The term “NFT” has amassed popularity on social media and has been discussed in major news and journals. But what exactly is an NFT, and why is it important? Why are NFTs so valuable?
In this chapter, we will address those and even give you a tutorial on how to create your very own NFT.
What is an NFT?
Fungible vs. nonfungible
A brief history of NFTs
Applications of NFTs
Examples of NFTs
Selling points of NFTs
Creating your own NFT
NFT market place
The future of NFT
What Is an NFT?
NFT stands for “nonfungible token.” It represents ownership of unique items and cannot be replicated on a blockchain. In Chapter 5, we introduced ERC-721 token standard. The initial ERC-721 specification was proposed by Dieter Shirley, William Entriken, Jacob Evans, and Nastassia Sachs in January 2018 as an Ethereum Improvement Proposal (EIP) for the Ethereum network. It defines the standard smart contracts interface, which can represent real-world items from digital collectibles to music, artwork, sports, and many other real-world assets.
When you acquire ownership of an NFT, you don’t get physical copy of the NFT. In fact, if the NFT is a form of media, anyone can still get a copy of it. But the important thing is that a smart contract is created to verify the buyer’s ownership of an NFT. Anyone can see transaction and contract history for NFTs on the Ethereum network, similar to how cryptocurrency transactions can be viewed and traced by anyone.
The NFT itself, however, is typically not stored in the blockchain. The owner, hash, token name and symbol, and link to file are stored in blockchain. So, although anyone can make a copy of the NFT, that does not mean they will own or have rights to it. But it is important that the buyer is not always granted all rights to the NFT. The creator may keep copyright and licensing rights, and can earn royalties from resells of the NFT, as well as choose to sell multiple replicas of an NFT.
Fungible vs. Nonfungible
In economics, fungibility refers to something that is easy to exchange or trade and cannot be distinguished from another. Before a good or a commodity can be traded or exchanged, it must be fungible. For example, the US dollar is fungible. Therefore, a person holding one bill can exchange it for another bill without changing its stored value.
Every $1 bill has the same value, uniform, and usability as another quantity of the bill. Divisibility is another essential feature of fungibility, and it refers to the property of a good or a commodity that can be broken into smaller units without losing value. Just like a $10 bill can purchase the same amount of goods as two $5 bills or ten $1 bills. In the blockchain, Bitcoin (BTC), Ether (ETH), and many other cryptocurrency units have the same highly divisible. One Bitcoin should carry the same purchasing value as a medium to buy or sell goods regardless of whether it is split into fractions of one, two, or ten UTXOs. Most daily transactions will cost less than one Bitcoin, and divisibility will make cryptocurrency easier to exchange for other like items.
In the previous chapter, we learned about ERC-20, which introduces a standard way to create fungible tokens. ERC-20 defines an interface with a property, and each token can be exchanged the same (in type and value) as another token. Some popular examples are Tether Tether (USDT), USD Coin (USDC), Shiba Inu (SHIB), and Wrapped Bitcoin (WBTC).
In contrast, nonfungible assets are unique and not interchangeable assets that a person or group owns, like art, car, book, real estate, diamonds, copyright, collectible, and game items.
If a lender lends a borrower his house, it is not acceptable for a borrower to return to a different house and have the same ownership, even if both houses have the same market value. Each house has its own uniqueness. The value is judged across multiple complex criteria, including location, home size, usable space, neighborhood, and sold history.
In addition, nonfungible assets are not divisible and cannot be broken up and sold in multiple pieces. The whole of the item determines the value of a nonfungible asset. In the blockchain, a non-fungible token (NFT) is a unique digital asset representing real-world items. People can buy and sell NFT from marketplace based on the value they believe in. Every NFT has a unique digital signature stored in an NFT smart contract, which provides proof of ownership to ensure they cannot be duplicated or destroyed in the blockchain. The blockchain will keep track of ownership of the NFT assets.
