Quick Summary: What Are NFTs?
- They can be traded and exchanged. $1 can be traded with another $1, because…
- They have equal value. 1 bitcoin is equal to 1 bitcoin.
- For physical currencies, this system of trade works because everyone agrees to it. With bitcoin, the value is stored on the blockchain (explained below).
An anonymous, unchangeable, and publicly accessible log (public ledger) that records transactions in chronological order. Blockchains are decentralized and information about the network’s transactions is stored in batches called “blocks.”
Describes an organization in which operations and administrative powers are delegated away from a central authority to several smaller groups or individual parties.
What’s the Point in NFTs?
A decentralized digital currency that is secured and created by cryptography.Right now, NFTs are used to represent:
- Collectibles such as trading cards
- Virtual items within games including character outfits and in-game currency
- Virtual land in metaverses*
- Video footage
- Legal documents
- Tokenized real-world assets such as deeds to a car, real estate, or sneakers
A virtual space where users interact with the environment and each other. Metaverses incorporate features of social media and gaming. They often use virtual reality (VR) and augmented reality (AR), and can be built on a blockchain.
How NFTs Work
A way to encode information to secure communications. Cryptography allows only a sender and recipient to view the contents of a message.
How Do Blockchains Work?
How Do NFT Marketplaces Work?
How Are NFTs Created?
The Properties of NFTs
Unique Asset Ownership
A decentralized platform that’s powered by a blockchain. Ethereum is known for its smart-contract functionality and its native cryptocurrency, ether (ETH).
A self-executing, trackable, and irreversible contract with terms between parties written into its code and stored on a blockchain.
NFTs are created through smart contracts and can even be contained within smart contracts.
Used to encrypt communications. They are visible to everyone in a system, and each public key has a corresponding private key.
Can decrypt (and read) communications that were encrypted by the related public key. Private keys can also encrypt and decrypt messages with the same key. They are stored on a user’s device and have a single owner.
Stores the addresses and public/private key pairs for the owner’s cryptocurrency transactions. Can be used to send, receive, and spend cryptocurrencies.
Fungible vs. Non-fungible
A currency that is declared by government decree to be legal tender rather than backed by a commodity, such as gold. Examples include USD and EUR.
A good or asset that is not readily interchangeable with another. For example, a house is non-fungible because you cannot exchange it with any other house.
Networks whereby each connected computer is a server for others in the network. Computers can share information without the need for a dedicated central server.
An electronic device connected to a blockchain network that forms part of the infrastructure of that network. Multiple nodes communicate with one another and transfer data to verify new batches of transactions (called “blocks”).
- Binance Smart Chain
- Hedera Hashgraph
- ERC-721was the first and is still the most popular standard for creating unique NFTs. It’s an Application Programming Interface (API) within the tokens’ smart contracts. ERC-721 allows developers to create unique tokens and makes transerring the tokens easy and, after approval, automatic..
- ERC-1155is a standard that gives semi-fungibility to NFTs. With ERC-1155, IDs represent classes of assets rather than single assets. For example, a single ID could contain 100 NFTs. This means that multiple NFTs can be transferred at once, but with less information about each one.
- ERC-998 is a composable token standard. These tokens can represent more than one asset at a time for quicker transactions. ERC-998 tokens can contain both fungible (such as ERC-20) and non-fungible (such as ERC-721) assets.
History of NFTs
2016 to 2019
NFT Risks & Issues
NFTs Are Bad for the Environment
NFTs Are Not Regulated
The Legality of Ownership: Copyright and IP Issues
Scams, Fraud, & Security Issues
- Fake NFT marketplaces
- Fake sellers posing as NFT creators
- Copies of non-NFT assets minted as NFTs
A method of distributing cryptocurrency or other crypto tokens to specific crypto investors’ wallets, usually to generate interest in a project.
NFTs Could Lose Value
Can You Own Digital Content?
A term coined by the crypto community that describes people who save images from NFTs to ridicule NFT owners, claiming that they own the NFT without paying for it. Right-clicker mentality is also used more generally to describe NFT naysayers.
A Complete Guide to NFT Marketplaces
- OpenSea is one of the earliest and biggest NFT marketplaces. It’s an all-around user-friendly marketplace that features NFTs of digital artworks, collectibles, domain names, photography, music, utilities, virtual worlds, and sports.
