Have you heard about an NFT? You may see topics about it on social media like Twitter, Facebook, and Youtube.
You might even hear about NFT in some news or any publication on the internet.
One of the earliest trends about NFTs that broke the internet is a GIF called “Nyan Cat”.
A Nyan cat is a famous internet meme that started in 2011. It’s a cat with a pop-tart body, flying with a rainbow in an open space, it is one of the most popular internet memes of its time but in Feb 2021 something happens that shocked the world.
But the question is, what really is an NFT? and why are some people buying NFT at that kind of price? In this article, I will give you an insight into everything you should know about the three-letter word N.F.T.
First What Is An NFT?
NFT stands for Non-fungible token, meaning it is not interchangeable.
To fully understand, let’s take this as slowly and clearly as possible, let’s create some examples between a fungible and a non-fungible one.
Let’s begin with a fungible item, when we say fungible it is an item that is interchangeable or can be replaced by another identical item. One good example is a dollar bill.
We can say that a one-dollar bill is always equal to a one-dollar bill, and we can divide a dollar into smaller denominations. A one-dollar can be replaced by a smaller denomination called cents, we can replace one dollar with 100 cents but the value will still remain.
Even cryptocurrency like Bitcoin is also an example of a fungible item. One Bitcoin is equal to one Bitcoin, and Bitcoin can also be divided into small denominations called satoshi, we can exchange 100 million satoshis for one Bitcoin and the value will remain the same.
Non- fungible on the other hand are not interchangeable, meaning cannot be replaced, we are referring to the items that have different values from other items or we can say rare items.
The famous painting Monaliza is an example of a Non-fungible item, even if someone has the ability to create an exact copy of the painting it will just consider a replica since there is only one Monaliza painting in the World.
Another example of nun-fungible items in real life was a real state and domain name which the price will vary to the person who wants to buy it.
Even some limited edition items and collectibles are non-fungible items, on which the values are based in the eye of the beholder.
In the digital world, non-fungible items are NFT artworks, tokens, virtual lands, in-game items, and crypto domains. All these digital items are backed by blockchain technology which makes them authentic and irreplaceable.
Blockchain technology like Ethereum stores all the information of the digital assets like ownership, or who sold it, making the items so unique, secure, and authentic.
Digital items that are backed by blockchain are not temperable. It simply means all the information about the items cannot be changed by force, so all the necessary information in the NFT will still remain.
To learn even more about NFT let’s turn back in time and learn about its origin or where it actually came from.
How NFT work?
NFT works like cryptocurrency. NFT was originally a concept of Bitcoin 2.X.
Like crypto, the NFT is also stored in the blockchain. All the information about a certain NFT was stored in the blockchain like who owns the NFT and who buy the NFT.
NFT values were based on the supply and demand chain. If the item is rare you can expect that it will have a high value. The value of NFT was the same even in NFT games, if an in-game item that is NFT was scarce it has a higher value since the demand is always higher than the supply.
When the supply surpasses the demand its value will decrease. It is the main reason why other NFT projects failed, they keep creating and creating NFT which makes its value drop. In NFT games, over-minting and over-trading make its value crash.
In NFT, supply and demand are crucial, and the community should always be responsible for controlling the market to maintain its value.
History Of NFT
The Bitcoin 2.X-2012
The concept of the NFT started with a guy named Yoni Assia, CEO of Etoro published an article about bitcoin 2.X(Colored Bitcoin) in 2012. He stated in his article about the new economic framework.
The idea is to create a separate bitcoin network, a new currency called colored bitcoins.
These colored bitcoins are ordinary bitcoin that are transferred in the genesis transaction which makes this colored coin a rare coin, and since colored Bitcoin is also an ordinary bitcoin, it can still be transferred using the ordinary bitcoin networks.
What makes a colored bitcoin different from an ordinary bitcoin was a colored bitcoin is like a collector’s item or a limited edition bitcoin and its value will depend based on the supply and demand of this rare coin.
These colored coins are not perfect, it has many flaws and those flaws are the reasons why colored Bitcoin didn’t work, but it doesn’t mean that it’s useless. The concept of these colored bitcoin servers is a stepping stone to something huge that we enjoy today.
Colored bitcoin even though it is not successful it was still recognized by many as the first concept of NFT.
The Counterparty Released-2014
In 2014, the better version that is based on the concept of colored bitcoin came to life when Counterparty.io emerged.
It is a peer-to-peer financial platform that is known as a decentralized ledger, the counterparty is the first to fix some of the problems of the colored bitcoin concept. In the same year 2014, the first Non-fungible token is created by Kevin MacCoy and Anil Das called the “Quantum”.
But the decentralized ledger and the creation of the first Non-fungible token are not enough to catch the attention of many. Not until the meme economy started on the Internet.
When the meme economy has broken out, people on the internet started to trade Rare Pepe. It was the first crypto art recorded on counterparty, that has been traded on a larger scale in 2016-2018. Rare Pepe is being traded for $100 to $1000, and this crypto art is now known as a Non-fungible token.