Comparing fungible and nonfungible
Fungible token | Nonfungible token | |
|---|---|---|
Interchangeable | Fungibles are interchangeable. A token can be exchanged with any other token of the same type. A person holding one bill can exchange it for another bill without changing its stored value. One Bitcoin value can be exchanged with other Bitcoin, which makes no difference for holders. | Nonfungibles are not interchangeable. A token cannot be replaced with any other token of the same type. If a lender lends a borrower his house, it is not acceptable for a borrower to return to a different house. |
Uniform | Fungible tokens are uniform and have the same properties and are non-unique | Each token is unique and different from all other tokens of the same type. |
Divisible | Fungible tokens are divisible and can be broken down into smaller units as long as the value remains the same. For example, one Bitcoin is divided into units as small as 0.00000001 BTC. One Ether can be divisible up to 18 decimal places. | Nonfungible tokens can’t be divided, and each token has its own value. NFT assets on a blockchain are cryptographically unique identification codes and metadata, which provide proof of ownership to ensure they cannot be duplicated or destroyed. |
EIP standard and example of tokens | Well-known EIP for Fungible token standard is ERC-20. Some popular examples are Tether Tether (USDT), USD Coin (USDC), Shiba Inu (SHIB), and Wrapped Bitcoin (WBTC). Blockchain native cryptocurrencies such as Bitcoin (BTC) and Ether (ETH) are fungible tokens. | ERC-721 is a nonfungible token standard. Some popular examples are artwork, cars, books, domain names, real estate, diamonds, copyright, collectible, and game items. |
A Brief History of NFTs
On December 4, 2021, a paper published by Meni Rosenfield introduced the concept of “Colored Coins.” The paper described colored coins as a Bitcoin but with a mark that allows people to prove ownership of and manage real-world assets.
On May 3, 2014, Kevin McCoy created the first known “NFT,” which was known as Quantum. The artwork features an animation of a pulsing octagon that changes colors. In June 2021, Quantum was sold for $1.47 million at that time; NFTs were referred to as “monetized graphics.”
In October 2015, the first NFT project built on Ethereum is launched at the DEVCON 1 conference, which was three months after the Ethereum network was launched. Players can make real money from the virtual world.
In September 2016, the first Rare Pepes were being sold and traded on Counterparty. Pepe the Frog is a character that became a popular meme across the Internet.
In 2017, one of the most successful NFT collections of all time was launched by the Larva Labs studio. Each CryptoPunk is a 24x24 size and pixel-art image that was generated by an algorithm, with a total of 10,000 CryptoPunks minted.
On November 28, 2017, CryptoKitties was launched. CryptoKitties is a virtual game that allows players to buy, breed, and trade cats.
From 2018 to 2020, Decentraland became increasingly influential in both the Metaverse and NFT industries. Decentraland is a virtual world where users can buy parcels of land. After users own a plot of land, they can lease it out to other people or do whatever they want with the virtual environment, such as build structures in the land. The platform was launched in 2017, but was opened to the public on February 20, 2020.
In 2020, NBA Top Shot launched, which is a marketplace for users to buy highlights and videos of NBA moments and players. Each moment is minted in a “pack,” similar to a trading card set. When users buy a Top Shot NFT, they gain access to Top Shot challenges and can win prizes and other items from the marketplace.
In 2021, the most expensive NFT to date was sold. Mike Winkelmann, a digital artist known as Beeple, sold an NFT artwork file titled “EVERYDAYS: The first 5,000 days” for $69.3 million. It was sold at Christie’s, a major auction house that deals with NFTs, making it the first digital artwork to be sold at a major auction house.
On April 22, 2022, RTFKT and Nike announced Nike Cryptokicks, which is a set of sneakers. RTFKT later released a set of skins that could upgrade the Nike Dunk Genesis and give them customizations.
Applications of NFTs
NFTs are very versatile. Generally, they can come in many different forms and be used for many different purposes, hence why NFTs are growing in popularity and creators are finding increasing uses for NFTs. Here are some possible ways to use NFTs.
Images
Most NFTs come in the form of still images which can be photographs or works of art. There are some NFT marketplaces that limit the size of the file that is being minted, but most of the time it is better to provide a higher-resolution image. There are two main types of images: raster, or bitmap images and vector graphics. Raster images are composed of pixels and support more depth of color than vector graphics, but lose their image quality as they are scaled up. On the other hand, vector graphics use equations to draw lines, curves, and points to create the photo, allowing the photo to scale without losing image quality.
