Non-fungible tokens (NFTs) are all the rage these days, with an astounding $26.9 billion worth of cryptocurrency traded on NFT-associated smart contracts in 2021 alone. Big brands including Nike, Taco Bell, Campbell, and Twitter are investing heavily in NFTs, and more companies are joining them by the day.
But what makes NFTs so popular? The blockchain experts at Synapse explain what you need to know about this emerging market, including what they are, how they’re created, and their benefits.
A non-fungible token or NFT is a digital asset that represents real-world assets such as photographs, artworks, designer clothes, and digital collectibles. They are encrypted with unique digital signatures that cannot be exchanged or replaced, hence the term “non-fungible” in its name.
For example, an artwork by Beeple is not equal in value to another one of his pieces just because they are both digital NFTs and made by the same artist.
NFTs are like collector’s items, but instead of receiving a physical item, you get a digital file.
Are NFTs Worth the Hype?
Here’s why NFTs are surging in popularity:
Eliminates the Need for a Middleman
NFTs operate in a decentralized marketplace, meaning creators can directly sell and make money off their work. For example, artists often need to hire an agent to find potential buyers. NFTs eliminate these intermediaries, enabling creators to receive full compensation for their work.
Likewise, the NFT marketplace allows artists to earn a commission each time a digital asset is transferred to a new owner.
NFT Assets Are Immutable
The unique metadata of an NFT item makes them impossible to alter. Likewise, they cannot be deleted or misplaced from the blockchain. Once purchased, it will remain in your ownership forever unless resold to a new owner.
NFT Assets Are Profitable
Non-fungible tokens are great investments as they increase in value over time. Some people even earn a living from reselling them. Their resale value could reach up to a whopping $20,000 even if the original buyer purchased the item for way less.
You can earn more by reselling NFTs that were previously owned by influential individuals.
A Guide to Creating an NFT
NFTs are created through a process called “minting,” where a digital file becomes part of the Ethereum platform – a block-chain based public ledger that is immutable.
Creating and selling NFTs are fairly easy. All you need is a digital or crypto wallet and Etherium for minting.
Here’s a quick guide to help you get started:
- Select an Item to Mint
- To kick things off, choose a digital asset that you want to convert into an NFT. It can be anything—a meme, GIF, in-game avatar, trading card, music, or a picture. The sky’s the limit! However, be sure only to use items you have intellectual property rights to.
- Pick a Blockchain Technology
- Once you’ve chosen a digital asset, you can now select a blockchain technology for minting NFTs. Etherium is the most widely used by creators, but other popular options include Polkadot, Cosmos, Tezos, and Binance Smart Chain.
- Choose a Marketplace to Sell NFTs On
- There are various platforms where you can sell your NFT, but the most popular marketplaces are OpenSea and Rarible. Both platforms enable users to create NFTs, free of charge. This is due to their “lazy minting” systems that let you create and sell NFTs without integrating them into the blockchain, thus eliminating any fees. You can also skip using a marketplace by creating your own smart contract. However, this can get technical. If you’re a beginner, it’s best to use pre-existing platforms like those mentioned above.
- Set Up a Digital Wallet
The digital wallet holds the cryptocurrency you’ll be using to fund your NFT investment. It also stores the NFTs that you minted or bought. The rule of thumb is to choose a wallet that supports the blockchain you’re using. Some of the most popular crypto wallets are Coinbase, MetaMask, AlphaWallet, Trust Wallet, and Math Wallet. The MetaMask wallet is compatible with most Ethereum-based applications like OpenSea. It runs as a Firefox or Chrome extension or can be downloaded as an app on iOS and Android devices. Coinbase works similarly, and most platforms also support it. If you’re investing in other types of blockchains such as Bitcoin, this is the wallet for you.
Connect Your Wallet to An NFT Marketplace
After setting up your wallet, it’s time to sync it to your chosen marketplace. If you’re using either OpenSea or Rarible, simply click the “Create” button on the upper left, and it will ask you to connect to a wallet. Choose your wallet from the available options to proceed with the connection process. If you’re using Coinbase, you can sync your wallet by scanning the QR code found on the main wallet screen.
Mint Your NFT
You can now create your first NFT item. Most NFT marketplaces provide instructions on how to upload digital files to their system. You have the option to convert them into different formats such as MP3, GIF, and PNG.
Monetize Your NFT
Here comes the exciting part—selling your NFT! Below are your options:
- Selling at a fixed price: This is similar to creating a store listing: you determine a set price for your NFT.
- Open for bids: Interested buyers can submit a bid for your NFT, which you can accept or reject.
- Start a timed auction: You can determine the starting price and set when the auction begins and ends.
Kickstart Your NFT Project Today
Despite the popularity of NFTs, there is only a handful of resources available for entrepreneurs who want to jump-start an NFT business. Synapse provides everything you need to grow your NFT business venture. From consultation to management, we’ll help you succeed. Drive your NFT business to new heights. Reach out to our team today to get a free consultation.