What is an NFT
NFTs, or non-fungible tokens, are digital assets built on blockchain technology that represent various items such as digital artwork, real estate, sports cards, etc. Each NFT is unique and can be sold as a way to prove ownership over a particular digital file.
NFT art has become the most popular and profitable entry into creating NFTs. Some pieces have sold at astronomical prices. The growing popularity has prompted many people to search for how to create NFT art and explore this avenue as a revenue stream.
Why is it Beneficial to Create an NFT?
The NFT creation process will enable you to turn your digital file into a marketable NFT. Anyone can create a piece of art, mint it as an NFT, and put it up for sale. Many NFT creations have been quite successful; most likely due to the popularity of the creator. Therefore, for anyone who wants to not only become an NFT artist but a successful one, it is somewhat necessary to have an already established following. However, with the increasing popularity of NFTs, a huge following may no longer be a factor in being a successful NFT creator but more so the ability to be innovative.
If you are already in the artist space, it would be an easy transition to create your own NFT artwork and possibly more beneficial than the traditional route.
- Creators won’t only make money from their digital artwork or tokens but have the opportunity to earn passively as long as those tokens exist through a royalty percentage. Adding royalties to your digital artwork, allows the creator to receive a percentage of sales profit anytime the artwork is sold to a new user.
- Since the NFT art sale is done all online through peer-to-peer marketplaces to a global audience, creators do not have to spend money on overhead such as auction houses and art galleries. This allows the creator to keep a significant portion of the profit made from sales.
- Most will argue that all they have to do to possess an NFT is to download the digital artwork token, which is somewhat true, however, it is only owned by one person at a time. Once it is minted onto the blockchain, there is a certificate of authenticity assigned to it. The creator, purchase price, and subsequent owners are all visible; this contributes to a level of transparency that has never existed in the traditional art world.
Types of NFTs
You can make an NFT of a digital painting, a text, a piece of music, a video; literally, anything that can be reproduced as a multimedia file. Their potential use cases continue to increase as they expand from general uses like digital art and games to fashion, music, education, tokenization of real-world objects, patents, membership sales and so much more.
When you upload your digital asset to a marketplace, you will have the option to upload it as a 1 of 1 collection ( an NFT that has been issued as a single, unique edition).
An NFT collection has become a primary resource for social engagement by way of its utility, an asset assigned to a particular NFT. One of the most popular collections currently is The Bored Ape Yacht Club (BAYC). This collection is considered a bluechip NFT collection as it refers to an established, stable, and well-recognized corporation. It has high utility and consistently ranks at the top in terms of daily sales volume on marketplaces.
Collections have become popular socially due to the usage of profile pictures (PFP). On platforms such as Twitter, Facebook, and Instagram where your profile picture represents you in the social media world, certain high-status collections have become symbols of notoriety and an acknowledgment that you are a part of a particular group of NFT collectors.
1 of 1
A 1/1, 1 of 1, or one of one, is an NFT that has been issued as a single, unique edition. One of ones are seen as more scarce and therefore more valuable because only one person can own them at a time. One of ones tend to have more value than collections but this could also be determined by other factors such as the popularity of the creator or the utility held by the NFT. For instance, Beeple’s Everydays: The First 5,000 Days was sold on March 11, 2021, at auction house Christie’s for $69.3 million yet a Cryptopunk, which is part of a collection sold at a Sotheby’s auction for $11.75 million.
Steps to Creating an NFT
Once you have decided that creating an NFT is your next venture, you can create a digital art token pretty simply by following these steps:
1. Purchase Cryptocurrency
Generally, before minting your NFT on any platform you will need to cover a few fees. Most NFT platforms accept Ether, the cryptocurrency of the Ethereum blockchain platform, but there are non-Ethereum marketplaces with possibly fewer fees that could also be an option.
If you already own cryptocurrency you will need to transfer it to your wallet of choice which you will later connect to an NFT platform. This is how you will make and receive payments. To purchase crypto, you can buy directly from a cryptocurrency exchange like Coinbase or directly from your wallet.
Ethereum is a decentralized, open-source blockchain with smart contract functionality. Ether or ETH is the native cryptocurrency. ETH is the most popular source for purchasing NFTs but its high gas fees keep enthusiasts searching for less pricey options.
The Binance exchange launched the Binance Coin in 2017 as an ERC-20 token on the Ethereum blockchain. It is a utility token that allows users to pay less in fees if they use the token for transactions.
Solana, a blockchain network that launched in 2020, is being seen by many as a competitor to the Ethereum blockchain. One of the biggest factors that pushed Solano’s value is that it also offers smart contracts and people are hungry for other options with similar functions. SOL uses a proof of history model which allows for faster transactions.
NFT creators can make a lot of money but not all NFTs will sell. Given all the fees involved with minting and selling NFTs, it may be a bit difficult to break into. A gas fee is a fee required to conduct a transaction on a blockchain. Some marketplaces will offset the gas fee for initially minting NFTs but they will ultimately be deducted from the first transaction so there is really no way around paying these fees.