“Everydays: The First 5000 Days” by Beeple is a collage of the first 5000 vector images and gifs created by Beeple for his Everydays series. The piece was sold for $69 million in Christie’s, a major auction house.
“Doge” is a picture of a Shiba Inu dog that became popular across the Internet and became easily recognizable. The “Doge” picture was sold for $4 million.
Videos
NFTs can come in the form of videos, which are often very popular. YouTube is an established platform for uploading videos and allows its users to sell their videos as NFTs. Other popular places to look for NFT videos are NFT marketplaces, where users directly upload their files. The benefit of having video NFTs is that they can have audio, animation, and videos with very high quality and resolution.
CROSSROAD by Beeple is a 10-second video that was originally bought for $67,000 and was resold 5 months later for $6.6 million.
“Earth” and “Mars” by Grimes are both short videos that were sold for $7500 per video. In total, almost 700 videos were sold, generating $5.18 million in 2 days.
“Auction Winner Picks the Name” by 3LAU created an auction of an NFT music video before it was created. The winner of the auction brought the opportunity to name the music video for $1.33 million.
“Charlie Bit Me” by Davies-Carr Family was a YouTube video from 2010 that was bought by 3F music for $760,999.
“Lebron James ‘Cosmic’ Dunk” by NBA Top Shot was the largest sale on the NBA Top Shot marketplace. The video was bought for $387,600.
GIFs
Graphic Interchange Format, or GIF, is a type of file format that is used to create a short video that loops. The way GIFs work is that multiple images are stored in one file, allowing animations or still images—however, people prefer to use other file formats for still images like PNG and JPEG. A benefit of using GIFs is that unlike videos, which are displayed with a thumbnail and play button, GIFs automatically play and loop. GIFs are also easy to create and can play in most browsers.
However, GIFs have existed since 1987 and do have some outdated properties. GIFs only support 256 colors and do not support audio. They also have larger file sizes, so many GIFs are usually only a few seconds, have a low frame rate (how many images are shown per second), or have small dimensions.
Here are some examples of NFT GIFs:
Nyan Cat by Chris Torres is a GIF of a cat that became widely recognized across the Internet. The original creator of the GIF sold the NFT for 300 ETH, or $583,464 on Foundation.
Finite by Pak is a GIF of a spiraling coil that was sold for 444 ETH, which was $864,507 when the piece was sold on Foundation.
War Haul by Jake is a GIF of barrels of oil being set on fire that was sold for 69 ETH, or $223,627 on SuperRare.
Lova Park by OSF is a GIF of an amusement park where a roller coaster passes through a Ferris Wheel. The GIF was sold for 82 ETH, or $267,878 on SuperRare.
Welcome Home Coldie is a GIF of a man moving on a color-changing path toward a sign that says “Welcome.” The piece was sold for 75 ETH, or $242,761 on SuperRare. This is the first time the NFT GIF piece was sold, it sold for only 6 ETH.
Audio
Many music artists have found success in selling music NFTs. Major and independent artists have posted their works as NFTs to sell their music and attract new audiences. Different audio types include .mp3 files and .wav. In some marketplaces like OpenSea, audio NFTs require a preview image or GIF.
Grimes has sold around $5.8 million in NFTs. Her main success came from selling thousands of copies of two short videos with music called “Earth” and “Mars,” as well as a video titled “Death of the Old” for $389,000.
Steve Aoki said he has made more profit in one year from selling NFTs than streaming royalties for decade. Through selling NFT collections, he has made millions.
Kings of Leon was a band that made over $2 million by selling tickets that gave their buyers front-row seats. They sold an album titled When You See Yourself as a collection of NFTs.
Digital Real Estate
Virtual property is a sector that will most likely grow in the future as the Metaverse becomes increasingly popular. Players can purchase property in a virtual world for them to “live” in or to sell at a greater profit later. NFTs make keeping track of the ownership of the virtual land simple and also prevent the need for a middleman—the buyer can directly buy the property from the marketplace. The record of purchase and information about the land will automatically be included in the blockchain instead of an office or paper document.
Sandbox is a virtual world where players can use building blocks to customize their gaming experience. Users can have complete control over their experience and can add assets on their land.
