NFTs have made a splash. Since the $69.3 million sales of Beeple’s Everydays — The first 5000 days at Christie’s has been on the headlines, they have frequently been in the news. Some have debated that this phenomenon won’t last, while others believe that it will stay.
Our guide will let you know everything about NFTs, including how they work, what they are, how you can be involved, and why they created some controversy.
What is an NFT?
In essence, an NFT is a digital asset that you can collect. It is a form of both culture or art and cryptocurrency that holds value. Similar to art, NFTs are seen as an investment that has value. How is this possible? Standing for the non-fungible token, NFT is a digital token, also a kind of cryptocurrency similar to Ethereum or Bitcoin. However, it is not like the standard coin as an NFT is unique and cannot be exchanged with the same thing as it is non-fungible.
Now, how can an NFT be more remarkable compared to any crypto coin? Since it stores additional information, it is elevated beyond just currency to be brought into any realm. There are so many varieties of NFTs as they can be in the form of a music file or digital art. It can be anything that uniquely holds value, and you can digitally store it. They are essentially similar to any item from physical collectors, but instead of getting a painting on canvas that you can place on your wall, what you get is a JPEG file.
How do NFTs work?
As a part of the blockchain Ethereum, NFTs are individual tokens with additional information stored within them. The important thing about it is the extra information as it enables them to be in the form of a video, music, art, and more that could be in GIFs, videos, MP3s, JPGs. Since they can hold value, people can buy and sell them similar to any art. Just like physical art, it has a value that the market has primarily set according to demand.
However, it may not be possible for just one digital version of an NFT art to be available in the marketplace. Like how an original artwork’s prints are created, bought, used, and sold, NFTs have copies that can be valid in different parts of the blockchain. Despite that, they may not have a value that is similar to the original.
Aside from that, avoid assuming that you hacked the system if you right-click and save the picture of the NFT, as well. The file you download does not have the information that tells it is included in the Ethereum blockchain.
Where can I purchase NFT tokens?
You can buy NFT tokens from various platforms, and whatever you select would depend on what you want to purchase. If you would like to buy baseball cards, you should go to digital trading cards. However, there may be other marketplaces that sell general pieces. It would be best to have a wallet that works explicitly on the platform you buy, and that wallet should have cryptocurrency. There have been pieces that have started to appear at mainstream auction houses like Beeple’s Everydays — The first 5000 days that appeared at Christie’s. Because of that, some pieces have begun to hit auction houses that are more mainstream that people need to watch out for regularly.
Since there is a high demand for different kinds of NFTs, they usually get released as ‘drops’ similar to events with ticket batches released at various times. It means those eager buyers are in a frantic rush when the dop begins. Because of that, you need to get registered and have a topped-up wallet in advance.
These are the websites that sell NFTs:
NFTs have also made waves because of the in-game purchases throughout various video games. Players can buy or sell these assets, including avatars, skins, swords, and other playable assets.
Who are the ones that use NFTs?
NFTs have achieved their moment as many NFT art creators like brands, gamers, and artists throughout the culture spectrum. It appears that every day a new player gets into the NFT marketplace.
Artists getting into the NFT space allow them to have another format and space to produce and share their artworks. It will enable their admirers to support their work differently. These pieces can range from small, easy-to-create GIFs like the Rainbow Cat that NyanCat sold for $690,000 to highly ambitious worlds. Because of NFTs, artists now have numerous ways to offer public art to earn money.
Brands now consider nFTs as an attractive stream of revenue. Taco Bell was able to sell images and GIFs with a taco theme on a marketplace and sold out 25 in just thirty minutes. Every NFT had a $500 gift card that the original owner could spend, which is why they were initially popular. However, the TacoCards are sold on the secondary market, and the most expensive card sells for $3,500 even if it does not include the gift card.
What is the reason why NFTs became controversial?
It can be possible to earn so much money from the NFT market. However, you may have also heard about the controversy that surrounds NFTs, especially when it comes to how they affect the climate.
Since creating NFTs consume so much energy, a lot of protesters feel worried about the actual impact of the craze on the environment. According to the website that calculates the NFTs’ carbon footprint, CryptoArt.wtf, the piece is known as ‘Coronavirus,’ and it was able to consume 192 kWh when it was created. It is the same as the total energy consumption of a resident of the European Union in two weeks. However, this piece is not particularly large as it is only a ‘simple’ GIF image.
It can be possible for artists to help if they make efforts to create carbon-neutral artwork. Beeple has promised to do this in the future. However, it may be hard to do this due to the way they build cryptocurrency systems.
Bitcoin, Ethereum, and other cryptocurrencies got built based on the proof-of-work system. It is similar to a complex series of puzzles that secure the users’ financial records. That system also uses so much energy. Ethereum, on its own, uses the same amount of energy that the nation of Libya consumes. However, it may not be that controversial for a long time as some organizations, like Blockchain for Climate, are doing their best to make a difference.
So many voices in the art and design community are angry because NFTs change hands for astronomical amounts of cash. NFTs have been initially created to give the control back to the artists as it asserts their digital ownership. Yet, it creates tension because it is now starting to be highly elitist. The buy-in fees are too expensive for many people, and the price of one makes people believe that the marketplace is only for those who are super-rich. Because of that, artists now think that they are disadvantageous in this sphere where they should have control.
Is it possible for anyone to make an NFT?
Now that you’ve learned about NFTs, you may wonder if anyone can get involved in it. Anyone can create artwork, have it minted into an NFT on the blockchain, and sell it on their chosen marketplace. You may also include a commission to the file that you will get paid whenever someone purchases the piece, including the resales. Just like when you buy NFTs, you need to set up a wallet and make it stuffed with cryptocurrency. The money required upfront is complicated as the hidden fees may be too much. Some sites charge a ‘gas’ fee for each sale as every transaction consumes energy along with the buying and selling fee. You may also have to consider the price fluctuations and conversion fees that could differ anytime in a day. It means that the costs could usually become more than the price you can get when you sell an NFT. Various sites may have different fees, and some can be better than others, so it would be best to research first.
Regardless of whether NFTs will be here to remain, they have become the new plaything for the rich as they can make real money once they make things happen. NFTs provide digital art with new meaning, and the prices that people see at a sale tell that it is included in the future of collectibles and art.
