Non-Fungible Tokens (NFTs) have helped to power the crypto market to new highs in 2021, attracting enthusiastic collectors from both in and outside the crypto space for their disruptive technology that provides a bridge between real-world and digital assets ownership across a vast number of industries and use cases.
The NFT market has enjoyed a remarkable rise in sales from $250 million in 2020 to over $2.5 billion in 2021, thanks to record sales of original NFT series CryptoPunks (such as “Covid Alien” for $11.9 million) and digital artwork like “Everydays: The First 5000 Days”, by artist Beeple, for a record $69 million in March. It is no longer a novelty to see snooty top auction houses like Sotheby’s and Christies roll out the red carpet for these digital asset collectibles.
With the popularity of mainstream, more affordably priced NFTs also hitting its peak, spearheaded by platforms like NBA Top Shot, Ve Ve/ Ecomi (who recently announced a collaboration with Marvel) and Play-to-Earn pioneer Axie Infinity, many hope to cash in before the market gets saturated.
NFTs are also increasingly being used in gaming and augmented reality, with platforms like Axie Infinity creating millions in income for players in third-world countries.
However, like other ideas in blockchain innovation, you should put in the research to understand how it works before you invest, or even create your own NFT. If you’ve been following the crypto and NFT markets over the last couple of months, you’ll be aware that many promising projects have seen massive price dumps due to low liquidity and bearish market conditions. Therefore, you should proceed with caution.
We have simplified the concept of NFTs in this article so that when you’re done, you should have sufficient information on what an NFT is, how it works, and how to create and sell your first NFT.
What is an NFT?
An NFT is a data-based digital asset that acts as a unique certificate of ownership for real-world and digital assets in the realm of music, the arts, computer games and video clips. Their unique attributes make them non-fungible, unlike other cryptocurrencies like Bitcoin, which all share identical attributes (like money) and are therefore interchangeable with all other bitcoins.
All on-chain NFTs (ones that have their metadata stored directly on a blockchain) are permanent and transparent, meaning that anybody can track the origin of an NFT, view who created it, who its current holder is, and how many times it’s been sold.
Blockchain innovation ensures the authenticity and immutability of NFTs. These characteristics have led to massive tokenization of unique and rare assets like artworks, music, collectibles, and even properties into NFTs.
How do NFTs work?
NFTs is essentially a digital certification tool that allows you to make copies of an original asset and tokenize them on the blockchain. This is accomplished by using an ID for the token and metadata that contains details about the asset.
For instance, if NFT ID# 10033 is represented by a shoe, the metadata contains information about the shoe, its attributes like color, design, size, and other details.
Step by step instructions on how to create NFTs
Creating an NFT is quite simple, but there are a couple of things to consider. First, you need to pick a platform to create your tokens. A few public blockchains (most of these enjoy native support on CoolWallet Pro or should soon), like Ethereum, Polkadot, Cosmos, Cardano, and Binance Smart Chain all support the creation of NFTs.
Note that none of the blockchains that currently support NFTs are interlinked. This implies that when you make an NFT on Cardano, for instance, you can’t trade it on the Tezos blockchain.
The Ethereum blockchain dominates with over 80% of the market. Below, we will give step-by-step instructions on how to create your first NFT on the Ethereum blockchain.
Creating an NFT on the Ethereum blockchain
In order to create an NFT on the Ethereum blockchain, you will need: .
- An account with an Ethereum-based NFT Marketplace (such as Rarible, OpenSea, or Mintable)
- An ERC-721 or ERC-1155 supported wallet (such as MetaMask or Coinbase)
Once you have registered with an NFT marketplace and have an NFT-supported wallet set up, you will need to:
- Deposit Ether into your supported wallet
- Select “Create” on your selected NFT marketplace.
- Next, you will be prompted to connect your wallet to the NFT marketplace. You may also have to digitally sign a message as a component of the wallet confirmation process.
- Following the confirmation process, you will be redirected to a page where you will need to upload the artwork that will be represented by the NFT (art, collectibles, songs, pictures etc.). During this process, you can make custom improvements by adding scarcity or specific characteristics that will make the NFT unique.
- Now you will need to input the metadata, which includes things like the name of the artwork and description.
- After you have uploaded and modified the artwork, click “Create” to start the NFT minting process.
- You will need to provide another digital signature on your wallet to confirm the production of the NFT. After authorization, your NFT should be minted and accessible in your wallet.
Note that NFT minting costs are not the same on all blockchain platforms due to their different consensus protocols. The high mining fees on Ethereum means that NFTs created cost significantly higher than another blockchain protocol like Bitcoin Cash. This is important to consider before choosing your NFT minting platform.
How to Sell NFTs
How to sell an NFT will depend largely on the NFT-supported marketplace that you have chosen. However, the following steps will apply to most marketplaces.
- Once you have connected your wallet to the marketplace, you will then need to select which NFT you would like to sell and click “Put on Sale”
- Now enter in the name of your NFT and a description
- Set your royalties – you’ll continue getting paid if it sells again on the secondary market. This amount is determined by the current sale price
- Next, you will need to connect your wallet
- Then, you will need to pay the gas fee for the listing
- Finally, you will need to digitally sign the sell order using your wallet
How to Use NFTs on CoolWallet Pro
The CoolWallet Pro is a next-generation hardware wallet with enhanced support of DeFi protocols, staking,DApps, airdrops, and other emerging crypto products and services. This also includes NFT collectibles. The CoolWallet team is currently building out comprehensive support of NFTs during Q3 2021 and has a big bag of surprises for NFT fans and collectors coming this year and 2022.
Stay tuned for some serious NFT fun on our amazing hardware wallet.