Mars House by Krista Kim was sold for 288 Ether, or $514,557 at the time of selling. The home is completely virtual and is designed to be visited in the Metaverse.
Trading Cards
Trading cards have always been a physical phenomenon, but they have been gaining popularity in the world of NFTs. Storing the trading card as an NFT makes it easier to exchange cards and proves the authenticity of the card. Often, trading cards have no intrinsic value and most of their success comes from scarcity and a desire to collect.
Gods Unchained is a blockchain-based multiplayer game that uses decks of trading cards. Players can earn in-game items as NFTs and sell them for real-world cash.
Curio Cards is a set of 30 trading cards. Each card has a varied amount of supply, but the total amount of cards minted was 29,700.
Candy Digital is an NFT platform where players can trade and collect official Major League Baseball NFTs. The platform also includes signatures, jerseys, images, video content, and other exclusive items.
Video Game Items
Many video games let players to collect in-game items, such as equipment, consumables, and skins, to customize their experience and progress in the game. However, earning items may be time-consuming or difficult, which is why when game developers give players the option to purchase their gear, they often make large amounts of profit.
Listing these in-game items as an NFT can help developers and players keep track of an item’s status and properties. This is especially beneficial because the owner can prove the item’s authenticity and the buyer can show their ownership. Creating in-game items as NFTs can also help players sell their items once they no longer need or want the item. It also eliminates the need for a secondary market, which often has scammers and may not always be allowed in the game.
Genesis Land Plots from Axie Infinity includes digital land in the game. 9 plots of land were bought for $1.5 million USD.
Dragon Kitty from Crypto Kitties is one of the unique Kitties available in the pet breeding game. The pet was sold for 600 Ethereum, or around $1.3 million USD.
Mobile Legends is a mobile game that launched an NFT collection called The Aspirants Mystery Box. The collection has 12 boxes, and each box has a digital figure and animations of in-game characters.
Summoners Aerna is an MMORPG built on a blockchain. The heroes and in-game items are all NFTs.
Fashion
Individual designers and large brands alike have found interest in fashion NFTs. There has even been a Crypto Fashion Week and a Metaverse Fashion Week with virtual collections and digital clothing items. NFT fashion items can include wearables that users can wear in virtual environments or digital avatars, or digital models of physical fashion items.
Balmain x Barbie collaboration by Balmain and Barbie featured three dolls with pink garments. Purchasing a Barbie avatar gives the buyer ownership of the avatar and a real-life Barbie-sized outfit.
MANGO is a fashion group that created three NFTs for the Metaverse Fashion Week in Decentraland. The collection was displayed in a virtual space and uploaded to OpenSea but was not made for sale.
3D Models
3D models can be designs or representations of abstract or real-world objects. The 3D model itself can be viewed, rotated, moved, and interacted with on a screen or with virtual or augmented reality headsets. The model itself can also be printed out with a 3D printer. 3D models are important to industries such as virtual and augmented reality, medicine, engineering, video games, scientific imaging, architecture, movies, advertising, and illustration.
Text
Text, such as ones in books, poems, articles, and quotes, has been branded and sold as NFTs.
“Source Code for the WWW” by Sir Tim Berners-Lee is 9,555 lines of code that created the original World Wide Web that was sold for $5.4 million USD.
“Buy This Column on the Blockchain!” by Kevin Roose is an article about NFTs that was auctioned off as an NFT itself. The article was sold for around $560,000 at the auction.
Domain Names
A blockchain domain is an address you can purchase and own to allow someone to send crypto to an easy-to-remember address. For example, a typical Bitcoin address has 34 characters and an Ethereum address has 42, so addresses may look something like ac1qw508d6qejxtdg4y5r3zarvary0c5xw7kv8f3t4. Buying a blockchain domain allows users to simplify their address to example.crypto and will be easier to remember. And unlike website domains such as .com and .org, blockchain domains do not require an annual renewal fee to be paid.
