Beginners guide to NFTs: The basics.
Updated: Jul 4, 2022
Did you know that the first ever NFT was called “Quantum”? It was a digital image of a pixelated octagon, and was minted by Kevin McCoy on Namecoin, back on May 3rd, 2014.
Ever since then, we saw the rise of thousands of NFT projects, all of which failed to reach widespread popularity .
The big boom for NFTs was not made until 2017, when Matt Hall and John Watkinson created the CryptoPunks.
Matt and John made 10,000 punk-rock-looking pixelated avatars and issued an NFT for each character. They put up 9,000 CryptoPunks on a website. At first, few people were claiming the NFTs. When a Mashable article came out featuring CryptoPunks, everything changed and within 24 hours, all 9,000 CryptoPunks were claimed! By the end of 2017, a CryptoPunk NFT sold for USD$170,000!
Crazy isn’t it?!!
Was everything you‘ve read so far crystal clear to you? Or did too many unknown words and expressions, such as NFTs, minting, CryptoPunks, make it too difficult for you to understand?
Let’s take a step back and try to explain some basics regarding NFTs.
So, what is an NFT?
NFT is a cryptographically unique token that is linked to digital content, providing proof of ownership.
Hmm… and what does that even mean?
To better understand NFTs (aka Non-Fungible Tokens), we probably should take each word and try to explain it as simply as possible.
The “NF” stands for non-fungible, meaning an asset that cannot be replaced or exchanged for something of identical value. For example, a painting. A painting can’t be exchanged for another painting, since each one is unique and has a unique property. An example of something fungible, on the other hand, would be one $, which is always equal to another, and thus can be exchanged.
The “T” stands for token and ecodes something like a digital certification of ownership, which is stored on a database known as the blockchain.
The blockchain is a huge public ledger that offers the safest and most reliable way to store data and verify transactions.
Once a transaction enters the blockchain, it’s kept there forever, anybody can see it, but no one can alter it. Same thing goes for NFTs too.
Once you buy or create an NFT of a digital asset, a record is kept in the blockchain, anyone can see that you are the only owner of the asset, but no one can steal it in any way.
Each NFT contains specific information, such as the name of its owner, and who sold it, making it distinct and easily verifiable.
Let’s see now how NFTs work and how you can create NFTs.
Most NFTs exist on the Ethereum cryptocurrency's blockchain (although other blockchains such as FLOW and Bitcoin Cash now also support NFTs), a distributed public ledger for both NFT and cryptocurrency creation and minting.
An NFT is created, or “minted” from digital objects, such as videos, collectibles, video games, designs, music, art, or even tweets. So, when someone buys an nft he doesn't actually get something he can touch or hang on a wall, but a digital file, or even better a blockchain-based digital certificate of a digital asset. This certificate gives the artwork a unique identity.
Each time an NFT is bought or created, the action is permanently recorded on the blockchain and timestamped, meaning that no one can alter it and everyone can trace it right back to its moment of creation.
As a creator, owning NFTs means that your creations get a particular value and that they are secured from any kind of forgery. Also owning an NFT, gives you the power to sell your work, or even earn royalties from all secondary sales of your work, independently, without the need of intermediaries. It’s an easy and low cost process, which can end up giving you a rather good amount of money, if you sell at a good price.
The process of creating an NFT is rather simple.
First you’ll need a crypto wallet; A computer program that allows you to store and transfer digital assets.
Then, select the asset you want to sell as an NFT, and add it to a blockchain that supports NFTs, through a process called “minting”.
Choose an NFT marketplace; If you are planning to mint one NFT at a time, choose platforms like SuperRare, Foundation, and Zora.
If you ‘re planning to mint a collection of NFTs though, then OpenSea, LooksRare and Rarible are some of the best choices you can make.
You are now ready to mint your NFT. Minting your NFT simply means that you associate a specific set of data with a specific asset. In simple words, you associate your NFT with a specific asset.
Depending on the marketplace and the blockchain you‘ve selected the process may be slightly different, but in general what you need to do is upload the file you want to associate and you’re done.
Once you’re done with the minting process, your NFT now represents an item on the blockchain, verifying proof of ownership in an immutable record. That NFT will be registered to your digital wallet.
If you want to know how much some investors are willing to spend for NFTs, just keep on reading…
- The first Tweet. Jack Dorsey, the founder of Twitter, sold the NFT for his first Tweet for $2.9 million
- The ‘Charlie Bit Me’ Video. The popular video of a baby biting his brother’s finger was viewed over 800 million times on YouTube. The NFT for the video sold for around £500,000.
- ‘The Merge’ was sold for $91.8million. 30,000 collectors pitched together to purchase parts of this NFT
- “Everydays: The First 5000 Days”, created by Beeple, was sold for a record high of $69.3 million, making it the most expensive NFT to date!
Looking ahead …
We tried to give you everything you need to better understand what NFTs are, how they work, and how to create an NFT, what the blockchain is and why it is important for any creator to make NFTs of his work.
Are NFTs here to stay? Nobody knows. But one thing’s for sure… NFTs are super important and they're surely creating new possibilities for digital art and creators of any kind.