NFTs (Non-fungible tokens), in lame man terms, are crypto tokens representing something unique that is irreplaceable with anything else. The quality of being fungible is associated with any product that can be replaced with another product of the same value. When it comes to NFTs, however, they are irreplaceable.
A fungible asset can be cash, which is easily transactional, or an ounce of gold that can be equally exchanged with another ounce. An NFT, on the other hand, is unique.
The Genesis of NFTs
For several reasons, 2021 is the year of NFTs. However, if you are following the latest news, development, and the hype surrounding non-fungible tokens, you will know that though it seemed to appear out of the blues, they do, go back as far as 2012.
Historically, the concept of NFTs has been around long before Ethereum’s creation. In fact, on Dec. 4, 2012, Meni Rosenfeld released a paper that introduced the concept of “Colored Coins” issued on the bitcoin blockchain. Fast forward to 2014, after the creation of Ethereum, NFTs found a new home on the ETH blockchain because it introduced a set of token standards that allowed the creation of tokens by developers.
Many people associate cryptocurrency with the blockchain, but the network is regarded as the future of technology for several reasons. One of them is because it takes digital assets to another level. Bitcoin is fungible- meaning it is exchangeable for another cryptocurrency token in a transaction.
Three factors distinguish NFTs, and they are:
- Verifiable ownership
- Social status symbols
Non-fungible tokens are publicly verifiable. Everybody knows its inherent unexchangeable value. Also, NFTs are collectibles. Investors collect NFTs for their inherent value or perceived value. For example, if you feel like a particular digital art can attain greater value in a few years, you may decide to invest in it.
NFTs are status symbols. This may sound ridiculous but the primary operating factor here is human psychology. More importantly, the human perception of value is changing drastically due to the instrumentality of technology. A good example is a tweet that was listed by the CEO of Twitter, Jack Dorsey. That tweet ended up selling for almost $3million. That right there is the factor of human psychology at play.
The most famous NFTs are highly expensive but may not look like what traditional artists validate as art. The Beeple NFT sold for a whooping for $69 million
Why you should explore NFTs
In today’s world, almost anything can be tokenized into NFTs. There are songs, digital arts, recipes, events, and even startups that have been listed as NFTs. The market is still very much in its infant stage and the best time to start exploring it is now. More so, very few restrictions exist on what can be listed and purchased.
How to engage NFTs
There are two primary ways in which you can choose to explore non-fungible tokens. You can either create one or purchase one.
You can create digital art and list it on an NFT market space for sale. Buying is also a great option if you don’t want to create one. Some people have chosen to be collectors of non-fungible tokens.
Either by creating or by purchase, both arrive at the same conclusion owning an NFT.
How to get started
Getting started on NFTs is not a big challenge. It consists of only three pivotal steps which are:
- Get an Ethereum wallet
- Stock it up with some Ethereum coins
- Link up the wallet with an NFT marketspace
Don’t worry, I’ll walk you through the process.
Get an Ethereum Wallet
This process involves you signing up on a crypto wallet that makes use of the Ethereum coin. There are a host of wallets that provide the use of ETH in their blockchain transactions. Some of them include Coinbase, Metamask, Rainbow, and many more.
What the wallet does is provide you with a safe place where you can keep the cryptocurrency with which you’d purchase your NFT. Also with this wallet, you can sign up and set up an account on an NFT market space.
Many free wallets allow you to make seamless transactions across the blockchain. One of these is the purchase of your desired NFT.
Stock up your wallet with Ethereum
Once you have gotten your cryptocurrency wallet set up, what you want to do next is purchase Ethereum into the wallet. Without it, you cannot start listing NFT or purchasing one. Depending on the kind of wallet, you can purchase Ethereum with other cryptocurrencies or your regular credit card. There is no rule as to how much Ethereum you can have on your wallet. However, regardless of how much you are willing to invest at first, you can add up as you go.
Link up your wallet with an NFT market space
Before joining a market space for NFT, you would be required to sync your digital wallet with the market platform. This way, you can easily make non-fungible token transactions. There are several market spaces you can choose from. Examples are Rarible, Opensea, Zora, Super rare, and many more.
How to create an NFT
I know this question must have been burning in your mind. Contrary to many beliefs, NFTs are not random jargon. It takes a recognizable eye to notice its value and just as mentioned any content can be made into an NFT. Here is how.
- Note that there is no one way to create NFTs. If the market space supports the type of content you want to list, then, it’s an NFT!
- Create a digital art file for your non-fungible tokens.
- Place on your art a price and list it on the market space.
- Once you have placed your NFT on the market for listing, anybody can discover it without the hassle and make a bid for it.
How to Value NFTs
Another important aspect is determining the value of a non-fungible token. This is important especially with several circulating predictions that many NFTs may fail. How do you make sure to go for the token that would keep rising in value?
You can go about this in three ways.
The quality of a token of being rare is its ability to be celebrated. People are attracted to newness and they easily associate value with it. Check for the rare quality of your desired NFT.
Besides its ability to be celebrated, does it have another use? This could be a great pointer to the inherent value present or the attainable future value.
Remember that the non-fungible attribute speaks to uniqueness. This is the primary basis for the value of an NFT.
With all that has been said, you can easily say that the blockchain is the future and NFTs just happen to be a tiny aspect of that future that is being unraveled. Now is the best time to get started. Who knows, your first piece of non-fungible token may end up becoming the Mona Lisa of the blockchain. Sounds fascinating right?
Goodluck getting started and lets us know how it goes.