Comparing different applications of NFT
Application | Summary |
|---|---|
Image | Images have no motion Can be photographs or art Raster vs. vector graphics |
Video | Can have audio and animation Can be very high resolution |
GIFs | Sequence of images Automatically loops Large file sizes |
Audio | Sometimes requires a preview image |
3D models | Can be viewed on a 2D screen or headsets Can be interacted with Essential to many industries |
Text | Examples include books, poems, articles, and quotes |
Domain names | Allows users to simplify their blockchain domain Does not require a renewal fee |
Real estate | Virtual property can increase in value Advantages over traditional real estate practices |
Trading cards | Easy to trade as NFTs Collected because of market value |
Video-game items | Help developers and players keep track of items Allows players to easily resell items |
Fashion | Can be virtual or have real-life value Can be more useful in the future as the virtual world expands |
Examples of NFTs
There have been many successful stories when it comes to NFTs. Here are some of the most iconic NFTs that have been sold:
Bored Ape Yacht Club (BAYC)
Yuga Labs, a blockchain technology company, created a collection of 10,000 NFTs of “Bored Apes.” The most expensive unit, Bored Ape #2087, was sold for 769 ETH, or about $2.3 million. Owning a Bored Ape gives members exclusive benefits such as community events, a members-only Discord server, a graffiti board called “The Bathroom,” airdrops, and more. Owners of Bored Ape NFTs can even rent out their NFT to an NFT museum or use it for high returns. Many celebrities have demonstrated interest in the BAYC.
William Shatner’s Memorabilia
William Shatner sold items from his 60-year acting career as an NFT collection. 125,000 units sold out in just 9 minutes, which included headshots of himself, a photo of Shatner hugging fellow Star Trek actor Leonard Nimoy, and an X-ray of his teeth.
Grimes WarNymph
Grimes, a singer and songwriter, sold a video called “Death of the Old” for $389,000, which was part of a collection of 10 NFTs. In total, he made $5.8 million selling the collection.
Nyan Cat
Chris Torres sold the original Nyan Cat GIF in an online auction for 300 ETH (around $600,000 at the time) in February 2021. The creator said he was “very surprised with the success,” but also “glad knowing that [he’s] basically opened the door to a whole new meme economy in the crypto world.”
Twitter CEO’s First Tweet
Jack Dorsey, the co-founder of Twitter, sold his first tweet from Twitter’s launch in March 2006 as an NFT for $2.9 million. Dorsey converted the money to Bitcoin then donated to the GiveDirectly charity organization.
NBA Top Shot
Top Shot is an NFT marketplace where users can trade and purchase videos of NBA highlights. NBA Top Shot sales were valued at over $338 million in October 2020. Currently, the most valuable asset on Top Shot is a video of LeBron James dunking against the Houston Rockets that was sold for $387,000.
RTFKT sneakers
RTFKT creates virtual sneakers for online gaming avatars that sell up to $10,000 a pair. In March 2021, RTFKT collaborated with an artist Fewocious to produce a series of sneakers that earned him $3.1 million in several minutes.
Taco Bell GIFs
Taco Bell, a fast food corporation, sold a series of GIFs based on food items from their menu as NFTs. After minutes, the GIFs sold out and Taco Bell proceeded to donate all of the earnings to the Taco Bell Foundation, which is their charity organization.
Reddit NFT avatars
Reddit, an online social platform where users can create posts and message each other, is inviting artists to create NFTs avatars. These NFTs are then sold on the official website for amounts from 15 to $100, and users can use these NFTs as their avatars.
The NFT Magazine
There is a project called the NFT Magazine by the Cryptonomist that allows people to read about different insights into the Crypto world, including important people, market trends, and advice on where to invest. However, to access the magazine, users must collect NFT magazine covers.
Selling Points of NFTs
Although some NFTs have no intrinsic value, NFTs do offer many advantages that non-NFTs cannot provide. The success of NFTs can be attributed to many factors, some of which include the following:
Scarcity
A creator can mint a limited number of NFTs, which will bring up the value of individual assets and make people more willing to buy. The number of copies available is also public. Combined with a favorable reputation of the creator and high market demand for a certain NFT, NFTs can fetch market prices of over millions.
Authenticity
The unique digital signature allows anyone to verify the originality of the NFT and prevents forgery, which is a common problem when it comes to physical art. It also helps the buyer avoid scams because it is easy to see who created the NFT, and the owner does not have to worry about proving whether they made the work or not.
