NFTs, or non-fungible tokens, may already be familiar to those who follow the crypto market. Despite the NFT’s existence since 2014, its popularity has grown significantly in the past few years.
The popularity of blockchain-based digital assets has skyrocketed in recent years and our NFT guide can help you avoid the pitfalls associated with this emerging asset class. NFTs had a market capitalisation of $2.5 billion during the first half of 2021.
Non-fungible goods are those that cannot be copied or substituted. The unique and inherent nature of NFTs makes them impossible to replace. On the other hand, a fungible token can be replaced with another one. Economically speaking, fungible goods are goods or assets that can be traded for other goods or assets of equal value. For example, a dollar bill is fungible, which can be swapped for another bill with the same value.
Furthermore, Ethereum provides fungible tokens, which means that all Ethers are equal. Likewise, Bitcoin works the same way. Bitcoins can be exchanged for each other since their values are the same.
NFTs are digital assets that are valuable and utilise blockchain technology. These digital assets include artwork, trading cards, memes, and animated gifs. Non-fungible tokens are certificates that certify a digital asset is unique.
History of NFTs
Coloured Coins
While NFTs are most commonly associated with Ethereum today, they began with the Bitcoin blockchain. The term “coloured coins” became popular during the early days of Bitcoin. Coloured coins were used to create other assets on the blockchain. The coloured coins were simply Satoshis used differently. Coloured coins provided space for experimentation and laid the foundation for NFTs.
Counterparty
The Counterparty platform is a peer-to-peer financial system centred on Bitcoin blockchain technology. Counterparty is comprised of an open-source, distributed Internet protocol. Bitcoin 2.0 was one of the first platforms to allow users to design their own tradable currencies. However, there were many counterfeits in the world of collectables, so it was not enough to attract collectors.
Rarepepes and the birth of CryptoArt
Since Counterparty’s token creation was not restricted, many experiments were conducted on the protocol. Thus, the first so-called “social” tokens were created. The first video game card, Spell of Genesis, and the first CryptoArt project, Rarepepes, was created.
Launched in 2016, Rarepepes started with the simple goal of creating collectable memes. The memes were created based on Pepe the frog and the crypto topic, creating “rare” Pepes. The cards became increasingly popular, prompting many card proposals. In addition, artists started submitting their own designs.
The result was over 1,700 designs by over 200 artists. Some of the designs were extremely unique, such as HOMERPEPE. Several artists kept creating designs in subsequent years, becoming pillars of CryptoArt.
The rise of NFTs on Ethereum
Buterin launched the Ethereum project in 2014. Cryptopunks and Cryptokitties were released on the Ethereum platform in 2017, which revived NFTs. These NFTs were alternatives to the Spell of Genesis and Rare Pepe NFTs previously launched on Counterparty. Cryptopunks didn’t follow the ERC-721 standard when it was launched since the standard didn’t exist yet. Instead, Cryptopunks was launched as an ERC-20 token. It was closely linked to the initial coin offerings (ICOs) at the time.
However, Wrapped Cryptopunks has made this NFT collectable set ERC-721 compatible. Cryptokitties was the first blockchain-based game to utilise the ERC-721 standard. This game launched several months after Cryptopunks in 2017. Cryptokitties were so popular at the time that they clogged up Ethereum’s blockchain. Costs of the network rose dramatically due to this change.
Cryptokitties eventually raised $15 million from some of the biggest names in Silicon Valley, thanks to its success. Over time, ERC-721 made its way into popular Ethereum wallets, including MetaMask and NFT exchanges, including OpenSea.
The world of multi-chain is experiencing a similar transition as we transition from Bitcoin to Ethereum. Ethereum powers many of today’s most popular NFT projects.
However, there are also NFT applications that use alternative blockchains and a proper NFT guide can help you understand their advantages and disadvantages.
Watch this video: NFTs, Explained (17mins 40secs)
Where you can buy NFTs
The NFT market is diverse, with various offerings catering to different needs.
A beginner’s guide to NFT or even a general NFT guide would be helpful to navigate the world of NFT.
There are many tokens listed, ranging from art and music to trading cards and domain names. A beginner’s guide to NFTs can help you to choose which NFTs to purchase.
Some only sell branded collectables, like those for the NBA Top Shot or Axie Infinity, the online video game inspired by Pokémon. An NFT guide can help you understand the benefits and risks associated with each NFT and a step-by-step NFT guide should be an ideal companion for amateurs of the NFT world.
There are various ways to purchase an NFT, depending on the project you are interested in. Therefore, you should know which blockchain created your NFT before purchasing it.
An NFT guide becomes a very useful and handy tool in this case.
