Hello and welcome to this blog post about A Beginner Guide for Non Fungible Tokens NFTs.
I am very exicted to know that you getting start with this amazing technology, you will be going to amazed by the incredible potential of the NFTs.
There is a lot to learn about this futuristic tech, lets get started to dive into it and start to leverage it to build Industry 4.0 applications.
The aim of this blog post is to help you quickly understand about the fundamentals related to NFTs.
I will ensue you that, i will going to explain every bits and pieces related to need of blockchain and will help you throughout your learning journey.
Without wasting any further time lets get started dive right in the:-
A Beginner Guide for Non Fungible Tokens NFTs: Introduction
“Every image that we see, every song that we hear, and every video that we watch on the Internet is FREE.”
At least, this is what most of us believe. We copy the digital content and share it with our friends without paying a single penny to the creators.
For instance, you send a WhatsApp message with an attachment of a funny image to your friend. The friend laughs, and you receive appreciation for sending that image. But in this exchange, the creators neither get appreciated nor compensated for their efforts.
NFT is going to change that.
Non-Fungible Tokens (NFTs) ensure that every creator – whether a painter, a musician, a video creator, or a poet – receives his reward every time the NFT of his work is sold.
How does it happen?
By making every item available online unique.
The process of converting a digital asset into NFT is called minting. As most NFTs created nowadays use Ethereum blockchain, we can also define NFT minting as a process that converts your digital asset to make them a part of the Ethereum Blockchain.
NFTs vs. Copy &Paste: What’s the Difference?
In the past, items published online did not have any value as everyone had access to them. But with NFT, the Internet has found a new way to give every item available in the virtual world a unique identity.
For instance, now you can buy an NFT for original artwork and ‘own’ it in the truest sense of the word. The item you have purchased as NFT will have its own unique identity.
Reading this, you might be thinking how an NFT of an image has more value than a Copy & Paste image.
Real-World Asset Vs. Digital World Asset Example
To clarify this difference, have a look at this example.
If someone is selling you a Picasso painting, you need to confirm that it was painted by Picasso and not by a Picasso fan.
How will you do that?
By calling up an expert who has complete understanding of how Picasso painted. Another way of verifying the authenticity is by looking at Picasso’s signature.
But to verify an NFT, you don’t have to call anyone. An NFT comes with a signature of its own. However, the signature, in this case, is a digital token that is saved in the Blockchain by thousands of computers. There is no way to replicate the unique ID and metadata associated with the token.
So, although it is still possible (highly unlikely) to replicate Picasso’s signature, it is impossible to duplicate a token stored in the Ethereum blockchain.
Once you buy an NFT, you own the original artwork in some form, e.g., you can buy a limited edition of an NFT that has its own selling value. On the other hand, when you copy & paste, you actually just copy an image, a video, or a poem.
The ‘copy’ does not have any intrinsic value, but the NFT comes with an associated value that will surely rise when the price of the artwork increases.
NFTs are Crucial for the Digital World of the Future (Use Case)
As we move into the world of metaverse and futuristic technologies, the value of NFT is going to increase even more.
Let us consider a possible use case of NFT in the future.
In the metaverse, you will have an alternate version of yourself (avatar) who will buy clothes and accessories from virtual online stores. Now, these items will be made by various graphics designers. So, it is very likely that these designers will sell the NFTs of their work instead of selling them through middlemen who will charge their own fee.
As the world becomes more digital in the future, we will see more and more digital commodities in the web space. NFTs provide the best way to sell these digital items practically. This is why it will become an essential part of the digital ecosystem.
Cryptocurrency and Blockchain: Decentralized Security (Basic Explanation)
The word cryptocurrency is a combination of the Greek word “crypto” (hidden) and “currency”. The most crucial attribute of cryptocurrency is that it remains hidden from malicious attacks.
You might be wondering how it remains immune to hack attacks.
One Word Answer: Decentralization.
Cryptocurrency is stored on thousands of computers. Every time a user performs a cryptocurrency transaction, the data (or message) created by the user’s interaction is converted into a hash function. Unfortunately, this hash function cannot be converted into the original data, which means the data interaction stays hidden.
Now comes decentralization.
Cryptography currency is based on the Blockchain. Every block of the chain contains a record of when the transaction was done, the hash function (as mentioned before) from the previous transaction and transactional data.
Every block connected in the chain has the hash information from the previous block. So, (in theory) it is impossible to duplicate or fudge data in any of the blocks without compromising the integrity of the Blockchain or, in other words, without making other nodes aware of the malicious hack attempt.
Due to the decentralized structure of Blockchain, there is no central point for the hackers to target. Moreover, each node in the Blockchain network is incentivized with financial benefits to maintain the network’s security.