Easy to Use with Cryptocurrency
NFTs can be easily traded with cryptocurrency integration because NFTs exist on a blockchain. The most popular cryptocurrency by far is ETH on the Ethereum network, but SOL crypto on the Solana network and ADA on the Cardano network.
Ownership
NFTs make it easy to change ownership. It is also possible to share ownership of NFTs, which is called “fractional ownership.” Ownerships are also listed as public records, so there is no need for a middleman or physical document to prove an ownership.
Permanence
NFTs do not have limitations that physical items have and do not degrade over time. Physical items are subjected to ultraviolet radiation from the sun, accumulation of dust, damage from humidity, rust in the case of metal, and rough handling or other accidents. However, the owner of an NFT can permanently destroy the NFT if they want to, which is called burning.
Efficiency
Using a digital asset eliminates third parties. The buyer and seller can directly interact with each other without the need for a middleman. This can help save time, prevent miscommunication, and help businesses track where their products are reaching.
Royalties
After selling NFTs, the original artist can receive a share of the profit whenever their art is resold. This is a large improvement from current practices in the art and music industry, where many companies, streaming services, and other middlemen reap a large portion of profits. NFTs allow creators to have full control over their own work and manage their sales.
Cheap to Create
While gas fees may be high depending on the blockchain—notably Ethereum gas fees—minting an NFT can be free or only require several dollars. Solana, Tezos, Avalanche, WAX are cheaper blockchains and Polygon allows the user to create an NFT for free.
Creating Your Own NFT
Getting started with your first NFT may seem daunting, but the options are endless. Many associate NFTs with only digital art, but you can mint anything that’s digital—from music to trading cards to memes to videos to tweets—as an NFT. Of course, it’s important to remember to abide by all ownership and copyright laws. Creating your own work and using that as an NFT will prevent you from getting into legal complications and attract supporters.
A recommendation would be to start a collection. Making a collection can help you gain experience and can also help generate interest in traders. In the end though, no matter what you choose to create as an NFT, make it your own unique style.
Be aware, however, that just because some people have met astounding success when dealing with NFTs, does not mean that anyone who creates an NFT will instantly generate millions. Analyze the market to see what is popular and what gets ignored. Also note that minting an NFT requires you to pay for service and gas fees. And be sure to price your NFTs fairly—sometimes, NFT are sold at a low value and the buyer will resell the NFT for a significantly higher price.
Now, onto the actual process. If you haven’t already, setup a crypto wallet and create an account. Popular options to download include MetaMask, WalletConnect, and Rainbow. Setting up a crypto wallet is free, but you should know the different types of wallets available. There are hosted wallets and self-custody wallets. Hosted wallets are managed by a third party, similar to a bank. While there may be less functions related to managing cryptocurrency, your money will be more secure. Self-custody wallets, on the other hand, give the user complete control over their wallet, but is less secure. The best option depends on what you are looking to use your wallet for, but for minting and trading NFTs, a hosted wallet is better.
No matter which option you choose, keep your password key safe—if you lose this key, you will lose access to your crypto assets. We also recommend purchasing a hardware or physical wallet.
It is also important to note that different types of blockchains use different crypto wallets. The top blockchain for crypto is Ethereum as of 2022, but Binance, Smart Chain, and Polkadot are becoming more popular.
Then, buy a form of cryptocurrency from a reputable trading platform, such as CoinBase or Gemini. ETH is the most popular cryptocurrency for NFT purchases, but SOL and XTZ are also notable options.
After your wallet is set up, sign up on an NFT marketplace, such as OpenSea, and connect your cryptocurrency wallet to your account. If you need a walk-through setting up a wallet, you can refer back to Chapter 5 to set up a MetaMask wallet. We will cover different marketplaces in the next section.
Now, you can upload your digital files and sell them either for a fixed amount or in an auction. Once they are moderated and approved, they will be listed for sale and buyers will be able to purchase the NFT. When a purchase is made or the auction concludes, the NFT owner will receive the top bid.
Now that you know the general procedure, let us go through the steps:
First, go to testnets.opensea.io. Note that we are using a testnet for our demo. Click on the create button.
Snapshot of the open sea website home page.
Then, connect your wallet. We will be using MetaMask for our walk-through:
Snapshot of connecting the wallet screen. Metamask is marked as a popular wallet among other wallets.
