is ‘MetaMask’.
To make transactions on the blockchain, you have to install a digital wallet. Meta Mask is an Ethereum wallet, accessed by a browser plugin and also via mobile.
You will need to install the extension and follow the step by step guide which takes a matter of minutes and follows the same format that any other account setup takes. Remember to create a secure and strong password!
What is unique about Meta Mask is that you are given a 12-word backup phrase, also known as a ‘seed phrase’. This is a security phrase that you must write down on paper and safely store, never to share with anybody. If you were ever locked out of your account, this phrase will restore your access.
To start, you can deposit funds via your debit or credit card. Upon doing so, you will also be able to buy crypto.
To transfer Ethereum, you simply copy and paste the recipient address and hit send. Your wallet address can be identified quite easily, above your account name there will be a long list of numbers and letters, this is your address.
When purchasing NFTs, you will first be asked to connect your wallet. Upon clicking purchase, you will be directed to the gas payment. This is a fee that must be paid to successfully complete the transaction, and is denoted in ‘gwei’. You can choose the speed of the transaction fee through ‘slow, average, or fast. Those that choose fast will be prioritized by the miners, and the transaction will be quicker, but at a higher cost.
During drops where there is a high volume of people minting the NFT, gas will significantly rise, you should also be mindful of this.
For your security, you should purchase a hardware wallet. This is the best solution to secure, store and manage your crypto funds, as well as better protecting you from threats and scams. Nobody can access the hardware wallet except you. Both Ledger and Trezor are the most widely used and offer helpful articles regarding the best practices for safety.
There are a number of platforms that allow you to mint your NFT, all of which have differences that make them unique. However, they each serve the same purpose of placing an NFT onto the blockchain and purchasing NFTs
The most prominent platforms today include:
This is just a small list of the NFT marketplaces that currently exist, there are many more which you can review and explore here!
1/1 Art Versus Generative Art
Since the boom of NFT’s in February, there has been a transition in trends. Back in February, artists were selling their work primarily on Foundation, an exclusive platform for 1/1 art that also requires an invite to begin selling your work on the marketplace.
Since launching in February 2021, creators have earned 36,111 ETH, which is the equivalent of $129.660,350.92. However, creators have to pay to mint their work, and Foundation takes 15% of the final sale price.
On the contrary, OpenSea only requires a one-time payment to get started, after this artists are free to mint their work on the marketplace. Since its launch in 2017, there are now 300,000 users, 1 million-plus collections, 34 million-plus NFTs, and a traded volume of over $4 billion. They are therefore the largest NFT general marketplace.
Coinbase is the largest crypto currency exchange platform and has recently announced its own marketplace for NFTs which is expected at the back end of 2021. The marketplace will allow users to mint, collect and trade NFTs, through cryptocurrencies or even via their credit or debit card. The platforms size and plans lead us to believe that they will certainly rival OpenSea, the largest NFT marketplace.
In recent months, the attention has shifted from 1/1 art towards generative profile picture collections, namely those with a quantity of 10,000. Generative art simply means art that is algorithmically generated. From The Bored Ape Yacht Club to Cool cats, many other collections have preceded, following the same style and template. The current theme of collections is animal-styled profile pictures.
But why? The simple answer is the community, groups have been forged over Twitter and discord, as they rally around the project, in hopes of seeing growth and reward. With significant changes already occurring within a matter of months, it is interesting to consider what we will see next.
Not all generative artwork is reflective of this style though, consider the Art Blocks collection. Artist Tyler Hobbs who previously worked as a computer engineer utilized this generative technology to create his own art collection, Fidenza. Initially minting for 0.17 in June, it has exploded in value. But how is the art created? Each design is unique and created on the spot, in fact, the code does not even exist until it is minted by the buyer, and upon doing so the artwork is generated. It has since become one of the most prestigious and sought after NFT collections, where just recently a collector purchased Fidenza #77 for a mind blowing, $2.75m (950 ETH).
Within the artblocks collection, a number of other prominent collections also exist which include ‘squiggles’ and ‘ringers’.
The NFT Language
The NFT space may seem like a different world, especially after reading the vernacular on Twitter and Discord. The culture of NFTs is found within these short acronyms and jargon, so let’s unpack them.
GM: This means good morning, it is a universal phrase and you can say it at any time of the day, it is simply to recognize and show friendly respect to others.
Fren: This means friend, we call each other this to show our support and appreciation, we are all on the same journey!
GMI/WGMI: “Gonna make it” and “We are gonna make it” these phrases are used to express your positive feelings about the future of the space and NFTs.
Additionally, I have compiled a glossary that will continually be updated, if you want to check it out find it here!
Since the NFT boom in February, a small number of projects have gained what is considered ‘blue chip’ status.
Blue Chip refers to projects that have sustained value and importance since their creation. These projects include both Crypto Punks and The Bored Ape Yacht Club.
Crypto Punks were one of the earliest NFTs with 10,000 minted for free in 2017. Since then they have gone on to sell at Christie’s and Sotheby’s in record-breaking auctions, with the highest Crypto Punk selling for $11.8 million.
The Bored Ape Yacht Club is still a relatively new collection, first minting in April 2021. They have become the most sought-after profile picture collection and have also seen a $24.4 million dollar sale at the Sotheby’s auction for a bundle of 101 apes. They have succeeded in driving value to their community through airdrops, memberships, and most recently a DAO and token.
It is important to note that the NFT market is volatile and speculative, changes can happen at any moment. However what’s more important is the artwork, if you enjoy what you have purchased, you can never be disappointed!
Within the space there are a number of collectors who have acquired OG status. 6529, Vincent Van Dough, Cozomo Di Medici, and Loopify, to select a few! They have garnered huge support and purveyed important lessons and knowledge for the NFT space. How do they choose what to collect? From the aesthetics, financial gain, or even memes, the appeal can stem from a number of sources and each collector’s motivations vary. As well as the artists, collectors are similarly helping to shape the space and move NFTs forward.
The Metaverse is a merge between “meta” and “universe”. It is not a physical world, it is a virtual world that NFTs will be able to contribute to. The shift to the Metaverse will enable the prospect of rebuilding our own world, sharing interfaces, and traveling universally between each world. From the Sandbox to Decentraland, we are already seeing virtual galleries establish where users can show off their NFTs, and even buy land plots. Major businesses are seeing the potential of the Metaverse and investing heavily already, given their influence in the gaming scene.
At a first glance, NFTs are difficult to wrap your head around, there is a lot of information and you can easily become overwhelmed. However, with learning and understanding, you may soon find yourself enthralled by the community and the space!