The abbreviation NFT (non-fungible tokens) means “non-fungible token”. To understand tokens, you need to understand the environment in which they reside on the blockchain (in this case).
To simplify a lot, a blockchain is a database that is simultaneously stored on a huge number of computers.⠀
However, it is clear that not all digital assets are fungible. The picture of Pablo Picasso is not identical to the work of Claude Monet, and the mp3 file with the song of The Beatles can hardly be replaced with a recording of Eminem’s concert. Therefore, in order to transfer unique items to the blockchain, the format of non-fungible tokens was created.⠀
What is NFT
An NFT or non-fungible token is a unit of account that creates a digital impression of each unique item. Among them can be: paintings, photographs, videos, music, gifs – in a word, any content that claims to be at least some kind of uniqueness. They are highly prized among collectors, gamers, and art lovers, and are bought and sold through auctions.
These same tokens are stored in the so-called blockchain – a huge chain of blocks, each of which contains information. Unlike, for example, servers, where data is stored in one place, these blocks can be located on many devices in various parts of the world.
This kind of encryption makes the blockchain very difficult to hack, because at best you will be able to hack just one block of information, and not the entire chain. That is why most of the cryptocurrencies work on the blockchain.
A token is just a record in one of the blocks, and, as a rule, there can be a lot of such records of the same type. For example, each individual bitcoin is an exact copy of another such bitcoin, which makes it possible to compare them with a currency.
But what if you need to create a unique token that has no analogues? The answer is NFTs.
An NFT token is a way to transfer unique items from the real world to the blockchain. Each of these tokens is unique, inseparable and exists in the singular. In addition, all the necessary information about it is securely stored on the blockchain.
Uniqueness may vary. So, the very first SMS was sold for 150 thousand dollars, and the first tweet of the founder of Twitter, Jack Dorsey, went for almost 3 million. After that, other stars began to look at the NFT.
How to create your own NFT
So we come to the most interesting part – how to create an NFT token. You can create NFTs using specialized platforms such as OpenSea. In addition to registering there, you will need the Ethereum system wallet and the actual digital content that links the tokens.
The NFT creation algorithm depends on the platform you choose. But in the general case, for this you need to log in to the system through the Ethereum wallet, create a collection and upload the necessary images, animation, music, or even 3D animation to it.
For example, the same OpenSea supports files in JPG, PNG, GIF, SVG, MP4, WEBM, MP3, WAV, OGG, GLB, GLTF formats and weigh less than 100MB.
Then you need to add a description and link to the object, set the basic parameters of the token and click the Create button. The token will be sent for confirmation and can then be sold.
As for the token itself, its non-fungibility is ensured by the unique combination of the object to which it is linked and your identifier in the system or a unique key that signs any token passing through your account. Actually, it is thanks to such an individual signature that any user can trace the entire path that NFT has gone through since its inception, and all the owners of this certificate.
In addition to your ID and token object data, there are a number of parameters inside the NFT that describe what the certificate owner can do. The main ones are resellable and copyright_transfer. The first is responsible for the possibility of reselling the token and the second is responsible for transferring the copyright of the object to the owner.
Moreover, if the copyright_transfer status is false, then, in fact, you are buying only your place in history and the possibility of reselling the token (if the resellable parameter allows it). There is no way to even copy the file attached to it.
What you need to create an NFT
Of course, first of all, you will need the object itself, to which the token will be attached. And the final price of NFT depends on its uniqueness and exclusivity. It can be a GIF, image, creative video or song you created. In general, everything that you think can be of interest to other users.
The subject matter of the NFT can be very realistic as well as digital objects. For example, you can use tokens to sell your own stamp collection, sculpture, or actual painting. This practice is still uncommon, but it will definitely change in the future. Moreover, there are already examples of this: not so long ago, an art object worth more than 130 thousand dollars was sold at Christie’s auction.
