We can’t stop talking about blockchain, cryptocurrency, and NFTs these past couple of years. Since a boom in the crypto asset market started in mid-2020, everything from NFT art to the metaverse has jumped into the mainstream.

That can leave you with a lot of questions.

No worries! We’ve got answers. In this NFT 101 rundown, we answer 33 of your most common questions about NFTs.

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NFT Basics

Let’s start by getting our bearings.

1. What Does NFT Stand For?

NFT stands for “non-fungible token.”

2. What Is an NFT?

It’s an asset (“token”) that lives on the blockchain and represents ownership or access. No NFT is interchangeable for other NFTs (“non-fungible”).

“Fungible” is an economic term that means something has unique properties that make it unable to be exchanged evenly for something else. Cryptocurrencies like Bitcoin are fungible tokens, while NFT works are non-fungible.

NFTs are unique creations, like paintings or sculptures are, so they can’t be traded for a guarantee value against any other item. Fungible items, by contrast, have a defined value that makes them interchangeable: Any U.S. dollar can be exchanged for any other denomination of U.S. currency, for example.

The most common NFTs confer ownership of digital artwork, like graphics, drawings, or videos. NFTs can also be used to create a decentralized ownership contract for physical assets, like a painting.

Access tokens are like tickets that give holders entrance into physical or digital spaces and events.

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3. What Gives an NFT Its Value?

NFTs are collectibles, so their value is based on demand and speculation. An NFT might come with a high price tag if there’s widespread demand for it, or collectors might be willing to pay a lot if the market speculates it’ll be worth a lot more in the future.

Essentially, we bestow value on NFTs by considering them valuable. Like any collectibles, they’re unique and tend to be available in limited quantities, and collectors are often willing to pay high prices for the exclusivity of ownership.

4. How Many Types of NFTs Are There?

Anyone can create an NFT to indicate ownership or access to just about anything; we may have only scratched the surface so far. The most popular current types of NFTs are usually:

  • Art and Collectibles: NFTs can be connected to a unique, collectible piece of digital artwork, music, memes, moments, and other types of online items.
  • Utility: NFTs can be created for access to events and spaces, to verify domain ownership and identity, and to develop interoperable data that improves upon current internet capabilities.
  • Metaverse and Gaming: NFTs are changing ideas around ownership in online games and worlds. Within NFT games, you can purchase items for real ownership that you can sell for a real-world profit outside of the game.

5. How Do I Get Started With NFTs?

NFTs live on the blockchain and are traded in cryptocurrency, so your first step to getting started with NFTs is to set up a crypto wallet and purchase some cryptocurrency.

The most common blockchain for NFTs is Ethereum, so you most likely need an Ethereum wallet, like Metamask, and some Ether or other Ethereum-based coin.

Then you can choose an NFT marketplace and start creating, selling, and buying NFTs through the platform.

6. What Is the Metaverse and How Does It Relate to NFTs?

“Metaverse” is a general term for a digital place parallel to the physical world, where people connect in a model that’s similar to the internet but in 3D—instead of text and images to communicate and consume ideas, 3D avatars exist in 3D models of physical spaces.

One metaverse doesn’t exist, at least not as many experts imagine it will eventually. Instead, we have separate virtual worlds that operate akin to video games. Some of these platforms use NFTs and cryptocurrency as a way to buy and sell virtual items.

These blockchain applications decentralize ownership in those worlds and move users closer to an integrated metaverse, because in-game crypto holdings can translate to value in the physical world, as well as transfer to other virtual worlds.

7. What Is an NFT Marketplace?

An NFT marketplace is a platform where you can buy and sell, and in some cases create, NFTs and NFT collections. Marketplaces let creators and digital artists mint and sell original NFTs, and most also include an option for collectors to sell NFTs on the secondary market.

NFT transactions happen on the blockchain, but marketplaces live online where you can access them using a web browser like any other website.

8. What Are NFT Games?

NFT games are video games or virtual open worlds built on the blockchain. They have in-game economies where users can collect assets through game play or simply by purchasing them.

These economies operate like other video game economies, except that the decentralized nature of crypto assets means players can amass assets that have value outside the game. 

