The acronym NFT stands for Non-Fungible Token. An NFT is a distinct record on a blockchain that is associated with a particular digital or physical asset.
Non-fungible means each NFT is unique and cannot be interchanged for another item of the same value. For example, one Bitcoin can be interchanged with another Bitcoin, and the value is the same, whereas each NFT is not the same as every other NFT. It is safe to say anything that can be digitalized can be sold as an NFT ranging from images, videos, memes, and music to real estate. These are called digital assets and are traded online, and as proof of ownership, you are given a digital token that is cryptographically recorded on a blockchain. The NFT keeps track of the owner of the asset no matter how many times its ownership gets transferred. In other words, there can only be one owner at a time, and because of this, scarcity is created, and the owners of these assets get to decide the value of their assets.
How are NFTs made?
NFTs are produced directly on NFT platforms that give you access to minting through the smart contracts that designate ownership and control over NFT transfers. The following steps can guide you in the process.
First, choose an item you will want to make an associated NFT for. This may include pictures, media, memes, GIFs, games, and so on. Some NFTs may require you to seek the help of a developer to create and manage. Regardless of whatever your choice is, make sure you have the intellectual property rights over this unique product. And just a heads-up, the rarer the product, the more value it will hold.
Choose a blockchain of your choice to host your NFT on. To start the process of minting the NFT, you need a blockchain platform that supports smart contract programming. The most commonly used blockchain platform is the Ethereum blockchain. Some other popular ones are Solona, Tezos, Polkadot, Avalanche and Binance Smart Chain.
Set up your digital wallet. In case you don’t have one already, creating a digital wallet is the next step. You will need cryptocurrency to finance your initial investment, and if you don’t have it already, you may have to buy some. Before that, you may want to do a background check on the digital wallet you choose to ensure that it is compatible with the blockchain platform you chose earlier on for minting. Some popular wallets to use for NFTs are Metamask, Trust wallet, and Coinbase wallet.
Select an NFT marketplace. Each market comes with its own pros and cons. It is better to do some research before you choose which is the best fit for you. For example, some marketplaces require you to use their own cryptocurrency, and others allow you to mint your own NFT. The largest known marketplace is OpenSea which primarily uses Ethereum.
If creating an NFT for a digital asset, you will want to upload your content file. A step-by-step guide is often provided in the marketplace you have chosen on how to upload your file, and once followed correctly will enable you to convert your digital file into an NFT. These content files are commonly in the form of audio, images, or video formats.
Just in case you decide you want to sell your NFT, many marketplaces will have you set up the sales parameters. This involves you deciding on how you want to monetize your NFT. You can choose to sell it at a fixed price, start an unlimited auction, or set a timed auction.
Types of NFTs
NFTs are so versatile and cover a multitude of items. Listed below are some of the more popular categories.
Virtual collectibles: These are goods of worth that collectors, who might be anyone, seek out and acquire. The first of its kind was the cryptokitties-unique crypto kittens in 2017.
Artwork: These NFT artworks, which are the pricier ones, are a special fusion of creativity and technology. They could be digital pictures or even real-world physical artwork.
Domain names: Browser extensions were introduced to handle loading of special blockchain-based domain names, such as ones ending with .eth or .crypto. Except for the fact that you just have to pay once and can keep the domain name for as long as you like without paying a renewal charge, they are identical to more traditional domain names.
Event tickets: Organizers of concerts, music shows, or any event can make use of blockchains to mint tickets that are used to verify and identify patrons and grant them access to the associated event.
Music and media: Musicians and content creators can now link their music and media to NFTs without worrying about the record label and streaming fees, given that you have exclusive rights over the music.
Virtual fashion: It entails clothes, shoes, or anything wearable to customers that exist virtually and can be worn in virtual environments. High-profile fashion designers have embraced this idea, too, the likes of Dolce Gabbana, Tommy Hilfiger, and many more. They graced the inaugural Metaverse Fashion Week hosted in the Decentraland game.
Real-world assets: Real-world asset NFTs indicate that a physical good is owned virtually. For trade to take place, a tangible asset must be present with legally supporting documentation. It could be land, a house, or something in that regard.
Gaming: Mostly, special character items, skins, and other in-game items are offered as NFTs, while the game itself is not. The game Axie Infinity is a typical example.
Significant Sports Moments: A short video clip of Lebron James dunking can be an NFT.
Memes: Unbelievable but true – you can buy and sell memes as NFTs to earn some profits. The “Overly Attached Girlfriend” meme NFT was purchased for $411,000 USD.
How to buy premade NFTs?
Buying an NFT is not that difficult. To get started, all you need is a wallet that supports the blockchain and cryptocurrency that your desired NFT resides on. You then link your crypto wallet to the associated marketplace for your desired NFT. As long as you have enough of the NFT sellers asking cryptocurrency, you should be able to purchase it. You will now have the token stored in your wallet, from where you can send it somewhere else for usage or list it back into a marketplace if you are trying to sell for a profit.