- You can “turn” absolutely any object into NFT: text, picture, audio recording, domain name and much more.
- Creating and releasing your NFT is no more complicated than posting a photo to Instagram. It can be done by anyone – even those without extensive knowledge of programming and blockchain technology.
- There are various services that provide the opportunity to create, buy and sell NFTs. The most popular of them are marketplaces such as OpenSea, Rarible, SuperRare, BakerySwap and Treasureland.
What is the main difference between NFT and cryptocurrencies?
All cryptocurrencies have a certain issue whose coins are the same and can be exchanged for each other. In turn, each NFT is unique and has no analogues. Although the issue of non-interchangeable tokens, like cryptocurrencies, occurs through a smart contract. Any number of NFTs with common features can belong to one contract, so they can be combined into collections.
The main feature and, at the same time, the value of NFTs is in the digital items to which they refer. The token does not store the object itself – it points to a link to a media file on the server. Due to the properties of the blockchain, this record cannot be faked or altered, except in legal cases of exchange or sale. In this way, NFTs act as evidence of ownership of a digital object (or a share thereof).
The most popular blockchain for NFT creation is Ethereum. A token’s metadata is managed by a smart contract created using the ERC-721 or ERC-1155 standards. Using the metadata, any NFT marketplace and other applications “find” the content of each token and display its attributes correctly.
In the case of the Hermitage NFT-collection, created on the basis of paintings from the museum’s collection, all works exist in two copies: one, physical, is kept in the Hermitage, and the other, digital, is presented on the Binance NFT site. Their authenticity is certified by the director of the museum, and the date, time and place of signature are fixed in the metadata.
What kind of items can I release NFTs for?
NFTs can be issued for any object, including in digital form: texts, social media posts, images, audio recordings, art objects, game objects or characters, domain names, trademarks, and the like.
For example, in February 2022, the National Art Museum of Ukraine began auctioning off paintings by various artists in the form of NFTs, and in June of the same year in New York, Okada & Company put up for sale one non-exchangeable token that gives ownership of an entire seven-story office building.
And in May 2022, Madonna released her NFTs. She created the token collection together with the artist Mike Winkelman, known under the pseudonym Beeple. Madonna’s NFTs are tied to music videos.
What does it take to create an NFT?
Anyone can release NFT, it is simple and does not require programming skills and deep knowledge about cryptocurrencies and blockchain technology.
The easiest way is to upload a file to one of the major platforms, such as OpenSea or Rarible. The platform will then create a unique token itself and link the media file to it.
To create an NFT you will need:
- The digital object itself – for example, your drawing or a video captured on your phone;
- Registration with the app where you want to release the NFT;
- a blockchain on which a non-interchangeable token will be created (the site will offer several networks to choose from);
- a cryptocurrency wallet for authorization and financial transactions;
- a cryptocurrency wallet to pay fees for the creation and placement of NFTs. The amount of commissions differs depending on the selected network.
In which blockchain is it better to issue NFTs?
Most non-interchangeable tokens are issued in Ethereum, but the commissions on the network are at least a few tens of dollars.
There are a number of alternative blockchains that are often used for NFT:
- BNB Chain;
Each blockchain has its own standard for NFT. The network in which the token is issued determines which applications and wallets will support transactions with it. A non-interchangeable token issued on the Ethereum network can only be sold on platforms that support its token standards, such as Rarible. Another NFT marketplace can only support BNB Chain, like BakerySwap, and NFT from Ethereum cannot be placed on it.
Popular blockchains give access to a large audience and a mature marketplace, but they often have more expensive transactions. In turn, networks with lower transfer fees may have a smaller ecosystem.
Which marketplace to choose to create and sell NFTs?
There are many NFT marketplaces. However, not every marketplace allows releasing a token to any user. For example, Nifty Gateway conducts a serious selection of participants before placing a digital object, so it is more often chosen by famous artists.
OpenSea is the easiest place to find buyers. The main feature of the platform is the variety of categories for items to which NFTs are linked: art, sports, collectible cards, and projects from famous artists. OpenSea even sells NFTs for audio files, domain names, and three-dimensional objects.
How much do I have to pay to issue NFTs?
Each NFT marketplace has its own pricing policy and charges different fees for creating and placing tokens. Typically, they charge several types of fees, which include two types of payment: an upfront fee and a transaction fee.
The upfront fee is a one-time payment to the platform that the user pays for opening an account or placing an NFT for the first time.
The transaction fee can be fixed and paid only by the buyer, or it can be divided between the buyer and the seller. For example, OpenSea’s standard fee is 2.5% of the NFT and is charged to the buyer.
The author of the work can also connect the royalty option on large NFT sites. This allows you to earn a commission from each resale of the token. Royalty is fully automated through the marketplace’s smart contracts.
How to create a non-interchangeable token via OpenSea?
Let’s look at the process of creating an NFT using OpenSea as an example.
- Go to the main page and click the Create button:
2. The platform will automatically suggest connecting a suitable crypto wallet to the service. We will use MetaMask.
- The wallet will ask you to sign the message necessary to connect to OpenSea. After confirmation, the platform will automatically create your profile.
- In a new window, a page for creating an NFT will appear. You need to upload the object to which the token will be attached: image, audio, video or 3D model.
Then, you need to enter other data: token name, link to your personal website or blog (optional), object description, then choose the blockchain where the token will be placed: Ethereum, Polygon, Klaytn Blockchain or Solana.
You can also use the Unlockable Content option – in this case, only the holders of the token will be able to see the metadata of the token.
- When all the settings are set up, click Create and the NFT will automatically appear in your collection.
- To go to the Sell settings, click the Sell button at the top right of the screen.
A page will appear with settings for price, duration of placement, and other conditions. If desired, the creator of the NFT can hold an auction or set a fixed price. You can also set a royalty and select the cryptocurrencies available to pay for the token. Once the parameters are set, click on Complete listing.
How to earn money from NFT?
Marketplace does not promise the user a hundred percent guarantee of token sales, so he will have to advertise his own NFT and find buyers for it.
If it is important for you to get skills in digital object creation rather than in trading, you can join any NFT project as an author.
Many companies associated with this market are looking for specialists to create content: artists, musicians, writers and other creative professions.
What problems can arise when creating an NFT?
Media files cannot be stored in the blockchain, because otherwise its size would reach an incredible size. For example, a copy of Ethereum already weighs more than 1TB. Therefore, offchain infrastructure is used to store the files to which NFTs are attached.
Often, NFT metadata points to a link in the cloud HTTP server where the file is stored. Thus, a contradiction emerges: the token itself is on the blockchain, but the item it points to is on a centralized server. Therefore, there is a possibility (albeit low) that the file can be replaced with another one or deleted altogether.
The InterPlanetary File System (IPFS) communication protocol partially solves the problem. It is a system for decentralized file storage, so files hosted on IFPS are less vulnerable to outside interference. Multiple hosts, not just the server operator, ensure that the data is not altered. This is exactly the solution Grimes used when she sold her collection of unreleased tracks in the form of NFT.