Non-fungible tokens (NFTs) are one of the fastest growing assets in the crypto industry. In this article, we are going to introduce you to some of the applications of NFTs, tell you how you can buy and sell them, and explore how they might be used in the future.
But first of all, let’s find out what NFTs actually are.
What are NFTs?
Non-fungible tokens (NFTs) are unique, non-interchangeable units of data. They contain a piece of identifying information that makes them distinguishable from all other tokens. Because no two tokens are the same, they cannot be traded or exchanged at an equivalent rate or broken down into smaller units like currency.
How are NFTs used?
Because NFTs are one-of-a-kind, they can be used to value and authenticate the ownership of digital assets, including virtual land parcels, artwork, etc. One of the biggest markets for NFTs is the entertainment industry.
Take a look at how NFTs are being used to create merchandise in the following spaces:
- Art – There are two types of CryptoArt. The term mainly refers to crypto-themed pieces that tie blockchain into their cultural, political, economic, or philosophical subjects. However, CryptoArt can also be understood to mean digital artworks that are published directly to the blockchain as NFTs. Two of the most popular CryptoArtists right now are Beeple and FEWOCIOUS.
- Music – Musicians are using NFTs to add exclusive content to new and re-released albums. Kings of Leon created a tiered version of their 2021 album, When You See Yourself, which gave fans access to front-row tickets for life. Re-releasing his album, Ultraviolet, DJ 3LAU turned unreleased tracks, re-recorded songs, and album artwork into NFTs. Other artists who are getting involved in the NFT space include Portugal, This Man, Akon, Eminem, DJ Steve Aoki, and Shawn Mendes.
- Sports – Major league teams in American football, basketball, and hockey have created digital memorabilia in the form of one-off videos for their fans. Plus, the sports card company Topps has produced NFT packs that contain rare cards e-signed by famous players.
- Gaming – Video game companies are using NFTs to allow players to create and own unique game skins. In some games (such as Alien Worlds, Mist, and Minecraft), players can earn NFTs which can then be traded in for cryptocurrency.
- Collectibles – Pokémon, Magic: The Gathering, and Marvel are just some of the franchises that are offering fans NFT collectibles.
The Value of NFTs
In 2021, the volume of NFTs being traded in Q3 went up by 38,000% compared to the same period last year. According to DappRadar, the monetary value of these tokens exceeded $10.6bn.
In August alone, OpenSea, one of the biggest NFT marketplaces, reported a trading volume of more than $75m in a single day. This is more than its trading volume for the whole of 2020.
The top three highest grossing NFTs to date are works of CryptoArt created by Beeple. His piece Everydays: The First 5000 Days sold at auction for over $69m, making him the third most expensive living artist behind David Hockney and Jeff Koons.
How to Start an NFT Auction
If you’re after a slice of this multimillion-dollar market, you’ll want to start by getting set up with Ethereum. There are other protocols for creating your own NFTs (Zilliqa, TRON, Flow, Cosmos), but Ethereum is where the big money is. To get started on this network, check out this handy guide from NextAdvisor. Then, sign up for one of the specialist NFT marketplaces, which include Mintable, Rarible, SuperRare, and OpenSea. To create an account, you’ll also need a wallet browser extension, e.g. Metamask.
To create a collection on any of these marketplaces, you can either move your NFTs over from another platform (e.g., from Rarible to Mintable, or vice versa), or mint your NFT directly on your chosen platform. Once you have created your collection, you need to outline the properties of your NFT, including how many copies of it there are.
Then, you can put your NFT up for auction. Please note, you will have to pay a gas fee to get started. Gas fees vary according to demand. To avoid extortionate fees, start the bidding during off-peak times.
How to Buy NFTs
1. Go to Rarible.com and click on the “Create” button in the top right-hand corner of your screen. You’ll be asked to sign in with your wallet. Select the wallet you want to use to connect to the platform, and accept the terms of service to log in.
2. Once you’ve signed in, search the platform for the NFT you wish to purchase. Once you have selected the NFT you want to buy, click the “Buy now” button.
3. Double check the details of your order. If everything is correct, click “Proceed to payment”.
4. Your wallet will pop up on the screen. If you’re sure you want to go ahead with your purchase, confirm the transaction, and it will go through. Once your purchase has been approved, your NFT will be sent to your Ethereum address. Now it’s all yours!
The Future of NFTs
Currently, many applications of NFTs are focused on the entertainment industry and popular culture. We’ve already seen how they have been merchandized by sports teams, game and movie franchises, and musicians. However, they also have huge potential to transform the worlds of copyright, intellectual property, and software licensing.
Certificates for all kinds of things – including birth and death certificates – could be produced as NFTs. The information could be used to prove the identity of the owner. By storing these documents in a digital ledger, they are far less likely to be lost.