It is not to say that Blockchains cannot be hacked, but the likelihood of that happening is much lower than in a centralized financial structure.
With NFT, it is possible to use the revolutionary elements of cryptocurrency to make every item available on the Internet unique and saleable.
NFTs Popularity Amongst Popular Brands
NFTs are all the rage nowadays. Therefore, many brands are investing in NFTs to sell their products. Have a look at some famous names that are doing whatever they can to leverage the power of NFTs:
- Nike: Nike has recently purchased a virtual shoe company that manufactures sneakers for the metaverse. If you are someone who wants to use your NFT assets in your favorite games or virtual spaces in the future, then it is time to link your Ethereum wallets with Nike to verify that you are the valid owner of the NFT.
- Adidas: Adidas is combing both its metaverse products and physical items as part of its NFT initiative.
- H&M: The popular clothes brand is looking to open its virtual store in the metaverse (not confirmed) and also looking to authenticate the virtual products via NFTs.
- McDonald’s: Have you heard about McRib? It is a tasty burger, which you can also buy virtually. But as McDonald’s has released only 10 McRib NFTS, you will have to break the bank to buy one. Regardless, it is a great initiative by the fast-food chain as far as marketing is concerned.
- Taco Bell: Popular for its mouth-watering tacos, Taco Bell, has already auctioned 25 NFT GIFs. It is driving the interest of its customers and spreading awareness and seems set for an entry into the virtual world.
- Coca Cola: The famous cold drink brand has already sold 4 NFTs, and it’s on its way to building anticipation in the market.
NFTs Popularity Amongst Celebrities
- Paris Hilton: Paris Hilton’s NFT creations “Legend of love” and “Hummingbird in my metaverse” have already garnered $220,000 in sales. She is busy creating new NFTs, and it is anticipated that her future NFTs can earn over $1 million. That’s quite a handsome sum of money for the celebrity Diva.
- Snoop Dogg: Popular hip hop artist Snoop Dogg has put some videos and audios for auction as NFTs. He is expected to earn close to $1 million for what he is selling. Such is the craze of Snoop Dogg that a fan has paid £340,500 so he can become rapper’s neighbor in NFT Metaverse.
- Indian Celebrities: India has also remained untouched by the NFT craze. Stars like Amitabh Bachchan, Salman Khan, and Rajnikanth have signed up with different companies dealing with cryptocurrencies and NFTs. While Amitabh Bachchan has already sold his collection of NFTs for over seven crores, Salman and Rajnikanth have signed lucrative deals with BollyCoin and Diginoor.io, respectively, to sell their movie-related memorabilia and other products.
Create and Sell your Own NFTs
Have NFTs and their popularity got you excited? You might not be a celebrity or associated with a big brand (like the names mentioned above), but if you have confidence in your talents, then you can also create an NFT and sell it for a price that you desire:
- Select a Blockchain: First of all, you need to figure out which Blockchain you want your NFT to be issued from. We recommend that you choose Ethereum, but if you want to mint your NFT cheaply, Polygon Blockchain is also a good option.
- Select a Wallet: Every NFT Blockchain has its own standards, separate marketplaces, and digital wallets. For Ethereum, we suggest that you go for MetaMask. For Polygon Blockchain, you can choose AlphaWallet. (Remember: Our suggestions are based on our own use and market perceptions. We don’t take any responsibility for the service providers.)
- Connect your Wallet with an NFT Marketplace: Once you have signed up with a wallet and added some money into the Wallet, you need to link the Wallet to a platform that can help you mint your NFT. We recommend OpenSea.
- Develop your NFTs: Using the OpenSea or any other platform of your choice, you can mint your creation/asset into an NFT.
- Understanding the Cost Related to NFT Minting (OpenSea Example): NFTs can earn you a lot of money, but there is also a fee associated with creating NFTs. The price of initializing your account on the marketplace can be anywhere between $70 and $300. Once the account is initialized, you need to pay between $10 and $30 to offer a platform like OpenSea access to the NFT. Moreover, you will also have to share a part of the final sale price with the NFT marketplace. For example, OpenSea charges you 2.5% of the final sale price.
- Sell Your NFT: You can sell your NFTs through a fixed price model or auction them to the highest bidder. It is also possible to mint your NFT in a way so that it becomes a part of a collection.
To create and sell an NFT, you do not have to be a technical expert. But it is always good to know what is happening behind the scenes, so that you always know the kind of risk you are taking while dealing in NFTs.
Currently, NFTs are all the rage and expected to rise in stock because of their popularity amongst the major brands and celebrities worldwide. There is a high likelihood that the price of NFTs will keep on rising. But it is important that you bring a product to a market that will definitely sell or you risk losing your investment in minting your NFTs.