Here we go again. As if the news of cryptocurrencies breaking all-time highs weren’t exciting enough, we stand in front of NFTs becoming mainstream, what exactly are they and how does one invest in NFTs? If you don’t know then brace yourself for exciting news.
What is an NFT?
The acronym stands for non-fungible token. It means that every single NFT is an irreplaceable one-of-a-kind digital asset.
For instance, cryptocurrencies such as Bitcoin, Ethereum, and Litecoin are fungible tokens. Either one can be replaced by an equal (ex: trading 1 Bitcoin for another), NFTs on the other hand have a unique identity, if you were to trade one, you’d have to trade for a completely different asset.
For now, the best way to define an NFT is to think of it as ownership of a unique digital asset nobody else has.
How to Invest in NFTs? How do They Work?
Investing in NFTs comes in two forms, buying or selling.
According to Artnet, there were $300 million in NFT sales in January and February of this year alone.
Digital works can be tokenized and turned into NFTs. For such purposes, there are NFT marketplaces where you can perform both actions. At the present time, OpenSea is the leading platform.
Although optional, NFTs have smart contracts that can attribute a cut of future token resells to the creator.
Let’s say you’re an artist and you just created a stunning digital artwork, how would you make an NFT out of it and sell it?
It’s actually simple but first, it’s important to make sure that you’re the creator or the owner of the piece.
You just need to create an account in an NFT marketplace and upload it, here’s how to do it in OpenSea:
1. This is the homepage. From here, click on the profile icon and then select “My Profile”.
2. You’ll need to create a MetaMask account first, click on “Get MetaMask”.
3. You will be asked to install MetaMask as an extension on your browser.
4. After you’re done installing the extension, click on “Get Started”.
5. Choose the option “Create a Wallet” if you’re using MetaMask for the first time.
7. Create a password.
8. Now you’ll be presented with a secret backup phrase, make sure to save it with the correct word order. Word order will be important to confirm your secret backup phrase in the next step.
9. Confirm It.
10. If everything was correctly done, you’re done with your MetaMask account:
Now it’s time to login in OpenSea with your brand-new MetaMask account. This should be pretty straightforward.
Once you’re logged in, change your username which will be Unnamed by default.
At the top right corner, click on “Account Settings” to change your username.
Change your username under “general Settings”.
With further personalization not taken into account, you’re all set.
Now, how do you upload your beautiful art to the platform?
You’ll need to create a collection.
Go to “Create” and click on “My Collection”.
Click on “Create”.
Upload a logo, give it a name and a description.
Click on “Add Items”.
“Add New Item”.
Proceed to upload your creation.
And, you’re done. Now you how to invest your efforts in NFTs.
Browsing through the creator’s page, you can now see its unique token ID under the “Chain Info” collapsible bar.
Wait… Before You Try to Sell Your Art Read This
OpenSea operates in the Ethereum blockchain. Therefore, whenever you make transactions, such as transferring crypto to another wallet or purchase a digital collectible, you’ll need enough ETH for the transaction and the gas fees. Paying gas fees is also a requirement when you try to sell your artwork.
If you’re not on par with ETH gas fees, read this.
Other NFT Marketplaces Worth Mentioning:
What’s the Point of NFTs?
The point is evolution. NFTs are a potential step forward to revolutionize finance and copyright infringement infra-structures.
Their market efficiency is stellar. NFTs proof of ownership lies in the blockchain, so there’s no need to register your work at U.S Copyright Office to claim ownership. This also removes the legal hassle and third-parties involvement in transactions, allowing artists to connect directly with their audience.
Just like any revolutionizing creation, NFTs are still in their infant steps but the possibilities are endless. We could be witnessing new forms of investment and new markets just around the corner or it can be the latest get rich quick scheme (tell that to cryptocurrencies), only time will tell.
How Are NFTs Being Used Outside of the Artwork Landscape?
Decentraland is yet another way to invest in NFTs and perhaps the most iconic example of the strange ways NFTs can be used.
What if I told you that there’s a booming market in trading virtual assets and that you can purchase digital world real estate?
Surprisingly, Decentraland provides this possibility.
What is Decentraland?
It’s software that runs on Ethereum. A virtual world where users can buy and trade land, interact with each other, and play games.
Decentraland consists of a massive metropolis called Genesis City. Even though it’s similar to previous virtual worlds such as Second Life, what differentiates it from its older brothers is the economy, entirely based on cryptocurrency.
There are a total of 90.061 parcels in Genesis City. These are the virtual real estate and they’re called “LAND” in the game. Each unit measures 16×16 meters and they can be bought, sold, rented, or developed using Decentraland’s own cryptocurrency called “MANA” which by itself saw an increase of 3824,61% since last year, the current value is around $1 per token.
Just so you have an idea, each square in the above picture represents a LAND parcel, these are averaging a price anywhere between 5000 to 15000 MANA, which roughly translates to $5.000 – $15.000 USD. In 2017, the year Decentraland launched, each LAND parcel was being sold for an average of $100 USD.
How Does Decentraland Relate to NFTs?
In-game LAND ownership is an NFT by itself. The LAND supply is limited and will never be minted, it has a cap of 90.061 parcels. What makes every piece of LAND non-fungible is its unique set of (x,y) map coordinates.
Do NFTs Hold any True Value?
Looking at the appreciation history, seems like enough people believe in digital scarcity and are on their way to invest in NFTs.
The estimated value of all LAND is currently around $100 million and growing.
Now It’s Your Turn
We’d like to hear your thoughts on NFTs, do you believe they’re just a fad, or do you believe they’re the next success after cryptocurrencies?