Unless you've been entirely off the grid, you've more than likely heard people talk about NFTs. You probably even thought it was a passing trend. But now EVERYONE is talking about selling and buying NFTs! Learn what you can do with NFTs and when and how to buy and sell non-fungible tokens.
What Can I Do with NFTs?
What you can do with NFTs depends entirely on whether or not you want to sell them or buy them. So, you have to ask yourself this question: are you a creator, investor, or both?
If you are an artist or creative individual, NFTs might be worth a go. People are buying them for the exclusive right of ownership. Investors are putting their cryptocurrency in artists whose work, they feel, will grow in value as time goes by.
Your NFT can be anything you want. You have uploaded artwork, digital artwork, videos, music, GIFs, eBooks, and even items used for video games online. If you can create it, you can turn it into an NFT.
You also have a nice feature with your creation that allows you to get a certain percentage of the NFT every time it sells through the blockchain. So, let's say you sell your work. You get paid. The value of this NFT goes up – way up. So you can get a percentage of the new value when it sells again.
NFTs: the gift that keeps on giving!
If you are an experienced investor or even new to cryptocurrency, then NFTs could hold some potential. Speculative assets (8) aren't a new concept. This idea has been around since people first started collecting artwork. You invest in an artist's work in hopes that it will rise in value. The idea is to sell this collection or piece of art for a profit.
There is also the sense of community that NFTs provide, which allows you to be a part of something. People coming together over something they own also isn't a new concept. From card games like Magic: The Gathering to Pokémon, communities love to rally around a common interest.
How Do I Buy/Sell NFTs?
Ethereum is a form of cryptocurrency, much like bitcoin or dogecoin. Cryptocurrency is the way to purchase and sell NFTs (digital tokens or simply tokens). At first, Ethereum (ETH of the Ethereum blockchain) is what you used for NFTs. However, that is beginning to change as additional blockchains are being created to have unique NFTs.
If you are creating an NFT to sell or have NFTs you want to sell, you can utilize a few sites for this purpose. These online marketplaces include Nifty Gateway, Mintable, OpenSea, Rarible, SuperRare, and MakersPlace.
Before you can upload your masterpiece to the blockchain, you'll need a crypto wallet for NFTs. A crypto wallet is a safe, secure way to store your private keys (the passwords that give you access to your cryptocurrencies). They allow you to send, spend, store, and receive cryptocurrency used in the transaction of an NFT.
There are options! Metamask, Math Wallet, AlphaWallet, Trust Wallet, and Coinbase Wallet are popular choices. Follow the step-by-step instructions, and you'll have a crypto wallet in no time. There are also physical alternatives that you can connect, such as a USB stick like the Ledger Crypto Wallet.
Once you have your crypto wallet, you can link it to one of the sites that buy and sell NFTs. So now you're ready to mint an NFT if you are a creator.
Following few questions to tackle: do I pay gas fees or not? What are gas fees? What does it mean to mint an NFT?
Gas (concerning cryptocurrency – not your car or bodily functions) is probably the most loathed process of NFTs. Gas, in this context, represents the amount of ether (ETH – Ethereum) needed by a network for users to interact with that network (9). It's a part of the Ethereum blockchain that you can't avoid – for the most part.
Gas fees go to miners. Miners validate transactions in the Ethereum blockchain and help protect those transactions from hacking and other attacks online. However, there is anticipation that the Ethereum network will move to another form of incentivizing known as Proof-Of-Stake (10).
The improved version of validation will have a better carbon footprint than the current model and is set to be implemented at some point in 2022.
Gas fees are a part of the transactional process of dealing with NFTs. They are the price paid to create, buy, and sell non-fungible tokens. Creators pay the gas fee to mint (create and upload) an NFT.
Gas prices are not the same as the value of the NFT that is for sale. Therefore, it can become complicated if you try to accommodate the price of your art (NFT) to lower the gas fee. Often, the perceived value of your NFT will diminish as a result (11).
Buyers also have to contend with gas prices. As an investor looking to buy, you pay a fee whenever you order an NFT or even when you cancel an order (12). Therefore, purchasing and transferring your NFT to someone else involves the dreaded gas fee.
Ways to avoid paying high gas fees include:
- Do your transactions early in the morning or late at night. There is less demand and lower fees.
- There are blockchain options that don't require the fees. For example, Matcha can utilize gasless trading, and Bitgert will launch a zero gas fee blockchain.
- You can set your gas limit or how much you want to spend. Miners will only process this when it is profitable for them.
- From an artist's perspective, you can use sites such as Mintable that allow you to upload NFTs with no gas fee.
Whether you are an investor looking for digital assets, or an artist looking to create work on a new platform, NFTs have something to offer everyone.