Unlike traditional video games or virtual worlds, where the game publisher owns and controls the goods and assets in the game, NFT games operate on the decentralized blockchain. So players own the NFTs and crypto they collect in the game and may be able to trade it outside of the game and even exchange it for real-world currency.

9. What Is a POAP NFT?

POAP (Proof of Attendance Protocol) is a method for creating a blockchain token that records notable experiences. For example, event organizers might create a POAP that goes out to attendees of their event. Attendees can mint their NFT and hold onto it as a memento of their exclusive experience—or they can sell it to other collectors through a marketplace.

10. Can You Print an NFT?

If you purchase an NFT, you should have access to a digital file by way of a link in the NFT metadata. With that file, you can print your NFT artwork through any service that supports it.

11. Can NFTs Be 3D?

Yes, NFTs can be connected to any kind of work or digital art.

Creating NFTs

Here’s everything you need to know about creating an NFT.

12. Can Anyone Make an NFT?

Anyone can create an NFT! The process happens on the blockchain, but you don’t have to know how that works just to make an NFT. Tons of websites exist to make it easy to mint an NFT through the Web2 internet you know and love—just go to an NFT minting site or marketplace, upload your file, and click a few buttons to mint and list the NFT.

13. What Kind of Software Do I Need to Make an NFT?

You don’t need anything special to create an NFT. You just have to find a platform online that facilitates NFT minting and sales, like OpenSea, Rarible, Mintable, or Foundation. You can do that entirely through your normal web browser, so you don’t need any special software on your computer.

You do need a crypto wallet to receive payment for an NFT and some cryptocurrency holdings to cover potential minting fees. 

14. What Does “Minting an NFT” Mean?

“Minting” is the term used for creating an NFT—you “mint” the unique token.

The technical process of minting an NFT happens on the blockchain, but you can do it easily through a Web2 platform. The process on your end looks kind of like the process of creating a listing on an online marketplace like Etsy: You upload an image or other media file, add a title and description, and click to list.

On the backend, minting an NFT creates a record on the ledger that is the blockchain. There’s a record of its creation and your (anonymized) ownership, and the record will continue to grow as the NFT is bought, sold, and traded. The record also includes a link to the related file, which remains on the internet, not the blockchain.

Buying NFTs

Here are the most common questions about buying NFTs.

15. Can Anyone Buy an NFT?

Yes, anyone can buy an NFT! You don’t have to have access to a complicated machine or technology, just an internet connection.

You can buy an NFT directly from the original creator—called the “primary market”—or from a collector who purchased the token elsewhere—called the “secondary market.” In either case, the whole transaction can take place through an NFT marketplace, which is a website with NFT listings that’s connected to the blockchain to complete transactions.

The only special things you need to have to buy an NFT are a crypto wallet, like Metamask, and some cryptocurrency, usually Ether or other Ethereum-based coin. A wallet holds your crypto assets, including coins and NFTs. And you’ll use cryptocurrency to make the purchase; you can’t buy an NFT directly with fiat money (even though prices are usually shown in USD or your local currency).

16. How Much Do NFTs Cost?

NFTs range in price as much as any other collectible: You can find an NFT that costs less than $5 and one that sells for millions. 

Creators and sellers price NFTs however they want, and buyers drive costs based on demand. 

Some buyers collect NFTs as an investment and are willing to pay high prices because of speculation that an asset will go up in value over time. Others will pay a lot for the exclusivity of owning an NFT created by a celebrity. Still others might just dabble in the market and buy low-priced NFTs to support budding artists.

All NFT purchases you make will be in cryptocurrencies, but prices are typically listed in your local currency. 

17. Can You Only Buy NFTs With Cryptocurrency?

You can only buy an NFT in cryptocurrency that lives on the same blockchain as that NFT.

So, for example, no NFTs live on the Bitcoin blockchain, so you can’t use that currency to buy one. Most of them live on Ethereum, so you can use Ether or other Ethereum-based currencies that use a set of rules called the ERC-20 standard to buy NFTs.