Once you choose the wallet you want to connect, you should see the screen as follows:
Snapshot of the account added to the wallet.
Snapshot of the address, transactions, and account balance permissions to the account.
Great! You have now connected your wallet. Now, we can create our NFT. Upload your digital file and give your NFT a name:
Snapshot of creating a new N F T.
If you want, feel free to add additional details to your NFT. Once you are satisfied, scroll to the bottom of the page and click on the create button:
Snapshot of adding additional details for the N F T account.
We have successfully created an NFT! You can now see different details about your NFT in an overview:
Snapshot of the details of a tiger N F T.
NFT Market Place
A bar graph depicts the collection volume by chain. Ethereum has the highest collection volume.
Collection volume of NFTs by blockchain from DefiLlama
A bar graph depicts the U S dollar volume by chain. Ethereum has the highest volume.
Collection volume of NFTs by blockchain from DefiLlama
As you can see, most transactions and NFTs happen on the Ethereum blockchain. When considering trading or using NFT marketplaces, it is important to consider the number of trades happening on the blockchain. More trades on the blockchain means the network will have more users and be more stable and decentralized. However, it is also important to know that tokens from an EVM-based network, such as Ethereum, BSC, and Arbitrum cannot be used on non-EVM–based blockchains, such as Solana, Cardano, and ImmutableX.
A chart depicts the N F T collection rankings by sales volume. Axie infinity has the highest sales value.
Top 15 NFT collections by sales volume from cryptoslam.io
OpenSea.io
The most popular marketplace is OpenSea.io, which supports over 150 payment tokens and is easy to use. Signing up and viewing digital assets is free, and it also allows creators to easily mint NFTs:
A snapshot of the advantages and disadvantages of digital assets.
Rarible
Rarible is very similar to OpenSea—the platform allows users to buy, sell, and make art, videos, collectibles, and music. However, Rarible uses its own token (CRYPTO:RARI), which is also supported on OpenSea. Yum! Brands' (NYSE:YUM) Taco Bell has listed art on Rarible, and cloud software company Adobe (NASDAQ:ADBE) has partnered with Rarible:
A snapshot of the advantages and disadvantages of the Rarible platform.
SuperRare
Another marketplace for digital creators, similar to OpenSea and Rarible, is SuperRare. The site includes art, videos, and 3D images that can be purchased using Ethereum, although many SuperRare NFTs cannot be purchased anywhere else. Every NFT is also a single edition. SuperRare announced its own token. SuperRare NFTs can be traded on OpenSea. SuperRare is also unique in the fact that it allows artists to upload NSFW, which stands for Not Safe for Work. NSFW is content that depicts sexual content, nudity, violence, and other potentially triggering topics for viewers:
A snapshot of the advantages and disadvantages of the super rare platform.
Foundation
Foundation.app is a place for auctioning and bidding on digital art using Ethereum. Over $100 million worth of NFTs have been sold on the platform. However, creating an account on the platform requires an invite from an existing Foundation community member:
A snapshot of the advantages and disadvantages of the foundation app.
Nifty Gateway
Nifty Gateway has helped the sale of some of the most famous digital artists including Beeple and singer and songwriter Grimes. However, to get started, you must be an already established digital artist, celebrity, or brand and be approved to sell through an application process. The site is powered by the crypto exchange Gemini, and the NFTs, known as Nifties, are built on Ethereum. Nifty Gateway also hosts any NFTs purchased—meaning the NFTs aren't stored in your own wallet but are actually stored in Nifty Gateway:
A snapshot of the advantages and disadvantages of the nifty gateway platform.
Axie Marketplace
Axie Marketplace is actually a shop for a video game called Axie Infinity, where users can buy a creature called an Axie. Players can train their Axie and battle other Axies for rewards. Users can also buy lands and items as NFTs that can be used in-game. The Axie Marketplace uses a currency called Axie Shards. The token is on the Ethereum blockchain and can be used in other NFT marketplaces and Coinbase global:
A snapshot of the advantages and disadvantages of the axie market place platform.