Currently, there are several different blockchain networks. Below is a list of the most prominent blockchains:
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- Ethereum
- Binance Smart Chain
- Solana
- Polygon
- Klaytn
- Flow by Dapper Labs
- Tron
- Polkadot
For the issuance of NFTs, Ethereum is currently the most popular blockchain. The Ethereum blockchain is used in some of the most innovative and popular NFT projects, such as VeeFriends, Cryptopunks, BAYC and Beeple.
You’ll find below a step-by-step NFT guide on how to purchase NFTs using the Ethereum blockchain.
How to purchase NFTs with Ethereum’s blockchain
Step 1: Getting ETH
A cryptocurrency is the first thing you’ll need to purchase NFTs. Here, we’ll be your NFT guide and walk you through the process of buying ETH. Coinbase offers a secure platform for buying, selling, and storing cryptocurrencies. To get started, follow these steps:
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- To create an account, go to Coinbase and click “Get Started.”.
- Create an account and verify your identity.
- Set up a bank account or debit card for verification and to purchase ETH.
- Upon verification of your account and linking of your bank account or debit card, you will be able to purchase Ethereum on Coinbase.
- Click on “Buy / Sell,” then select “Ethereum”.
- As a first step, we recommend purchasing a small amount of ETH. Your wallet needs ETH to cover transaction costs to mint NFTs.
- Purchasing ETH can be completed by clicking “Preview Buy” and then “Buy Now”.
- You are now an ETH owner.
- To create an account, go to Coinbase and click “Get Started.”.
Step 2: Set up Your Crypto Wallet
Cryptocurrency wallets function as digital wallets in the same way as traditional bank accounts. They provide safe access, sending, and receiving of cryptocurrency funds through blockchain networks. You can also send and receive assets through these wallets, such as NFTs. Crypto wallets can either be custodial or noncustodial.
Custodial Wallet
Custodial wallets are digital wallets that keep a customer’s private keys. These wallets offer security and backup capabilities. Crypto custodians actually strive to offer the most convenient way for their customers to store crypto. The majority of people nowadays prefer security and customer-friendliness when it comes to gaining access to their assets. Custodial wallets are a solution for people who do not feel comfortable with computer security. Several custodians also offer a return on your cryptocurrency investments.
Non-Custodial Wallet
Unlike a centralised wallet, a noncustodial wallet allows the customer to keep control of their private keys. To restore funds, users receive a file with private keys, along with a mnemonic phrase to remember. Private keys provide you with complete control over your funds. You can select from a range of security levels based on your threat model. Then, you can conduct transactions without anyone watching you.
Nevertheless, keeping full control of your money also means that you are the only person who can manage it. Purchasing NFTs requires a noncustodial wallet. Please follow our NFT guide for tips and guidelines on setting up your wallet.
Crypto wallets generally include MetaMask, Formatic, Coinbase Wallet, Torus, and Portis.
Setting up a MetaMask Wallet (Google Chrome)
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- Visit the MetaMask website.
- Go to the homepage and click the “Download” button.
- Install MetaMask for Chrome by clicking the “Install MetaMask for Chrome” link. You will be sent to the Chrome web store automatically.
- The Chrome extension will be added once you click “Add to Chrome”. MetaMask’s icon (a fox head) will appear at the top right corner of your browser once it has been installed.
- Then select “Create a Wallet”.
- Passwords must be at least eight characters long to comply with MetaMask’s guidelines. The password must be unique and should not be used anywhere else.
- Store your Secret Recovery Phrase in a safe place, and be careful not to lose it.
- This series of words is critical; if you lose them or forget their order, your wallet will no longer be accessible.
- Make sure all the words are in the correct order, as you were told.
- The MetaMask browser extension should now appear in your extensions list.
If you experience any problems, please contact MetaMask Support. The MetaMask wallet is now accessible from your browser via the fox icon. You can now purchase and receive cryptocurrencies.
Step 3: Send ETH from Coinbase to your Wallet
The Coinbase team will inform you when your ETH is readily available in your Coinbase wallet. After receiving your ETH, send it to your MetaMask wallet by launching the MetaMask extension on your browser. The following are simple steps to send your ETH to your wallet.
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- Copy your MetaMask Ethereum address by clicking on “Account”. The Ethereum wallet address functions similarly to a bank account number. Through it, you can send and receive cryptocurrency from anywhere in the world.
- Go to the Coinbase website.
- Browse to “Portfolio” and select “Ethereum”.
- To send cryptocurrency to MetaMask, select your amount and click “Send”.
- Fill out the “To” section with your Ethereum wallet address that you just copied from MetaMask.
- Make sure you copied and pasted the wallet address in its entirety. You cannot get your crypto back if you send it to the wrong address.
- Please click “Continue” and “Confirm” when you are ready to send your ETH. It should take a few minutes for the transfer to complete.
Step 4: Sign up to an NFT marketplace
Previously, you purchased your first cryptocurrency and transferred it to your wallet. It is now time to sign up for an NFT marketplace and browse the offerings. Again, an NFT guide can help you understand the differences between NFT marketplaces.
