Simply defined, NFTs are digital cryptographic assets, which are transferable and interchangeable between addresses. Such assets are like Bitcoin and Ethereum, except while you can trade Bitcoin and benefit from its varying market value, every NFT is unique.
On the other hand, all tokenized assets are a part of the Blockchain technology, purchased and sold with the currency supported by that.
The concept of NFTs is based on ownership. That means every token possesses a specific dataset registered on the Blockchain and verifiably scarce, i.e., only one entity has the right to that token and no one else.
For instance, if you buy an NFT (say, a pack of digital vintage baseball cards), the information about it along with its smart contract is stored on the Blockchain. It proves you are the owner.
You can sell that ownership to someone else in exchange for something else. So, you can trade your digitized pack of cards for an entirely different item — a digital art piece, a highly retweeted post, or another box of sports cards — whatever you choose.
TABLE OF CONTENT
- History of NFTs
- NFTS can be anything, even digital artworks!
- What are the benefits that non-fungible tokens bring to the table?
- Popular examples of tokenized digital assets
- Best NFT marketplace for artists
- What do today’s digital artists think of NFTs?
- Why are the transactions in NFTs booming now?
- How are NFTs created?
- Challenges of NFTs
- Is the NFT future or a fad?
NFTs have been in existence since at least 2014. But they began gaining popularity only from 2017 when people started creating and using digital cats known as CryptoKitties .Do not be surprised when we tell you how some sought-after kitten avatars were traded for millions. That is a massive amount for trading in digital cats!
NBA Top Shot is a blockchain-based platform allowing fans to buy, sell and trade officially licensed but specific video highlights of NBA games.
More recently, the digital asset traders have been selling authentic digital collectibles, which are similar to paperback trading cards. A Lebron James slam dunk clip is the most valuable NFT to be sold for $208,000 in February 2021.
An NFT can represent anything, even digital artworks!
Remember the Nyan Cat gif — a 12-frame animation of a cat leaving a rainbow-colored contrail as it flew through space? We are sure you do. It sold at an auction for $587,000, making it one of the most expensive digital art pieces sold several months ago.
A 10-second video of former US President Donald Trump lying on the ground with his body covered in slogans while people walk past him, made by Beeple, but owned and sold by a Miami-based collector, was sold for $6.6 million — setting a new record in the world of NFTs.
NFTs have breathed new life into monetizing the world of art, which was previously limited to traditional marketing sources such as auction houses and art galleries. Sure, the figures are eye-popping, but they do make you wonder:
What are the benefits that non-fungible tokens bring to the table?
There are many reasons why investing in NFTs has proven to be rather profitable for businesses and individuals. In this section, we will discuss five of them:
1. Provides investors more liquidity
Investors can liquidate the tokenized assets when they need to. For instance, if a virtual landowner decides to rent that space to influencers or advertisers for an amount, they can still do so without losing control of that “land.” They can liquify it as rent.
2. Possess an immense potential for growth
Owning and controlling digital spaces enables the owners to decide what they want to do on their land. As mentioned in the previous point, they can rent it. But they also have the authority to build up a solid and secure business for advertising in that digital space.
3. Creates value for the tokenized asset
NFTs offer a platform for physical objects such as art pieces to be tokenized. This eliminates their duplication and limits ownership to the artist. The arrangement creates scarcity for that artworks, and the scarcity, in turn, boosts their value.
4. Gives ownership of the tokenized asset
A digital file can indeed be copied as many times as you like. However, NFTs are designed to get you something that can never be replicated, i.e., the ownership of the work.
The digital artist will always retain the copyright and reproduction rights — similar to how it happens with physical artwork. What the owner does with it — selling, renting, flipping — depends entirely on them.
5. Allows digital assets to be transferred globally
NFTs can be interchanged or transferred far more efficiently than any other collectibles that have come before them. Moreover, given the uniqueness of NFTs, they give buyers confidence when they buy a tokenized asset. They wholly own it, unlike Bitcoin and Ethereum.
