The term is an acronym for „Non-fungible tokens”, and in simple terms it means artistic products in digital format that can be traded on the blockchain. „Non-fungible” is a term that describes something unique that cannot be replaced. Simply put, it’s a type of cryptocurrency token that runs on smart contracts on a blockchain. This is usually the Ethereum blockchain, although other blockchains may run versions of NFTs.
For example, while a bitcoin can be exchanged for a bitcoin with exactly the same properties, a dollar can be exchanged for a dollar, and a lion can be exchanged for a lion, an NFT is unique in nature. to.
Yes, a digital work can be sold in several copies from the beginning, just as an artist ‘s album comes out in series, but that doesn’t mean that the product purchased is less original.
Each NFT has a limited amount and cannot be exchanged for another, making it ideal for authenticity. In fact, it is distinguished by unique attributes and details that cannot be changed between them.
Non-fungible tokens aim to have the same attributes as physical goods, such as uniqueness, rarity, and proof of ownership; unlike fungible goods such as US $ 1, which has the same value in both Washington and Los Angeles. In fact, the best example of a fungible token is the cryptocurrency Bitcoin, having the same value wherever it is. Thus, fungible tokens are not unique, they can be changed and are divisible and non-fungible tokens are truly unique, indivisible and cannot be exchanged with others.
The first non-fungible good was created in 2014 as an experiment for the Seven on Seven conference at the New Museum in New York. Today, the utility continues to grow in important niches including music, fashion design, academia, patents and approvals, but also sales and loyalty programs. Thus, anyone interested in enhancing their digital creation such as music, art or photography can do so through NFTs.
What is the value of digital works and why do collectors pay such high prices for them?
The intrinsic value of a good, even in the „real” world, is hard to find. Thus, every content creator exposes their creation on the market at the desired price. If a future collector or user is willing to pay for it, then we can say that it is based on the old economic principle, demand and supply . The same principle applies to non-fungible tokens.
It is known that a collector paid a record US $ 69.3 million for a non-fungible token called „Everydays: The First 5000 Days”, created by Mike Winkelmann, known by the pseudonym Beeple. Winkelmann’s work contained over 5,000 drawings, each illustrating a day from the last thirteen and a half years. In the first half of 2021 alone, non-fungible tokens worth more than US $ 21 billion were traded.
What is the purpose of NFTs?
This question may have several answers, as The Verge notes. For artists, NFTs offer them a new way to sell their work. Moreover, the technology may have implementations that allow artists to collect a percentage each time their work is resold or transferred to a new wallet, to a new owner.
Virtually any digital content can be sold and purchased as NFT. However, a beginner in the blockchain world needs to know that they can be purchased from special marketplaces . Among the most popular are OpenSea, Mintable, Nifty Gateway and Rarible.
At the same time, the beginner must create a suitable digital wallet to purchase and store NFT, as not every wallet is suitable for them. CNN draws attention to the commissions that may intervene. Some marketplaces charge a so-called „gas” commission – representing the energy required to complete the blockchain transaction, a process similar to buying cryptocurrencies.
It is worth mentioning that the transfer of an NFT does not mean the transfer of a trademark or copyright to the owner. And the creator can upload multiple versions of an object, each with its own NFT, so it doesn’t have to be unique to be distributed this way.
There is also a huge potential for using NFTs in gaming – where they can be used as in-game savings. Players can use NFTs to become owners of items that are rare or hard to win, as a reward for overcoming challenges or participating in special events, for turning points into coins for real-world transfer, and so on. Further. And creators could use NFTs to monetize their work directly from players.
How can we create an NFT and how can we sell it?
The creation of a non-fungible token (NFT) can take place in any digital form, with content such as paintings, photos, texts, songs or videos as well as virtual objects from video games, collections such as avatars, weapons or virtual coins. Thus, we notice that there are no limits, everything depends on the imagination of the creator. But it is important that the format of the non-fungible token is digital or converted to one.
The process of creating a non-fungible token is called „minting” and refers to converting a digital product into a resource and uploading it to the blockchain. In order to be uploaded, the user needs a cryptocurrency such as Ethereum, which they store in the digital wallet compatible with the non-fungible token. When the creators of a token upload it to the blockchain, they can choose to impose the clause that specifies that, in any future sale, they will have a share, thus generating a passive income.
