Discover Online Classes in NFTs
Create, buy and sell your own NFTs, and more.
The NFT (non-fungible token) market is already enormous and growing bigger day by day. News outlets frequently report high-value NFT sales, often to celebrities and wealthy collectors. Meanwhile, creators and artists are taking their first steps into the world of non-fungible tokens or contemplating what opportunities exist to break into the market.
The good news for creators and investors alike is that, while the market is booming, we’re still in the early days of NFTs. There are ample opportunities for those who are willing to explore and to understand the fundamentals and to create, buy, and sell NFTs for themselves.
Conservative estimates suggest that NFT sales in the first half of 2021 exceeded $2.5 billion—up from $13.7 million in the first half of 2020. High-profile digital artists like Beeple are bringing NFTs forward in the public consciousness. Mainstream artists like Damien Hirst are experimenting with them, too, as are movie studios, sports franchises, and rock stars, gradually bringing more people into the world of NFTs.
There’s never been a better time for creators to experiment with NFTs as a way of using a new creative medium, to potentially reach new audiences and buyers, and to protect the property rights of their digital assets.
The biggest challenge for many is in understanding: What are NFTs? What gives them value, and how can they be created and used by creators to connect with new and existing audiences?
Here’s what you need to know in order to understand, experiment with, and ultimately use NFTs as a natural part of your creative pursuits.
What Is an NFT?
So, what are non-fungible tokens, and what do they really represent? Some struggle to get past the idea that they’re just over-priced, pixelated digital images. A few of the common questions raised include:
- What makes NFTs worth thousands or millions of dollars?
- What do you get for your money?
- Why wouldn’t you just right-click to download a copy of the digital creation?
Even those who have a grasp on them still struggle to understand where to buy NFTs or what’s involved in creating them—so that’s what we’ll walk through in this article.
NFTs are digital tokens created and stored on a blockchain network of computers. Each NFT denotes the original version of a digital creation.
The purpose of NFTs is to protect the uniqueness of creations that might otherwise be easily duplicated and distributed. They offer a means of recognizing and protecting the original version of a digital creation in a way that cannot be disputed. If you own the NFT, you own the original (as recognized by its creator).
Consider a conventional masterpiece of art, such as the Mona Lisa. We collectively accept that there’s only one genuine painting that hangs in the Louvre in Paris. We can buy a poster of the painting and can enjoy looking at the artwork, but we know that we don’t own the original. The originality and ownership of the painting are acknowledged due to the fact that it’s a physical item, stored securely in a gallery.
NFTs protect the original versions of digital creations that can’t be stored securely in an art gallery or an underground vault. By minting an NFT on a network such as Ethereum or Solana, artists can create a unique digital token of authenticity that registers ownership of the original digital asset.
This token can be bought and sold on a marketplace (like OpenSea) or via an auction house. All future changes in ownership of the NFT are then recorded forever on the blockchain ledger. They can be displayed, shared, and traded on NFT websites including marketplaces and metaverse galleries like Decentraland, or used as avatars and profile pictures on social media platforms like Twitter.
No matter how many copies of the creation are made, the NFT allows the original to still be recognized. With that originality comes value and status.
What Does Non-Fungible Mean?
Non-fungible means that something is not interchangeable with other things of the same type.
A single dollar bill is interchangeable (fungible) with other dollar bills of the same denomination. While they each have a unique serial number, one is treated as equivalent to the next. In the context of copies of a digital creation (such as an image), the NFT denotes that all copies aren’t equal. The NFT denotes the original.
By minting NFTs for digital creations, artists are able to bring about something that’s entirely unique for creations that are otherwise easily duplicated.
When Was the First NFT Created?
In terms of who invented NFTs, the first is believed to have been created by digital artist Kevin McCoy in May 2014. This appears to be the first known application of blockchain technology for tokenizing digital art.
His NFT “Quantum” is a pixelated image of a hexagon with various other shapes constantly appearing within its perimeter. The piece was last sold by Sotheby’s auctioneers for $1.4 million in June 2021.
While NFTs have existed conceptually for years, the vast market for creating, buying, and selling them has only matured in 2021. It has taken time for momentum to build to the current level, where $250 million+ of NFTs are now traded every month.
Start With the Basics
NFT Fundamentals—Buy, Create, and Sell NFTs
Why Are NFTs Valuable?
NFTs for desirable digital artifacts can fetch huge sums of money. But like all artistic creations, value is subjective. Much of that value is driven by the status that buyers perceive in owning certain creations.
A big part of the appeal of NFTs should come from buyers appreciating them on an aesthetic level or for what they symbolize. This has been the case ever since people began collecting items because they liked how they looked or because of what they represented.
This same is true for NFTs—some are desirable because of how they look, but in many cases, their financial value is as much driven by what they represent.
Twitter founder Jack Dorsey auctioned an NFT of his first tweet, and it sold for over $2 million. The buyer paid for the right to claim ownership of that moment in internet history, with the price suggesting what that moment represented to them.
It doesn’t mean that they own exclusive rights for viewing the tweet or that only they can reproduce it. In fact, here it is:
I haven’t committed digital forgery or infringed the owner’s digital copyright by including the tweet here. But as I don’t own the NFT, I can’t enjoy the status of notionally owning the original—that belongs to the person who paid $2.9 million for the NFT. The non-fungible token that Jack Dorsey minted will forever register who owns his first tweet, no matter how many times it’s reproduced or replicated.
What makes a piece of art valuable is entirely determined by what someone is willing to pay for it. A digital asset has value as a piece of art simply because the creator and buyer agree that it does.