The year 2017 is the year when the cryptocurrency become massively popular when Bitcoin reached $19,783.06. The success of Bitcoin is also the success of cryptocurrency.
One that benefits from the success of bitcoin was Ethereum, the second most valuable crypto, next only to Bitcoin.
Since Ethereum is the second most popular cryptocurrency, NFT creators at that time embrace the Ethereum decentralized ledger. In fact, the Ethereum blockchain is the best choice for smart contracts and ledgers, even to this day, Ethereum was still the king of NFT.
Crypto Punks- 2017
In the same year 2017, two developers from Larva Labs named Matt Hall and James Watkinson, create the now-famous NFT art called “Crypto punks”, these digital artworks are originally given as free NFTs for those who own Ethereum wallets at that time.
Now, these crypto punks are sold for a huge amount of money, but why? you might ask.
Well, there are 10,000 Crypto Punks that are made, but this digital artwork serves as an inspiration for the modern non-fungible token art on the Ethereum blockchain.
Since Crypto punks are iconic and many have credited this artwork that playing a huge role that popularizing the use of a Non-fungible token.
Crypto punks are iconic and it’s the main reason, why a lot of people are willing to pay a huge amount of money just to get one of these, this crypto art serves as a collection and memorabilia of the past, and a part of the history of a Non-fungible token.
What Is The Use Of NFT?
Non-fungible tokens have many uses, from digital artworks to domain names, and even video games, the concept, and functionality of NFT are very promising, and after learning its origins let us now explore the uses of NFT.
NFT Use In Arts
The use of NFT is widely known in the digital arts since it helps the artist to monetize their art in the digital space.
In the real world, you cannot just copy digital artworks like paintings, but in the digital world copying an artwork is as easy as one, two, or three.
Before the use of NFT copying, digital arts can easily achieve by just copying and pasting. Just click the artwork, hit copy then paste and it will be hard to distinguish the original.
Another examples are memes, a lot of people love memes since they will intensify the conversation on the internet and brings laughter to someone who will find it funny, but internet users are massive in numbers, and because of that I will just take a few minutes for your meme to use by other without giving you any credits.
Same the digital artwork, it can easily be stolen on the internet.
The uses of blockchain technology solve these kinds of issues, digital items like artworks or memes can now be protected by converting them into a non-fungible token. Converting digital items into an NFT is called “Minting” As a gamer I play a lot of NFT games, and minting an item into an NFT is not new for me.
The process of minting an in-game item and digital artwork was just the same, you will just need a cryptocurrency like Ethereum of Polygon in which you will store your digital items’ information like ownership, creation date, etc.
After that your digital artworks are now secure by blockchain, no matter how hard they try to copy your items, those copies will just remain a replica and will never become the original.
Using non-fungible tokens in digital artworks, enables artists to sell and monetize their art.
With the use of blockchain technology, all digital items that are minted will be converted into Non-fungible tokens that are unique, and authentic that cannot be replicated.
Only the artist or the holder of the digital art will remain the owner unless it is sold to another holder.
The traditional domain name is not owned by anybody, when you bought a domain name, it was said that you owned the domain name, but actually, it is not.
When you purchase a domain you only own the right to use it as long as you are able to renew the domain name before it expired.
But in an NFT domain, once the domain is minted, it will turn into a Non-fungible token or what we called an NFT domain, all the information about the domain is stored on a blockchain.
In a traditional domain, users need to pay a renewal fee to have the right on using a domain name, but in an NFT domain there is no renewal fee, users just need to have a one-time payment for registering an NFT domain, and after the registration and minting process, the owner has now full control of that domain forever
The use of NFT in a domain is promising, and many agree that domain NFT is the future of the internet, together with web3, and decentralized web hosting. NFT domain name might be the future of the internet but for now, the internet itself is not yet ready for it.
When you try to use the NFT domain today, you will be facing some problems, like indexing on Google, which means your website that uses an NFT domain will not appear in Google search which will hurt your businesses online.
But purchasing an NFT domain for the future is a good investment since you can hold a domain name and wait for the right time when the internet is ripe and ready for the NFT domains, or you can hold the domain and sell it for a much higher price in the future.
Holding a domain name and selling a for a much higher price is not new at all. A lot of people are doing it, and it is called “Domain flipping”
I can see the better potential on the NFT domain for flipping business in the future, so it is much better if you get a really good domain name and sell it at the right time, for more information about domain flipping business, you can read my previous article called “ A Beginners Guide On Domain Flipping”.
Then NFT games appear, and I was so happy that the dream is now a reality, gamers can now own in-game items that have real value in real life, and players can now earn by just playing games, and all of it is made possible by NFT.
The use of blockchain technology in the game is revolutionized, it gives players actual ownership of a game item that they owned. How does it work? Well, it goes like this, NFTs used in the games are depending on the game creators, and what is allowed to become an NFT.