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The value of an NFT is given by its uniqueness, and the markets play an important role in the success of its sale. Creators need to consider important factors such as accepted blockchain types, accessibility, and required standards. The first known standard for non-fungible digital goods was the Ethereum blockchain, ERC-721. Although most platforms are based on the Ethereum blockchain, it has no monopoly on the NFT market.
One of the oldest and most popular platforms is OpenSea, created in 2017 and allows users to create non-fungible tokens efficiently and for free but also to sell them. MakersPlace, by the way, allows users the same thing.
Secure NFT storage
Owning a digital wallet is an important factor for any cryptocurrency user and holder. However, the non-fungal token market eliminates the need to store user data, making the platform even more secure. There are many digital wallets for cryptocurrencies: both mobile and browser extension and physical.
In order to upload a non-fungible token on the blockchain, the creators have to pay a cost that compensates for the electricity needed to process and validate the transactions through the blockchain.
Sale of non-fungible tokens (NFT)
Before listing a digital good for sale, the user must complete in a file its title and description, which, for a quick and successful sale, should be as complex and detailed as possible.
The types of NFTs that have a real interest in marketing are:
- Digital art: photos, paintings, cartoons, etc.
- Video games
- Avatars or profile photos
- Collections of different types
The sale can be done in two ways: sale at a fixed asking price or at auction. In the case of a fixed price sale, the user sets the selling price directly, and in the case of auctions, the aim is to end the sale at the highest price received from the participants, starting from an initially set price .
Once the token has been sold, users can download the transaction details to their digital wallet and then convert the received cryptocurrencies into traditional money. If, after any period, you decide to sell the non-fungible token, you can do so through a so-called „second-hand” sale, so you will upload your token on the market and potential buyers will be able to buy it either at the price you ask. ., or in the auction system.
In some cases, however, the creators of the non-fungible token, once resold by the first owner, will no longer receive passive income from other sales.
Promotion of non-fungible tokens (NFT)
The promotion can start once the token has been uploaded to the blockchain, keeping in mind that potential buyers are well informed about its specifications and values. Among the most successful methods of promotion is the one that presents the direct offer to people who are part of a community with a high interest in this niche.
It is also a real success to promote through online publications and news in the field of cryptocurrencies but also of various podcasts in which well-known people in the field participate .
Last but not least, promoting in social media communities helps to make a quick sale more efficient and people who are interested in buying non-fungible tokens in a certain niche find it much easier.
What are the most expensive NFTs ever sold?
In February 2021, Crossroads, an animation created by digital artist Mike Winkelmann, known as Beeple, was resold for $ 6.6m on an NFT platform called Nifty Gateway. This sale far surpassed the previous record for a single NFT of $ 1.55m and was 100 times higher than the price of $ 66,666.00 for which the original work was sold in November 2020.
With a similar value, music artist Grimes auctioned off $ 6m NFT artwork, and sold 10 items in less than 20 minutes on Nifty Gateway. The WarNymph collection includes video, images and music. An exclusive 50-second video was sold for $ 389,000, while 700 copies of two videos were sold for $ 7,500 each.
The future of non-fungible tokens
At present, digitization is on an upward trajectory and NFTs will be a viable solution for securing properties and assets in optimal security. Although non-fungible tokens were originally intended to revolutionize digital markets and facilitate people-to-people transactions, they are currently trading more on demand than on fundamental factors.
In the future, non-fungible tokens will have a huge potential for development in close connection with Metaverse, which is essentially the online world. Entire communities are built in the blockchain, where sales of various goods and properties are already taking place. People will be interconnected through Metaverse not only through mobile or computer terminals, but also through devices that play virtual reality, which can be included in every room of the house.
If you need effective promotion, contact a communications and public relations agency .
The NFT phenomenon is, unfortunately, less about art and more about profit. Collectors are primarily investors, not curators or art collectors. On sites like OpenSea we work with bots that buy on the stock exchange, according to criteria set by the human buyer, NFTs over NFTs, in the hope that some will be successful.
To date, NFTs are just new tools for treating digital art as a commodity, as a consumer good. Specialized platforms do what they can to improve access to truly extraordinary digital artists or to create the right context for critical or reflective artwork, but if we look at this new phenomenon on a large scale, NFT mania is not about art at all, but rather about entertainment and profit. However, for many digital artists, there is a new way to sell their work, much more directly than the classical art trade system, where digital art plays a peripheral role anyway.