You could also buy NFTs that live on other blockchains, including Solana, Tezos, or Flow, using their native coins (SOL, XTZ, and FLOW, respectively).

18. Can You Invest in NFTs?

A lot of buyers consider NFT collections an investment because of the possibility they’ll grow in value quickly or over time. NFT and cryptocurrency values are volatile for now, because they’re new assets, and they’re not tied to any traditional or regulated industries.

You can’t buy or trade cryptocurrencies or NFTs through most traditional brokerages, but some investment apps, including Robinhood and Cash, let you buy and sell limited cryptocurrencies. You’ll have to use an NFT marketplace or crypto exchange to invest in NFTs.

Selling NFTs

Here’s what you need to know about selling NFTs.

19. Can Anyone Sell an NFT?

Yes, anyone can sell an NFT they’ve created or collected.

The computing process behind NFTs on the blockchain is complex and not something a layperson is likely to be able to navigate—but you don’t have to do that to sell an NFT.

Web2 sites you can access through your browser handle all the technical stuff for you, so creating and selling an NFT can be just as easy as selling an item on eBay.

The only difference is that NFT transactions happen on the blockchain and through cryptocurrency. You have to have a crypto wallet, like Metamask, to hold an NFT and to receive the proceeds of selling it; and cryptocurrency, like Ether, to pay the fees to mint an NFT.

20. How Much Can NFTs Sell For?

NFTs prices run the gamut. They can sell for a few dollars, a few hundred thousand, or even a few million. The majority of sellers won’t hit six or seven figures, but those big sales pull the average up: as of April 2022, the average NFT sale price was $2,000.

21. Can I Make a Living Selling NFTs?

It’s going to take time to figure out whether selling NFTs, especially as a digital artist, can prove to provide a stable income. 

Because you can create the artwork with no resources but time, and fee-free minting options are becoming increasingly available, selling an NFT for any price can be profitable. The question is whether those profits will add up to enough to make a living.

Like any creative venture, you can only figure that out through trial and error.

Because they’re often tied to artistic creations, NFTs raise interesting questions about ownership and copyright that haven’t been answered yet. 

Not enough cases have hit U.S. courts for them to sort out the big questions around NFT copyright, so creators and collectors are left to rely on their interpretations of existing copyright law—and potentially exploit the loopholes.

Many NFT marketplaces have added stipulations to their terms of service to account for those gaps, and the rules vary across platforms. If you buy or sell NFTs, read the terms carefully to understand which rights to the work you’re gaining or giving up.

22. Is an NFT Intellectual Property?

It hasn’t been decided legally yet, but an NFT itself probably doesn’t meet the criteria to be considered intellectual property. 

Intellectual property is a work that results from creativity, like an invention, art piece, or branding. An invention can be patented, art and other forms of expression can be copyrighted, and branding and company markers can be trademarked.

An NFT—the token itself—is actually just a record of ownership, like a contract or deed.

The work an NFT points to may be intellectual property if it’s a creative work like digital art or music. In that case, it’s subject to copyright. 

23. Can You Copyright an NFT?

Because an NFT itself isn’t a form of expression, it doesn’t meet the criteria to be copyrighted. 

The work it’s connected to, if it’s a form of art or expression, is automatically copyrighted by its creator just through the act of creating it. The copyright owner can register the copyright for stronger legal protection if they want to.

The NFT, the work, and the copyright are each separate pieces of property. You don’t automatically own the copyright to work when you buy the NFT, unless the seller includes a copyright transfer in the sale. And you can’t register copyright in your name if you don’t own the copyright.

24. Can You Patent an NFT?

NFTs don’t meet the criteria for patents. The U.S. Patent and Trademark Office grants patents for inventions of new utility, design, or plants.

NFTs are blockchain-based contracts that document ownership for, usually, creative works. Those creative works may be eligible for copyright protection and the copyright owner could register with the U.S. Copyright Office.

Someone might, however, be able to create an NFT to record ownership of a patent.

25. Can You Trademark an NFT?

NFTs don’t meet the criteria for trademarks. The U.S. Patent and Trademark Office registers trademarks for words, phrases, symbols, and designs that distinguish one provider of goods or services from another in the marketplace—like a company’s logo or a name like “Google.”