Some other games like “Lost Relics’ have some rare items or artifacts that are scattered in the game, once a player hand those artifacts they can sell them in the marketplace since the artifacts are NFTs that have value in the real world, enabling players to earn money from it.
Items like this are backed by blockchain it is NFT, some items that are rare have very limited numbers like a sword in Lost Relics called “Nova Ultrus” there are only 20 those Sword are made, and all the information is stored in the blockchain which cannot be altered, the rarity of the item is controlled by blockchain, which is a good innovation for creating an in-game item that has value in the real world.
In addition, the use of NFT in an in-game item like Lost Relics gives the players complete control over the items, and they can even use the NFT items in some other NFT games supported in the game multiverse.
There are various ways to create an NFT, and some are even a bit technical, but I found ways not just to create your own NFT easily but also to create your own NFT for free.
Yes, it’s free, but before we start, you need to have your own art such as digital photos, or digital art that we will be minted to create your very first NFT.
You will also need to create your own NFT wallet, I recommend using Metamask since it is the most popular, and widely use Ethereum wallet for tokens, ETH, and NFT.
If you don’t know how to set up your Metamask Wallet, I already created a tutorial on how to set it up Metamas wallet you can check it out in this article “Metamask Wallet Tutorials” it will guide you on how to set up your Metamask Wallet, add polygon network, and connect Metamask on Opensea.
NFT Marketplace (Opensea)
If you don’t know what an Opensea is, it is a massive and popular NFT marketplace for you to create, trade, and buy NFTs.
There is some NFT marketplace, but I recommend starting on Opensea since it is the most widely used, and user-friendly when it comes to trading or selling NFTs.
Now that you have successfully created your own Metamask Wallet, let us now proceed to create your very own NFTs.
Tutorial On How To Create An NFT
Step by Step Guide on how to create an NFT for Free
Step 1: Go to OpenSea Website
First, type Opensea.io on your browser, then connect Opensea to Metamask, after that click profile to get access to your Opensea dashboard, the dashboard allows you to control all of your NFTs that are on sale.
Step 2: Create Your Collection In Opensea Marketplace
Next, in your Opensea dashboard, Head over to your profile, then click my collection, let’s assume that you don’t have a collection yet and create a collection, just click the blue button “create collection”, and upload your logo, and you can upload any logo that you want.
In my case, since this is just a tutorial, I will use the same photo that I will be minting as NFT.
Step 3: Fill up the Info Of your Collection
Fill up the necessary information when creating a collection such as the name of your collection, description, add category > percentage fee > and add your Metamask wallet address. Then for the blockchain choose polygon > then hit the create button.
Step 4: Mint Your NFT
Now that we already created our first collection in Opensea, let us now mint the item to convert it into an NFT. Just click create button at the upper part of your dashboard > upload the image, video, audio, or whatever items you want to mint > place the name > description > select collection > choose blockchain (Polygon) > then hit the create button. You now have NFT items.
Step 5: Sell Your NFT
Now that you have minted the items into an NFT, you can now list the NFT item for sale in the Opensea NFT marketplace. To list your NFT items for sale just click the “Sel button” at the upper right part of the dashboard > enter your desired amount in Ethereum > click the complete listing button, and that’s it, try to promote your NFT art on social media, good luck. To fully understand the step by step on how to create an NFT, watch the video tutorial below this line.
How To Buy NFT
Buying an NFT was almost the same as creating an NFT. You should have an NFT wallet like Metamask. Then the next step was to choose what platform to buy.
Some popular platforms are NFT marketplaces like Opensea, Nifty gateway, and Rarible. You can also find some NFT for sale on social media like Twitter or Instagram. After choosing a platform, you will need to connect youre wallet and you can choose what NFT you want to buy.
Some NFTs have buy-now options, those are the items for sale at a fixed price. This means you can buy it right away if you want it. Some NFT works have to make offer options, where you can place the price that you might think is right for the times, and when both of you and the sellers agree with the price you can buy the NFT.
There are also NFT auctions in that you can participate. If you win the bidding you can have it. After you bought the NFT its data will be stored in your wallet, which you can use to hold or resell the NFT item that you have.
So that’s it, all of the things that you need to know about NFT, I hope that learn something from this article of mine, I tried my best to give you the information that you need about NFT, its meaning, its history, and how to create your own NFT.
If you like this content, you can consider buying me a drink and I will truly appreciate it, thank you, and have a nice day.
Frequently Ask Questions About NFT
What does NFT mean?
NFT stands for Non-fungible token, a token that represents a digital item such as digital paintings, GIFs, NFT domains, In-game items, or crypto-based tokens. etc
What is the use of NFT?
The important use of NFT is to become a digital item to be unique and authentic, all the information about minted NFT items is stored in a blockchain, like who owns it and who sells it.
How do you make money with NFT?
There are many ways to earn from NFT especially if you are an artist, you can convert your digital art into an NFT and sell it in the NFT marketplace.