6. Encourages easy verifications
For any NFT, historical ownership data is registered on the Blockchain. That means everything can be tracked easily back to the original creator. This allows for rapid and easy authentication.
Popular examples of tokenized digital assets
Every industry niche has dipped its toes into the non-fungible token game between music, sports, finance, tech, and art. Here are a few famous examples:
Twitter founder and CEO Jack Dorsey sold his first tweet, “just setting up my twitter,” for $2.9 million on March 22. The proceeds were donated to a charity.
Rob Gronkowski, an American footballer for the Tampa Bay Buccaneers, raked millions by selling his limited-edition Championship NFT digital trading cards. But the number of digital art pieces being sold as NFTs will astonish you.
Mark Winkelman, also known as Beeple, sold a digital art piece as an NFT for $69 million at Christie’s, an auction house based in March 2021. The artwork was called “A detail from “Every day’s — The First 5000 Days.”
In a shocking incident, many “art and NFT enthusiasts” purchased a Banksy piece, burned it, and then sold the charred artwork as an NFT for a whopping $380,000.
The same month, several pieces from musician Steve Aoki’s limited art collection “Dream Catcher sold for a combined net worth of $4.25 million.
NFTs have become a somewhat unavoidable subject for anyone who earns as a creative person. They have allowed them to create something from scratch, sell it at a high value, and make their job even more creatively fulfilling.
Best NFT marketplace for artists
This digital art marketplace is dedicated to artists and designers, enabling them to create, discover and own unique digital artworks. The Ethereum Blockchain secures KnownOrigin.
All users have to upload their digital art into a .jpg or Gif format in the gallery of the marketplace to automatically store them decentrally on an InterPlanetary File System or IPFS.
The files are also assigned unique identifiers for tracking purposes. Being a well-known marketplace for rare digital artworks ensures that every tokenized asset is entirely authentic and truly unique.
Artists are required to use a digital wallet such as TrustWallet for creating profiles, and once that is done, they can use the application form, available on their platform, for free. In simple words, KnownOrigin is a digital art gallery.
2. NFT Showroom
This is the only marketplace that is built on Hive Blockchain technology. Known for being fast and free with better scalability options and global accessibility, NFT Showroom fully leverages the Hive ecosystem's offerings.
Artists submit their digital artworks and issue rare tokens to be traded on the platform. Buyers have to pay 10.00% of the NFT's selling price to the marketplace.
However, if they make a second sale, buyers still have to pay a 10% fee, but the marketplace will only keep 5% of it. The remaining 5% of the amount will be given to the original artist as royalty.
To use and trade on NFT Showroom, the artist must have Hive tokens that can be collected from a few famous crypto exchanges such as Binance.
Rarible is a community-owned NFT marketplace for artworks. Having a significant focus on digital artworks, this marketplace allows trading in various categories such as photography, games, art, music albums, and memes. On average, it distributes 75,000 RARI every week.
The marketplace awards ERC-20 RARI tokens to all active users. Every entity that actively participates in Rarible through buying and selling frequently receives RARI tokens weekly.
Rarible can also be used to create "minting NFTs" that help creators to sell their work as NFTs — attached with tamper-proof files.
It also enables them to release only a sneak peek of the asset (that can be a preview or trailer) and only share the complete tokenized asset once the trading happens successfully. In addition, it is relatively easy to create an account on Rarible.
Scammers have been detected multiple times on the marketplace because of their robust verification process, which helps minimize the risk of dealing with a fake project. It also emphasizes a lot on creating an autonomous platform driven by community governance.
The total income volume on Rarible is more than $9.92 million. Buyers can also build a personal portfolio of digital artworks they like, while others can create a collection of art they see a potential in.
Currently leading the charts, OpenSea is presently the world's biggest NFT marketplace for buying, selling, and trading NFTs.
Having the most comprehensive range of assets, the marketplace has around 700+ different projects, including trading card games, collectibles, and sports cards, along with a range of digital art projects.