- Rarible is decentralized and run by its community – owners of RARI tokens. In this sense, Rarible is something of a pioneer in the crypto space. Rarible focuses on art NFTs but also contains music, domains, in-game content, metaverse NFTs, and more.
- Nifty Gatewayis all about digital art. The site contains NFTs from some of the biggest NFT artists like Beeple and Trevor Jones, not to mention famous NFT collections like Mutant Ape Yacht Club.
- Foundationis another artwork-centric NFT marketplace. Like Nifty Gateway, Foundation features some prominent NFT art and meme collections.
- SuperRare contains single-edition NFTs from top artists, including XCOPY and Coldie. The SuperRare DAO* is governed using $RARE tokens – ERC-20 tokens on Ethereum’s blockchain.
- Mintable is an NFT marketplace solely designed for creating, buying, and selling NFTs. It’s the closest thing to eBay for NFTs. Users can easily create NFTs from artworks, audio files, PDFs, and more.
- Axie Infinityis a game with its own huge NFT-fueled economy. The Axie Infinity marketplace contains over 270 million tokens. Players can collect “axies” for use within the game. They can then battle each other with their axies, create new axies (by breeding them), and trade axies with other people.
- NBA Top Shotcontains NFT trading cards which feature a short video of an iconic NBA moment. The marketplace is built on the Flow blockchain. Users can buy and sell these trading cards to one another.
- Decentralandis a massively popular NFT game with a market cap of US$6 billion. It’s essentially a metaverse where users can trade virtual land and other in-game items.
*Decentralized Autonomous Organization (DAO)
A decentralized organization that is governed by a community of its users. DAOs exist online and are organized based on rules encoded on a blockchain.
How to Get Started on an NFT Marketplace
Choosing a Marketplace
Funding Your wallet
Payments made by users of the Ethereum blockchain that cover the computing energy costs of maintaining the network.
What’s a Cryptocurrency Exchange or Broker?
A platform that allows customers to buy and trade cryptocurrencies in exchange for other financial assets, such as fiat money or a different cryptocurrency.
A company or individual that acts as an intermediary between a cryptocurrency buyer or seller and the market.
How to Buy and Sell NFTs
How to Price Your NFTs
- Market demand
- Ownership history
- Potential return on investment
When and Where Should You Sell NFTs?
How to Market NFTs
- Community engagement
- Social media
- Outreach to NFT influencers
- Donations of NFTs to influencers
- Adding the drop to the NFTCalendar
- Content marketing (informative blogs, videos for users)
- Mailing lists
- Airdrops & giveaways
- Pre-sale sign-ups
- Pre-sale NFTs
- Posting blurred pictures of NFTs before they’re listed
- Opening the auction to bids before NFTs are revealed
- Drawing out the release into stages: Early access, pre-sale, public sale
Set an On-Chain Identity
How to Trade NFTs for Profit
Which NFTs Should You Trade?
Short-Term Exit Strategy
Long Term Exit Strategy
Fixed Price or Auction?
The Risks Associated With NFT Trading
How to Mint Successful NFTs
Refers to the process of creating an NFT, which involves turning a digital file into an asset stored on a blockchain.
What Things Can You Mint as NFTs?
- The most popular collections often explore futuristic, retro, and sci-fi themes.
- NFTs have a somewhat purple color palette on average, which links to their technostalgia aesthetic.
- 3-D art is viewed more often and sells for higher prices than other NFTs.
- NFTs that are tagged with the word “drawing” underperform.
Tell a Story With Your NFTs
ScarcityAffects the Price of Your NFT
Program Value Into Your NFTs
- Unlockable bonus content
- Unlockable NFTs
- Printable physical/digital copies of NFTs
- Unlockable discount codes
- NFT achievements that users can unlock
- Event tickets, raffle tickets, prize draws
Remember: Gas Fees
The Most Famous (and Expensive) NFTs
Famous NFT Collections
Bored Ape Yacht Club
Memers Turned NFT Artists
Popular NFT Stories
Celebrities Join the NFT Trend
Pak’s “The Merge” Displaces Beeple’s $69m NFT
Real-World Uses of NFT Technology
Tokenized Physical Items
Licenses & Certifications
Tickets & Merchandise
Supply Chains & Logistics
Decentralized Finance (DeFi)
Ethereum Name Service (ENS)
The Future of NFTs
A method of holding digital assets whereby only the owner has access to them. Self-custody means users take full responsibility for the management of their assets, rather than relying on banks for safekeeping.
Frequently Asked Questions About NFTs