In addition, to create an NFT, you need a cryptocurrency wallet and a supply of coins that may be needed to pay the fee. Although the latter is not always necessary – some platforms allow you to create tokens for free if you do not plan to sell them …
How to sell NFTs
There are many platforms where you can place your tokens. Some of them even have a narrow specialization – for example, only game items or only art.
The most popular are OpenSea, SuperRare, Foundation and Rarible. As a rule, sites charge a commission in the Ethereum cryptocurrency, or ethers, as it is called in the common people. The size of the commission can be different, but usually it is several tens of dollars (this cost is due to the fact that the new token will need to be included in the blockchain).
The commission is always charged at the time of token creation, but depending on the site, this can be either immediately after the file is uploaded or at the time of the sale.
To pay the Halva commission , open a foreign currency account and profitably exchange for dollars.
How to make money on NFTs
The demand for digital goods appeared long before the advent of NFTs. Many gamers have bought skins in CS:GO , Dota 2 and many other games. Moreover, the cost of such skins was often expressed in completely non-symbolic figures. Of course, in those days, users did not buy NFTs, but the software code of the skin, but this hardly changes the essence.
Even more money is spinning where it comes to collectibles. Here you can recall the most expensive NFTs. This includes the collage Everydays: The first 5,000 days already mentioned were worth about $ 70 million, the baseball card T206 Honus Wagner was hit at $ 3.25 million, and the actual record holder, Project The Merge, gave its author $ 91.8 million. Brought. ..
Imagine you have a unique baseball card. Alternatively, you can paint, collect stamps, and create characters for your game. All your creativity can be sold digitally using NFT. Although NFT applications are much wider. Unique tokens are also useful for work tasks. For example, they can confirm your right to receive unique information and access to private clubs.
Read also: How To Start A Blog And Make Money Online 2022
But to make money on NFT, it is not necessary to create something new. As is the case with any asset, the price of an NFT token for a certain object changes over time, and you may well invest – invest your money in a project at the bottom of the market and sell at the top, thereby earning on the price difference.
However, as with any investment or speculation, there is no guarantee that you will be able to make money from such actions. Investing is always a risk and NFTs are no exception.
Another example of a NFT possible application is the purchase of digital tickets for concerts, football games, or other events. You can use it as a souvenir or as an autograph of a celebrity. NFT use cases are diverse and the possibilities are enormous.
At the same time, like any blockchain project, NFT is not tied to any one server. All transactions with tokens are distributed over hundreds of thousands of systems around the world. Any NFT transactions are recorded by each computer on the network, and anyone can view the data about them. Essentially, by buying NFTs, you are claiming your right to a digital object to the whole world, and this information will remain online forever.
Disadvantages of NFTs
The problem is that the use of NFTs does not rule out the possibility of fraud. Despite the absolute transparency of working with tokens, their creation does not at all guarantee that the author actually owns the property. And this situation happens quite often.
It should also be taken into account that numerous rights to token buyers may be entered into the NFT. In other words, instead of owning an object, you can only talk about the possibility of using it, and sometimes you don’t have the right to benefit from such use. Of course, there’s nothing wrong with buying an NFT for this purpose, but in reality you just want to keep your memory in the digital space.
Most NFT tokens traditionally refer to a specific object located on a specific server.But what if I buy an NFT and the server moves to another domain or goes completely offline? In this case, the NFT token will no longer refer to the object you purchased. And it’s good if such a situation arises due to an accidental failure. In fact, it can be quite a malicious act.
Another point concerns possible plagiarism, against which the NFT does not insure in any way. Yes, once created, an NFT token can neither be counterfeited nor stolen. But do not forget that this is not a physical, and not even a virtual object of sale.
Is it just the most secure certificate of the right to this object. Therefore, it costs nothing for an attacker to copy an object tied to an NFT and create their own token for this copy. Moreover, a copy on the Internet is a very loose concept.
A small insurance in case of buying NFT for a non-original object can be the use of specialized online platforms that take care of the copyright protection of the content creator. But even they cannot give a full guarantee here.