Besides, OpenSea enables users to create and design items on the platform with their item-minting tool. This robust tool can be used for creating NFTs for free, that too, without writing even a single line of code.
The items created can further be listed on the marketplace without any charges. Digital creators can either sell them at a fixed price, create a declining price listing or make an auction listing if they want to go via that route.
Since its inception, OpenSea has grown significantly. Today, it has more than 17,000 users, including prominent names such as Gary Vaynerchuck, Mark Cuban, and Logan Paul. OpenSea is basically like an eBay for NFTs with various assets organized neatly under different categories.
It is the first-ever cross-chain NFT marketplace website that comes with cross-chain support for Phantasma and Neo Blockchains, enabling digital artists to buy and sell NFTs through these blockchain solutions.
The GhostMarket is built by Ghostdevs, the open-source developers in the ecosystem of Phantasma. The marketplace comes with a myriad of default functionalities such as minting, batch minting, sending, and so on.
To connect to the platform and utilize its features, the user must connect their account with Neo and Phantasma wallets and then start buying and selling through listings.
However, that is not required if you only want to browse NFT-events such as transfer history, date of token listing, and minting.
Currently, the GhostMarket does not take any listing fees from the NFT sellers. However, buyers are expected to pay a 2% commission fee of the total sales amount. As of March 2021, GhostMarket has performed 9,700 transactions in total and listed 273,780 NFTs.
Similar to CryptoKitties breeding game, Axie Infinity is a pokemon-inspired game that includes digital pets called Axies. Players can buy these digital creatures from the Axie Infinity NFT marketplace and also sell them at auctions.
All of the NFT Axies listed on the marketplace are unique and can be bred with each other. Users buy Axies for playing tournaments, majorly in the "Play to Earn'' mode. Every winner receives crypto prizes.
In addition to digital creatures, the NFT marketplace contains various other items such as land, forest, or special skill sets that can be purchased with the help of Ethereum.
Given the rich and immersive gameplay, Axie Marketplace has secured the #1 position on Ethereum with around 18K+ users and approximately 6,400 ETH in revenues.
7. The Sandbox
The Sandbox is a popular platform in the crypto world that allows individuals to use $SAND game currency for purchasing various NFTs listed by different artists.
Currently, it is in the beta phase containing around 100 NFTs from 46 artists. This number is predicted to keep on increasing once the marketplace is open to all. Players who are well-versed with the game can secure a lot of cryptocurrencies.
It is composed of three major components:
- VoxEdit NFT — used for building all the game assets
- Marketplace on which an individual can buy or sell assets
- A game-maker tool for building and sharing games
All these components work together to offer rich, easy-to-create voxel worlds and game experiences.
It is one of the leading Decentralized Finance (DeFi) liquidity pools offering multiple services. Their non-fungible tokens have a limited spectrum of either sweets or bunny characters named after various sugary treats.
For instance, PancakeSwap has its native token called CAKE, which can be used in the SYRUP pools of the marketplace to earn more CAKE tokens. Besides, they have introduced "teams" to play games with each other on the platforms and earn money.
This arrangement is believed to lead to a potential increase in the addition and creation of NFTs. PancakeSwap also provides fantastic giveaways to its users. Recently, they offered a limited edition 3D "Bullish" Lunar New Year animated NFT to their first 8,888 users.
One of the top NFT marketplaces, PancakeSwap uses the BSC network, and its fees typically range from $0.04 to $0.20. The marketplace has been previously audited by the cyber-security firm called CertiK.
Zora is a marketplace for trading with limited-edition goods. Their central vision is to empower digital creators and brands to get the full benefit of their work by leveraging resale prices.
For digital artists to get started on Zora, they must connect a crypto wallet with their Zora account. This could specifically be an Ethereum wallet because of better compatibility.
Since it enables users to get second market values, Zora has recently made a big launch: Community tokens. These tokens are known as $RAC tokens and are built with the help of the Ethereum blockchain.