There are several marketplaces for NFTs, including OpenSea.io, SuperRare, Foundation.app, Rarible, and Mintable.
OpenSea is a leading NFT marketplace where crypto wallet holders can create, buy, and sell NFTs on the Ethereum blockchain.
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- Create an account on OpenSea.
- On the OpenSea homepage, click the wallet icon at the top right of the page.
- When you open OpenSea, you will be asked to link to a wallet service of your choice. When you do so, your account is activated.
- The profile tab of your OpenSea account will appear once you’ve connected a wallet. On this page, you’ll find all the NFTs you’ve collected, created, or favourited on the site that you might wish to purchase.
- Until you customise your account, your default account will be “Unnamed”.
- The next step is to “Sign” a quick agreement before moving forward. As soon as you’ve done this, you’ll be able to customise your profile.
- From here, you can choose a username, fill out a quick bio, and add your email address.
The OpenSea marketplace is now open, and you can make offers on unique artworks with your wallet’s balance.
How to buy NFTs on OpenSea
NFT sellers can list their NFTs in two different ways on OpenSea. The price of an NFT can be fixed, or they can set up an auction where any number of buyers can bid on an NFT.
NFT guide to buying items with a fixed price on OpenSea
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- Browse the marketplace and check for NFTs you are interested in buying.
- Analyse all collected data regarding the NFT. NFTs with a higher value may have more specific properties.
- You can purchase products by simply clicking the “Buy Now” button.
- Before closing your purchase, OpenSea may ask you to review a few details.
- There will be a pop-up at checkout with your final cost. You will be asked to agree to OpenSea’s terms of service before you can proceed to checkout.
- After clicking “Checkout”, you’ll see your final cost, including applicable gas fees based on your NFT preference.
- After clicking “Confirm”, congratulations, you now own an NFT!
- Browse the marketplace and check for NFTs you are interested in buying.
Making an offer on an NFT
Some NFTs are likely to have auction options. It gives buyers a chance to compete with one another by setting a minimum price threshold. Submitting an offer is a straightforward process.
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- Put in an offer on the NFT you want.
- You should review the entire NFT page, including the current offers, to determine if your bid will be accepted. It’s a good practice to bid at least 5% more than the current offer.
- You can make an offer on the NFT page by clicking “Make Offer”, some may be available to buy there and then.
- To make sure the NFT is genuine, you might be asked to review some details.
- Make your offer in the currency of your choice. When you use a currency you haven’t used before, there may be one-time fees.
- Put in the amount and expiration date of your offer. You can withdraw an offer after it expires. Setting a longer expiry gives the seller more time to consider accepting your offer.
- You can find a list of all offers you’ve extended in the “Offers” tab on the left sidebar of your profile.
Once you submit a bid, the bid is instantly activated. Now, just wait for the bid to be accepted by the buyer. Keeping escalating offers on an NFT is a good strategy if the NFT is really attractive to you and there is a lot of activity and interest from other parties.
How to sell NFTs on OpenSea
NFTs can be sold easily via OpenSea, no matter if you purchased one or created one. Below is a simple NFT guide for selling NFTs on OpenSea:
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- Please select the NFT from your wallet that you would like to sell from your profile.
- Select “Sell” from the upper right-hand corner of the NFT page.
- The next screen will ask you to set the price and type of sale. Depending on your selection, it is possible to set up a fixed-price sale or an auction for your NFT. Auctions can be set up with a starting price, price threshold, and timer.
- After configuring the sales settings to your liking, click “Post Your Listing”.
- You can find all of the NFTs you have available for sale by selecting the “Activity” tab in your profile.
NFT listings do not include any direct fees, although there may be some fees once a sale has been completed. In addition, if you are selling for the first time, you will be prompted to initialise your wallet. If the NFT you’re selling was not minted on OpenSea, you may also encounter a few more review prompts. All this must be done before your listing is finalised, verified, and posted on the market.
The above overview or NFT guide explains how you can buy and sell NFTs on OpenSea. You may have more specific questions during your exploration of this market and as you begin to trade NFTs. OpenSea’s website offers plenty of tutorials and FAQs thanks to its useful help centre.
What’s the Difference Between NFTs and Cryptocurrency?
After learning more about NFTs and cryptocurrency, you might be wondering which one would be the best for a new trader. Since cryptocurrencies and NFTs have volatile values, both are risky. So how can we decide which is better?
Cryptocurrencies, in particular, are considered high risks, as crypto critics and regulators reiterate consistently. Nonetheless, they deliver high rewards as well. Several cryptocurrencies are designed to have a higher level of stability than others. Stablecoins are types of cryptocurrency that offer low volatility compared to others like Bitcoin and Ethereum. Tether and USD coins are the most commonly used stable coins. The dollar backs these coins.