For example, in my opinion, Jackson Pollock’s abstract expressionist paintings are little more than panels covered in spilled paint. And yet art collectors pay millions of dollars for them! Their desirability, value, and credibility as works of art are collectively agreed between those buyers and sellers.
NFTs have demonstrated that there’s similar kudos, status, and value for buyers in owning the original items, just as collectors pay millions for more traditional works of art.
While NFTs benefit from being cryptographically created and stored on a blockchain that irrefutably records ownership of the token, it doesn’t prevent people from looking at the digital artworks or even from taking and distributing copies of them. These copies might evoke similar feelings of enjoyment and appreciation, but only the original is potentially worth large sums of money via the NFT.
Creators have always pushed the boundaries of what’s accepted and appreciated by the general public, and the artistic medium through which they’ve expressed themselves has constantly evolved with technology. NFTs represent the next stage in that evolution.
Types of NFTs
There are many different NFT types, and one can be minted to represent any piece of digital art—whether an image, audio, or video file, a piece of text, or a module of computer code such as an animation, a meme, or a more complex program or app. There’s also an intersection between NFTs and online gaming—some NFTs represent playable characters or attributes (such as visual skins) that can be added into online games by owners of the NFT.
Some of the best-known and most desirable (and valuable) NFTs are limited-series collections of digital images like CryptoPunks and Bored Ape Yacht Club. NFTs within these collections are instantly recognizable, and individual examples often sell for hundreds of thousands of dollars. The most expensive CryptoPunk, #3100, was first sold for around $2,127 in July 2017. It sold again in March 2021 for $7.58 million.
NFTs within such collections tend to be generated programmatically at the time of minting, often using artificial intelligence and machine learning to incorporate certain traits and features within each image. Different combinations of these traits determine the relative rarity of individual NFTs in the series which, in turn, dictates their relative desirability and monetary value.
The value associated with such NFTs is also derived from the status that comes with their ownership. Many projects have seen the price of their NFTs soar when celebrity collectors or investors have purchased them. NBA star Steph Curry paid around $155,000 for a Bored Ape which is now used as his profile picture on Twitter. Rapper Snoop Dogg (under his NFT collector pseudonym Cozomo de’ Medici) is the proud owner of over 100 high-value NFTs including nine CryptoPunks.
Again, NFTs are about more than just tokenizing digital images. Creators whose art involves all kinds of media are exploring ways that the blockchain can be used to derive value from their creations.
NFTs can be minted to represent music. The rock band Kings of Leon have released a series of NFTs in parallel with their most recent album. Holders of their NFTs gain the kudos of legitimized super-fan status, along with elite privileges including VIP concert tickets and limited-edition vinyl albums.
One of the earliest and biggest NFT projects is NBA Top Shot. These NFTs offer one-off digital video clips of action sequences from NBA basketball games. These digital collectibles allow fans and speculative investors the opportunity to notionally own the moment in sporting history captured in the video clips. NBA Top Shot has already been lucrative for many collectors, and the NBA’s venture into NFTs has netted sales in excess of $250 million to this point.
Actress Sarah Jessica Parker is taking part in the issue of an NFT series, too. The project will allow NFT holders to gain exclusive access to rare wines and digital label artwork released in collaboration with a New Zealand vineyard. Such NFTs allow issuers to tokenize and control access to members-only groups and elite clubs where membership brings holders exclusive benefits. The tokens are tradeable and can be sold. They may increase (or decrease) in value depending on the perceived appeal of the perks and the associated status that owners receive.
NFTs could theoretically also be used in the future by educational establishments for granting access to their courses. A “Harvard NFT” or a “Cambridge University NFT” could be traded for a price determined by the perceived value and status of their offering. The holder would be able to study the courses and gain the qualifications they needed before selling the NFT on to another. In this way, schools would be incentivized to refine their courses in order to protect their reputation and to increase the desirability and hence, the value of their NFT.
In a final, unusual example, an innovative Californian realtor even attempted to sell a home by minting an NFT of a digital rendition of the property—the successful buyer of the NFT would also get the home included in the price!
Some use cases (like the last one) will undoubtedly push the boundaries of what’s possible technically, socially, and legally. But as these examples demonstrate, significant opportunities exist for creative thinkers to use NFTs as a new way of bringing their work to market. The possibilities presented seem almost endless at this point!
How You Can Get Started With NFTs Today
As you can hopefully now appreciate, NFTs have proven to be far more than a temporary bubble of hype and excitement. Individual artists and major corporate brands alike are awakening to the possibilities presented by NFTs and are rushing to get involved.
The good news is that as you read this now, you’re still really early to the party! There’s incredible scope to start exploring NFT culture and to make your mark as a creator, an investor, or just as an enthusiast of art and technology.
- If you’re a creator, whether an artist, photographer, musician, or writer, you likely already have a digital asset that could be minted and sold as an NFT on a marketplace like OpenSea, Cent, or Nifty Gateway. The process of turning your art into an NFT is quick and easy to understand and follow.
- If you’re looking to invest speculatively in NFTs, head onto a marketplace and browse the vast array of NFTs that exist today and can be purchased for prices of less than $100. All you need is a little cryptocurrency (such as Ether, if your chosen NFT is minted on Ethereum) and to find an NFT that appeals to your eye and your budget.
- If you’re just enthusiastic about learning more about NFTs, there’s a wealth of useful information in courses that cover the basics, as well as active communities on platforms like Twitter and Discord where creators mingle with collectors to discuss the technology and its application.
The most important thing is to waste no more time—get started today!
This article is not intended to be financial advice.
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