Moreover, creators can allow their community to purchase and sell goods before they are ready to ship. These tokens enable artists to have more flexibility to trade in those products which do not lie under typical categories such as artwork or bite-sized entertainment.
The pricing of the NFTs changes based on supply and demand. The more people want to buy an item, the higher its price goes up and vice versa.
AtomicMarket is an NFT marketplace that is based on the EOSIO Blockchain technology. It is a shared liquidity market for NFTs with smart contracts used by multiple websites. The term 'shared liquidity' means that the listings on AtomicMarket can also be listed on other marketplaces. This is not the case with the majority of NFT marketplaces.
Users can thus create digital assets and list them for sale and auction on the marketplace. They can also use any pre-built NFTs for auction and browse through existing listings simultaneously.
AtomicMarket is an integral part of the AtomicAssets hub. Unlike other marketplaces, if you put a tokenized asset for sale here, you do not have to send it over to a marketplace account immediately. Instead, a trade offer for the respective asset is sent to the contract.
Every NFT of well-known collections will be assigned a verification checkmark to define its uniqueness, making it easier to spot.
On the other hand, all the malicious collections are blacklisted from the marketplace. Since its launch in January 2021, it has driven revenues as high as #33,692,276.
Based on Flow Blockchain, this marketplace allows everyone to buy, sell and explore authentic digital art pieces from all around the world. Flow is a highly scalable and composable Blockchain technology that satisfies the simultaneous performance of mainstream-level platforms.
Viv3 is not restricted to any specific niche. Instead, it allows users to buy and sell various collectibles, trading cards, and top-notch digital art pieces, giving the buyer base to trade in many options.
Through Viv3, sellers will be able to earn 87.5 % of the sales amount. They can also enjoy 10% of every resale of the same NFT on the same marketplace. However, every individual is required to use FLOW tokens for trading on Viv3 successfully.
Having a significant focus on gamers, this digital collectibles marketplace sells gaming items and general collectors in the form of NFTs.
Arkane is based on various robust and widespread technologies such as Binance Smart Chain, Ethereum, and Polygon Blockchains. It is among the rare marketplaces that allow users to trade with fiat currencies instead of making cryptocurrency the only payment method.
Arkane is the first NFT marketplace that works on the Polygon blockchain and recently launched a Battle Racers campaign that has helped gain more audience interest.
The latter is an action-packed Blockchain racing game that allows players to build and design NFT cars for various tracks. Arkane market comes with a low fee structure possible because of their premium partnership with Binance.
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13. Nifty Gateway
This widely popular NFT marketplace offers tokenized assets at relatively lower charges. An individual can purchase crypto-collectibles (or "Nifties") quickly and without any hurdles with the help of a credit card.
Some of the most popular crypto games, such as CryptoKitties and Gods Unchained, allow the purchase of assets via this marketplace. Users also can store Nifties in various places, such as Metamask wallet or the Nifty Gateway account.
Nifty Gateway charges a 15% fee of the total rate of an asset. This fee further breaks down into 5% service fee and 10% artist fee. Once every three weeks, they organize an event, namely 'Drop' that displays all the newly-released NFTs available for a limited time.
Terra Virtua Kolekt, or TVK, is a cross-platform marketplace that allows the sharing and trading of NFTs. It is based on Blockchain technology and offers a unique experience of viewing products online or through the mobile app with AR and VR 3D environments.
The marketplace uses ERC-20 tokens for trading purposes which can be collected from various popular crypto exchanges such as Binance and BitMEX. Besides, users are allowed to make transactions through debit and credit cards.
Backed by global leaders in entertainment, the marketplace has a robust collaboration with popular brands such as Paramount Pictures, Legendary Entertainment, and many more. RVK is home to different items like sports and movie memorabilia, and digital artworks.
Focused on providing the trade of unique and single-edition digital artworks, SuperRare is the NFT marketplace based on Ethereum Blockchain.
