NFTs have become one of the hottest crypto trends of 2021, with overall sales up 55% already since 2020, from $250 million to $389 million. Here’s how you can create, purchase and sell these popular digitals assets.
Non-fungible tokens (NFTs), which are unique collectible crypto assets, have been around as early as 2012 when the concept of Bitcoin Colored Coins first emerged. These coins were simply satoshis – small fractions of a bitcoin – marked, or “colored in” with distinct information that could link the coins to real-world assets, such as “this satoshi represents $500 of John Doe’s New York office building.” For the most part, however, Colored Coins were used to create and trade artwork like “Rare Pepe” digital cards on Counterparty, a peer-to-peer trading platform built on top of Bitcoin’s blockchain.
These cartoon frog images adapted from a viral internet meme were some of the earliest examples of unique digital artwork tied to crypto tokens. This paved the way for the ideation and creation of new non-fungible token standards – a set of blockchain building blocks that allow developers to create their own NFTs.
NFTs can be used to represent virtually any type of real or intangible item, including:
- Virtual items within video games such as skins, virtual currency, weapons and avatars
- Collectibles (e.g. digital trading cards)
- Tokenized real-world assets, from real estate and cars to racehorses and designer sneakers
- Virtual land
- Video footage of iconic sporting moments
How to create NFTs
Creating your own NFT artwork, whether it be a GIF or an image, is a relatively straightforward process and doesn’t require extensive knowledge of the crypto industry. NFT artwork can also be used to create collectibles like sets of digital cards.
Before you start, you will need to decide on which blockchain you want to issue your NFTs. Ethereum is currently the leading blockchain service for NFT issuance. However, there is a range of other blockchains that are becoming increasingly popular, including:
- Binance Smart Chain
- Flow by Dapper Labs
Each blockchain has its own separate NFT token standard, compatible wallet services and marketplaces. For instance, if you create NFTs on top of the Binance Smart Chain, you will only be able to sell them on platforms that support Binance Smart Chain assets. This means you wouldn’t be able to sell them on something like VIV3 – a Flow blockchain-based marketplace – or OpenSea which is an Ethereum-based NFT marketplace.
Since Ethereum has the largest NFT ecosystem, here’s what you’ll need to mint your own NFT artwork, music or video on the Ethereum blockchain:
- An Ethereum wallet that supports ERC-721 (the Ethereum-based NFT token standard), such as MetaMask, Trust Wallet or Coinbase Wallet.
- Around $50-$100 in ether (ETH). If you are using Coinbase’s wallet you can buy ether from the platform with U.S. dollars, British pound sterling and other fiat currencies. Otherwise, you will need to purchase ether from a cryptocurrency exchange.
Once you have these, there are a number of NFT-centric platforms that allow you to connect your wallet and upload your chosen image or file that you want to turn into an NFT.
The main Ethereum NFT marketplaces include:
Makersplace also allows you to create your own NFTs but you have to register to become a listed artist on the platform beforehand.
OpenSea, Rarible and Mintable all have a “create” button in the top right corner.
How much does it cost to make NFTs?
While it costs nothing to make NFTs on OpenSea, some platforms charge a fee. With Ethereum-based platforms, this fee is known as “gas.” Ethereum gas is simply an amount of ether required to perform a certain function on the blockchain – in this instance, it would be adding a new NFT to the marketplace. The cost of gas varies depending on network congestion. The higher the number of people transacting value over the network at a given time, the higher the price of gas fees and vice versa.
Top tip: Ethereum gas fees are significantly cheaper on average during the weekend when fewer people are transacting value over the network. This can help keep costs down if you’re listing multiple NFTs for sale.
How to sell NFTs
To sell your NFTs on a marketplace, you’ll need to locate them in your collection, click on them and find the “sell” button. Clicking this will take you to a pricing page where you can define the conditions of the sale including whether to run an auction or sell at a fixed price.
Ether and other ERC-20 tokens are the most common cryptocurrencies you can sell your NFTs for, however, some platforms only support the native token of the blockchain they were built upon. VIV3, for example, is a Flow blockchain marketplace and only accepts FLOW tokens.
How to buy NFTs
Before you rush to buy NFTs, there are four things you need to consider first:
- What marketplace do you intend to buy the NFTs from?
- What wallet do you need to download in order to connect with the platform and purchase NFTs?
- Which cryptocurrency do you need to fund the wallet with in order to complete the sale?
- Are the NFTs you want to buy being sold at a specific time, i.e. via a pack or art drop?
As you can probably guess by now, certain NFTs are only available on specific platforms. For example, if you want to purchase NBA Top Shot packs you will need to open an account with NBA Top Shot, create a Dapper wallet and fund it with either the USDC stablecoin or supported fiat currency options. You will also have to wait for one of the card pack drops to be announced and try your luck in trying to buy them before they sell out.
Pack and art drops are becoming increasingly common as a method for selling scarce NFTs to an audience of hungry buyers. These drops normally require users to sign up and fund their accounts beforehand so that they don’t miss out on the opportunity to purchase NFTs when they drop. Pack and art drops can be over in seconds, so you need to have everything ready ahead of time.
Where to buy NFTs
For crypto traders who are primarily interested in buying NFTs, here is a list of the most popular NFT marketplaces in 2021:
- Rarible – thecoinrise
- Nifty Gateway
- Axie Marketplace
- NFT ShowRoom
Is now a good time to get into non-fungible tokens?
The NFT craze is far from being over. Major brands and celebrities such as the UFC and Shawn Mendez have signed deals to release their own non-fungible assets soon, and even Elon Musk’s girlfriend Grimes has jumped on the bandwagon selling almost $6 million worth of digital artwork in minutes.
Messari analyst Mason Nystrom anticipates the NFT market will exceed $1.3 billion by the end of 2021 as more artists, brands and icons flock to the space to create their own distinctive tokens. With more blockchains competing to produce better NFT services too and a growing range of platforms to choose from, now is a great time to take part in the space.