NFTs are contracts that are often connected to creative works, like digital art, to convey ownership over the work. Someone could easily create an NFT that confers ownership of a trademarked design or phrase—but that wouldn’t transfer ownership of the trademark (i.e. the right to use it).

26. Can You Make an NFT of Something You Don’t Own?

Yes. Unless and until courts decide otherwise, you don’t have to own a piece of work to create and sell an NFT for it. That’s because the NFT and the work it points to—as well as the intellectual property rights to the work—are separate pieces of property.

So, you could create and sell an NFT that links to a digital file with a picture of the Mona Lisa, for example. When someone buys the NFT, they can access that uploaded file of the Mona Lisa. But they don’t own the Mona Lisa, the physical painting. And they don’t own the copyright to the image of the Mona Lisa (which is in the public domain)—they don’t gain a right to restrict or earn royalties for use of the image.

NFTs and the Environment

Blockchain transactions in general use a lot of computing power, which means the servers powering the blockchain require a ton of electricity to run. Here are answers to a few common questions about the environmental impact of NFTs.

27. Are NFTs Bad for the Environment?

Experts don’t know an exact measure of the environmental impact of NFTs, because they’re so new, but most know it’s high.

NFTs, like cryptocurrencies, require constant blockchain transactions—from minting to sale to transfer to accepting an offer to registering your account to transferring ownership. That’s likely sucking up a lot of energy.

Rapid advancement in the blockchain, however, might bring down the required energy and reduce the impact of NFTs.

28. What Is an NFT Carbon Footprint?

Earth.org estimates the environmental impact of an NFT transaction on Ethereum has a carbon footprint about 14 times that of mailing an art print and 74,000 times that of a Visa credit card transaction.

However, developers are already coming up with blockchains that use more and more efficient methods for validating transactions. Ethereum uses about 13% of the power Bitcoin requires, and newer blockchains can use less than 1/100 of a percent of that.

29. Is It Possible to Produce NFTs Without Harming the Environment?

As the popularity of blockchain applications grows, developers are working rapidly to develop blockchain protocols that use less energy than the power-hungry Bitcoin and Ethereum.

The majority of NFTs run on the Ethereum blockchain, but other more efficient options can also support NFTs. The environmental impact could come way down if NFTs shift en masse to more efficient blockchains.

NFTs and Security

Because they operate on the blockchain, NFTs raise security concerns for a lot of people. Here’s what you need to know about NFTs and hacking.

30. Can NFTs Be Hacked?

Like other digital accounts, the crypto wallet that holds your NFTs and cryptocurrency can be hacked. Thieves could steal your holdings or information connected with your account, like credit card or identity information.

Many blockchain apps use measures that keep your identifying and banking information from being connected with your wallet, and they use typical security measures like two-factor authentication to keep thieves from accessing your accounts.

31. Can You Protect an NFT From Being Hacked?

The simplest way to protect your crypto holdings is to take advantage of a platform’s security measures. Use strong, unique passwords, and opt into two-factor authentication.

You can up your security by using a cold wallet—a hardware device that’s not perpetually connected to the internet—instead of a hot wallet, which lives in the cloud and is more vulnerable to hackers. But you’ll trade convenience for security, because a cold wallet needs to connect to the internet every time you make a transaction.

32. Can You Insure NFTs Against Hacking?

Some types of crypto insurance exist that would protect your NFTs and other crypto assets against theft.

Crypto insurance is basically any kind of policy that covers your crypto assets in a hot wallet. It could be a traditional insurance policy that you negotiate to include those assets, or a dedicated blockchain-based insurance policy. The latter may also come with breach protection that monitors for hacks to keep your assets from being stolen.

33. Can You Insure NFTs Against Copyright Infringement?

There’s no insurance that protects you in case someone else uses your copyrighted work. But commercial general liability policies usually include coverage for claims of copyright infringement made against you.

Get Started With NFTs

We hope this guide helps you make your next move with NFTs. There will always be more to learn in this new and evolving space, but getting the basics down can give you the confidence to get started.

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This article is not intended to be financial advice.