The complete history and origin of every digital asset listed on the marketplace can be tracked easily and cannot be controlled or manipulated by anyone. That makes it an extremely safe marketplace.
Every transaction made on the platform is through Ether, the native cryptocurrency of the Ethereum network. Creators selling their assets on the forum are allowed to earn a fee from resales as royalty.
But as of now, they allow only a restricted number of handpicked artists only. New creators looking forward to listing their digital artwork must submit their portfolios that they will review before the launch.
SuperRare also works with a small number of handpicked digital artists. You can use the webform to submit your artist profile and get on their radar for their upcoming full launch.
BakerySwap environment is a decentralized exchange (DEX) platform based on Binance Smart Chain and utilizes BakerySwap token (BAKE) for trading.
Consider it as a crypto hub that offers multiple Decentralized Finance (DeFi) along with a marketplace for NFTs. The marketplace provides speedy transactions, allowing users to get things done within seconds.
Also, it comes with a relatively lower fee for the creation of NFTs. The fee is around 0.03BNB (Binance Coin) for the creation of one digital asset.
Their NFT marketplace allows the artists to list their digital art along, where they can also participate in various meme competitions and digital games with BAKE tokens.
Digital creators have to go through a simple and straightforward process of minting and selling their artworks. Trading NFTs on BakerySwap is easy, secure, and convenient.
This NFT marketplace connects artists with collectors from anywhere in the world with Blockchain technology. It allows them to sell or buy digital art and collectibles without any hurdle.
Portion's USP is the Artist Community, which is a global network of decentralized artists and creators. Maintaining complete transparency among the users enables everyone to centrally create or manage all the artworks and successfully transact through the cryptocurrency.
For trading, users must use portion Tokens that are ERC-20 assets on the Ethereum Blockchain and are also governed and managed at one centralized place. Their new tokens get frequent releases in case of liquidity mining, artist grants, and partnerships. The tokens are distributed every time any creator creates a new NFT.
Utilizing the Ethereum Blockchain technology, Mintbase is an NFT factory that works with OpenSea simultaneously. Assets listed here are compatible to be stored in various places such as digital wallets, VR, DeFi, and games.
To get started, users need to have a store that is created with a smart contract. It is further verified automatically on Etherscan. Mintbase comes with an in-built minting tool for the creation of digital assets on verified intelligent contracts.
These tokens can be listed for sale by collectors. Besides, the same item appears on OpenSea without any extra effort. Mintbase takes zero listing fees and only charges a 2% fee for every item sold. They also have an excellent policy when it comes to royalties.
Mintbase allows splitting royalties and payments continuously for up to 20 NEAR wallet holders. This works in favor of royalties for artist creations. Also, Mintbase only stores NFT files and metadata on the decentralized hybrid Blockchain. Mint Base itself holds no data.
What do today’s digital artists think of NFTs?
In the general sense, many artists think that these non-fungible tokens are a part of the digital revolution that has engulfed the entire world.
1. Freedom to create art of value
Ellie Pritts, a Los Angeles-based photographer, and animator created and sold her first NFT in February 2021. It was a short video herself, which sold for about a thousand dollars.
Animation, which is time-consuming and expensive to create, is also difficult to sell for a fair price online. NFTs allowed her to create a string of animated videos she loved at a high price.
Moreover, the people who bought from her did a lot of research and invested in her because her work looked promising. NFTs validate artistic talent. She is currently working on six collaborations with other artists who also mint NFTs.
2. Market NFTs to sell them conveniently
One cannot simply make an NFT and release it into the wild, hoping someone will purchase it. Digital creators who want to make money off their digital assets must be willing to promote it on all channels and be actively involved with the community so that their work can get marketed via word-of-mouth.
Canadian music artist Grimes has sold $6 million worth of digital artworks as of today. Our bestselling piece was a video called “Death of the Old” — based on an original song by Grimes. It was sold for $389,000.