In contrast, NFTs are a viable option for people who happen to be artistically inclined and wish to earn extra income from their artwork. NFTs’ artistic and creative aspects have drawn traders and artists alike to the market. On the other hand, it can discourage those who find developing NFTs difficult, complicated, or inconvenient.
So which is the better option between the two? The answer depends on which is more suitable for the trader.
Watch this video: Difference Between NFT And Crypto (08mins 19secs)
NFTs in the News
NFT art sales hit $3.5bn so far this year
https://www.theartnewspaper.com/2021/10/22/nft-art-sales-hit-dollar35bn-so-far-this-year
According to Hescox Online Art Trade Report 2021, this year’s NFT sales totalled about $3.5bn in the first three quarters. The report states that total online art sales for the first half of 2021 including NFTs were $6.8 billion.
NFTs will be available on Coinbase soon
https://www.cnbc.com/2021/10/12/coinbase-is-launching-a-marketplace-for-nfts.html
Among the major players in the cryptocurrency space, Coinbase will soon launch its own NFT marketplace. They will compete with brands like OpenSea and have announced a customer waitlist for their desktop product. Coinbase says it plans to integrate social elements more deeply into its upcoming platform in a blog post. The Coinbase NFT platform will make it easier than ever to purchase, showcase, and discover NFTs.
Coinbase NFTs waitlist has 1.4 million members!
Since Coinbase announced its imminent launch, more than 1.4 million people joined the waitlist within the first 48 hours. Currently, OpenSea and Rarible are the two biggest players in the NFT market. The entry of Coinbase and its user-base of 68 million can significantly alter the landscape. FTX and Binance have also recently entered the fray.
Conclusion
The non-fungible token trend in blockchain and crypto isn’t going away anytime soon. The use cases for this technology seem endless, with many unique applications. At this point, only simple images will be popular until the full potential of the technology is realised. As NFTs continue to gain popularity, we might see more complex tokens, resulting in an explosion in the NFT market. Furthermore, NFT developers are creating solutions in a variety of sectors. Since their inception, NFTs have benefited various industries, including real estate, media, and entertainment.
The development of NFTs as tradable assets is in a nascent stage, which makes them a risky investment. Investing in NFTs should be done with due diligence. It could be an extremely profitable investment opportunity if done properly and invested wisely.
FAQs
Is Bitcoin an NFT?
Although they both use blockchain technology, Bitcoin and NFTs are quite different. NFTs are non-fungible tokens used to represent ownership of digital goods, while Bitcoin is a cryptocurrency.
What’s the difference between NFTs and cryptocurrency?
Cryptocurrency and NFT are the buzzwords of the day. It’s especially true now that COVID-19 has virtually forced everything online.
Both NFTs and cryptocurrencies use the same blockchain technology. On NFT marketplaces, people may also be required to purchase NFTs with cryptocurrency. However, cryptocurrencies and NFTs are created and used differently.
Cryptocurrency acts as a store of value or as a medium of exchange for goods. Coins that represent cryptocurrencies are fungible coins like fiat currencies. NFTs, on the other hand, allow you to convey and prove ownership rights over digital goods.
How many NFT tokens are there?
It is incredible to see how much buzz NFTs are getting. It is impossible to know the exact number of NFT tokens currently available on all NFT marketplaces. Various marketplaces may not be able to provide the same NFT tokens due to the token standards. The first NFT tokens were created by utilising Ethereum’s blockchain standard ERC-721, however more and more chains are beginning to support NFT trading.
What are the costs of creating NFT marketplaces?
Using the popular clone script, you can start an NFT marketplace for much less and more affordably. Initially, the marketplace clone was priced at $5,000, but its exact price is not available. However, it may differ depending on the adjustments your business might require.
Do you need a crypto wallet for NFT?
Using a wallet that supports the right blockchain and is compatible with the chosen marketplace is essential if you wish to purchase an NFT. They are the perfect home for keeping all your crypto assets safe, secure, and seamless.
How To Make Money With NFTs
People can make money using NFTs in several ways if you’ve ever wondered how.
Check out these three real-life examples:
Digital Artworks
Non-fungible tokens are among the most valuable and popular non-fungible assets in terms of profitability. March 11, 2021 marked a major turning point in the history of blockchain and art when an auction house sold artwork for an incredible $69 million. The auction house successfully auctioned a digital art piece for the first time.
Fashion NFTs
The NFT technology addresses authenticity issues and prevents counterfeiting in the same way as artwork. As part of the NFT trend, fashion and clothing brands are increasingly releasing limited edition digitalised versions of outfits. These NFTs often feature celebrity pieces or a signature design.
Collectables with a licence
The tokenisation of collectables is a popular application of NFTs. People who work in the sector collect physical collectables, such as trinkets, sports memorabilia, and trading cards.