NBA Top Shot Marketplace
NBA Top Shot is a marketplace created by the National Basketball Association. The marketplace is home to collectible videos and highlights of NBA plays that can only be acquired within the marketplace. In May 2022, the marketplace passed $1 billion in sales and is home to over 40,000 NFTs:
A snapshot of the advantages and disadvantages of the nba top shot market place platform.
Mintable
Mintable is similar to OpenSea—you can use Ethereum to buy and sell artwork. The platform also allows creators to mint their NFTs to sell their work as a digital asset:
A snapshot of the advantages and disadvantages of the mintable platform.
Larva Labs/CryptoPunks
Larva Labs has multiple digital art and Ethereum-based projects, but they are best known for their CryptoPunks NFT Project. CryptoPunks is astronomically successful—they have sold for millions of dollars. Currently, they are sold out and can only be brought from third-party marketplaces.
A snapshot of the advantages and disadvantages of the larva labs and crypto punks platform.
The Future of NFT
NFTs have a large amount of potential and interest in the field is rapidly growing. However, there are still many concerns about NFTs.
There is currently a debate over whether the NFT industry is a bubble waiting to be burst. As mentioned earlier, the value of NFTs is based on the market’s demand for them. In these years, people are willing to pay thousands and even millions for NFTs because they believe the value of NFTs will increase in the future. But if interest in NFTs decreases in the future, then the investments of now may not come back in the future. If too many people pull out of the market at the same time, then the market may crash. However, the field of NFTs may end up similar to the dot.com phenomenon of the early 2000s—there may be an initial apprehensiveness and a large amount of speculation toward NFTs, but eventually they will be more integrated into society. NFTs have already proven their value with billions of USD in sales and millions of buyers.
Another issue is that NFTs also offer little protection against theft. While NFTs give proof of ownership, the fact that anyone can access the NFT being traded means that the digital goods are able to be copied and downloaded. In the future, as digital goods and copyright law continue to expand, we may began to lessen this problem.
Of course, one of the largest limitations of NFTs is that they are seen as harmful to the environment. According to the UK Renewable Energy Hub, each Ethereum transaction uses 48.14 kWh of energy. In comparison, the average kWh usage per day in a UK household is 8.5 to 10 kWh. However, environmental engineers and scientists have worked on reducing emissions from the crypto industry, such as using Proof of Stake (PoS) instead of Proof of Work (PoW) consensus. It is also worth mentioning that physical art often travels between exhibits by plane or truck, meaning physical art also makes a contribution to carbon footprints.
Speaking of art, one of the most famous use cases of NFT currently is in digital art. As NFTs continue to give artists an opportunity to share their work digitally, it creates more opportunities for artists of all different backgrounds and experience. Artists will no longer have to rely on corporations, brands, and collectors, and will thus be able to explore their creative vision more and find an audience that supports them. NFTs can also encourage creativity, as digital work can come in many forms, from VR to work that can be used every day.
In addition, NFTs can benefit the audience of an artist. NFTs increase accessibility of viewing art—viewers do not need to travel to the physical space the art is in, so people can explore galleries from anyplace, anytime. Patrons can also directly support artists and creators due to the direct nature of blockchain transactions.
Another possible use case could be selling concert and event tickets via NFTs. A paper ticket comes with the risk of being misplaced or copied, while the Ethereum blockchain can provide an indestructible and authentic record of ownership.
NFT and blockchain gaming may also see increasing popularity in the next couple of years. In-game items and currency being purchased and traded online is already common. NFTs can be the next step in securing the buyer’s ownership of digital assets.
It is also worth mentioning that NFTs can also be used with the real estate market. An NFT could be issued as a proof of ownership of property. NFTs can also be used as a tool for verification—schools could give students NFTs as a proof of a degree completion.
Of course, there is another concept that is also rapidly gaining traction among the tech sector and general public: the Metaverse. NFTs are based on websites and typically used for digital goods, while the Metaverse is a digital space and VR-based. Although they may seem different at a first glance, many companies see potential and have found ways to combine the two topics.
Summary
In this chapter, we learned that NFTs are nonfungible tokens, or individual tokens that are unique. NFTs are most commonly exchanged on the Ethereum network; digital signatures that show proof of ownership make it easy to transfer and purchase files. The next chapter will cover the basics of the Metaverse, a 3D internet based on new immersive technologies.