High fees are correlated with high demand, so it is important to keep fees in mind when setting the minimum price. If not, you could lose money on your NFT sale if you set the price too low. Unfortunately, the fees to mint and sell an NFT can be costly. Depending on the platform and pricing, you could pay a listing fee, an NFT minting fee, a commission on the sale, and a transaction fee to transfer money from the buyer’s wallet to yours.
2. Create a Digital Wallet
This is what’s used to store cryptocurrency and NFTs. When making a selection, ensure it is compatible with the blockchain you are using. If you are going to mint tokens on different blockchains, you may need a few options.
MetaMask is widely supported by Ethereum-based applications and can be used either as a Chrome or Firefox extension or an app. It’s suggested when initially setting up the wallet to utilize a desktop as some wallets may not be supported with complete in-app functionality. Coinbase also has its own wallet that you can use as an extension or an app, and it’s supported by most platforms.
Most setup processes are similar. Once you have the browser extension or app installed click or tap the “create new wallet” button. More than likely you will be asked to create a username and for certain a password, which you’ll want to make sure is secure. You will then be given a phrase which is 12 random words. It’s very important not to lose this, as it will let you recover your account.
Types of Wallets
Hosted wallets, also known as custodial, are considered to be the most user-friendly and easy to set up. It is called hosted because users’ crypto is automatically stored in it by a third party. Since third parties are responsible for the safety of users’ cryptocurrency, users have nothing to worry about because they will never lose their cryptocurrency even if they lose or forget their password or private key. The biggest disadvantage of using a custodial option is not only a lack of autonomy but also a loss of anonymity since this type of wallet often recommends users to perform Know Your Customer (KYC) verification that refers to ID verification. On top of that, users have to make sure that the hosting company is both trustworthy and competent.
A non-custodial wallet offers complete control of the security of their crypto funds. Users don’t have to submit a request every time they want to send cryptocurrency, as they are free to choose the type of transaction fee. Although these wallets provide the required software to store cryptocurrency, the responsibility to remember and protect passwords lie entirely on users themselves. If users lose or forget their passphrases, they will not be able to access their wallets.
Hardware wallets, or cold wallets, are physical devices about the size of a USB flash drive. This option is complex in use and expensive. The benefit of using a hardware option is the secure storage of users’ private keys without the security risks of online wallets. A hardware wallet can keep crypto funds offline and secure them even if the user’s computer is hacked.
3. Connect to an NFT Marketplace
After you’ve got your wallet set up, you’ll want to connect it with the NFT marketplace you plan on using. With OpenSea you clicking the create button in the top left prompts you to connect your wallet. You’ll then be presented with a list of compatible wallets, and choosing yours will prompt you to go through the connection process.
If you have Metamask or Coinbase’s extension installed, you’ll see a pop-up asking you if you want to connect your wallet, which can be done with a few button clicks.
A marketplace is where you create and sell your NFT. A few of the top NFT marketplaces include OpenSea, Axie Marketplace, NBA Top Shot, Rarible, SuperRare, Foundation, Nifty Gateway, Mintable, and ThetaDrop.
Choosing a marketplace is going to depend on purpose, functionality, and cost. Creating an NFT on some platforms is cheaper than on others. A few marketplaces, like OpenSea, have a large variety of NFT content whereas others may be more specific. For example, NBA Top Shot is a basketball-focused marketplace and Nifty Gateway is a marketplace for celebrity art and established creators.
Non-curated or self-service marketplaces provide free access to all users, they just have to register and pay the transaction fee to mint an NFT.
Curated or invite-only marketplaces require creators to submit an application with certain selection criteria and a long waiting period.
Gaming platforms focus on gaming and VR. They have unique collectibles that can be sold on their marketplace or swapped between players.
Sports marketplaces are related to popular memorabilia sites where collectors can buy highlights as NFTs.
4. Upload Your File
Now that you have your wallet connected, you’re ready to create your NFT. Click the create button which is usually located in the upper right-hand corner. You will give the NFT a title and short description then choose to mint it as a single NFT or a collection. Next, you will upload the digital file normally under 100Mb in the following formats; JPG, PNG, GIF, SVG, MP4, WEBM, MP3, WAV, OGG, GLB, and GLT.
5. Sell Your NFT
The final stage in the NFT minting process is to decide how you want to sell your NFT. You will have three options:
Fixed price allows you to set a price and sell NFTs instantly
The Unlimited Auction option will allow people to make bids until you accept an offer.
A timed auction is an auction that only lasts for a set time.
After you choose your selling method and details, you’ll have the option to add unlockable content, which will be provided to the buyer. This could be something like an invite link to a private discord, or a code to redeem something on an external website.
The NFT market is still fairly new with progressing innovations daily but with their rapid growth in popularity, creators are becoming more aware of their benefits. Thanks to blockchain technology, artists and creators are able to easily mint NFTs and make more money faster.