3. Ownership of your art is in yours only.
The new tokens allow digital artists to monetize their work by providing proof of their ownership, regardless of the number of people who download their work online.
It does not matter whether you create art online or on a canvas; it is yours if you get it registered on Blockchain. You are its sole owner. Digital artists love that!
Like every coin has two sides, they are aware that NFTs also come with their baggage:
1. Understanding NFTs is tricky
All the terms that explain how it works are only familiar to people who are already well-aware about crypto — for example, people who invest in NFTs and the marketplaces that sell them. Everyone else will initially have a hard time understanding the jargon.
2. There is no quality control
The digital art being sold as NFTs does not necessarily have to be of excellent quality. In fact, the same investor can purchase a bad meme artwork along with time-intensive and attractive animation videos.
3. The amount of scrutiny NFT artists receive is overwhelming
Even if the work is both financially and artistically satisfying, they have to deal with naysayers regularly. The biggest misconception is dealing with NFTs is mainly like a Ponzi or pyramid scheme. Others also point out the unrealistic expectations that NFTs can enable digital creators to sell their artworks for millions of dollars.
Why are the transactions in NFTs booming now?
In our opinion, this is linked to the rise of cryptocurrencies that are being massively used for trading NFTs at present. Besides the surging price of Bitcoin specifically, the COVID-19 pandemic has dried up many traditional sources of income.
With art exhibitions and concerts on hold, creative professionals are looking for unique ways to drive their revenues.
For instance, rock band Kings of Leon released their most recent album as an NFT in March 2021, bundling exciting real-world perks such as limited-edition vinyl and front row seats to future concerts. The digital art world is no different.
Former child actress Lindsay Lohan sold her first NFT, an art piece called “Lindsay ‘Lightning’ Lohan” on Rarible for almost $500,000. She donated the proceeds to charities dealing in Bitcoin so that the younger generations could learn about this new technology as it unfolds.
The value of Bitcoin currently stands at $60,000. Moreover, since the pandemic started, more people have been saving money. Research shows 59% of people with an income of over $100,000 saved more significantly.
Since crypto extends easily into digital art, people are using it the way they would use Gold or Bitcoin for investing in anything else.
How are NFTs created?
If you are a digital artist looking to monetize your work, you could make your piece an NFT. Let us say you have a doodle or a comic strip that you want to convert into an NFT. Each artwork must have a set of characteristics that make it one-of-a-kind.
You can start on platforms like Nifty Gateway and Rarible, where you could apply to create a project to be sold as an NFT.
On any of the online marketplaces, you can mint a unique NFT, assign it to a piece of digital artwork and store it forever in that marketplace’s custodian wallet. Anyone can then log on and see who owns that piece via the internet connection.
There are several types of NFTs, each of them having its setup process. In the case of setting up digital art NFTs, you can go through any of the top NFT marketplaces we discussed in detail in the above section. Here is a generic way to go about it:
- You first need to set up a digital wallet to store NFTs and crypto.
- In the next step, head to the marketplace and create your profile.
- Follow the instructions on the screen to share all the necessary details on the marketplace.
- Once that step is finished, you will find an option like “Create” or “Make” in your account.
- Click on it and head to uploading your digital art. You can even create a series of artworks under “Collections.”
- Add new artworks — upload images or video files and give your NFT a name. Mint a unique piece of code which IDs your artworks on the Blockchain to avoid duplication and to secure its scarcity and authenticity.
- Your digital artwork NFT gets set up once you save it on the platform.
Theoretically speaking, the crypto art marketplaces and platforms use Blockchain to identify and verify every digital art piece.
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Challenges of NFTs
While digital artists may have to deal with the downsides of creating tokenized digital assets, there are several perils of NFTs in general that cannot be ignored — irrespective of an industry niche.
1. Ecological impact
The process of minting NFTs by adding the tokenized assets to the Blockchain and high volumes of trading transactions such as bidding or resales results in an enormous use of energy.
Although Ethereum, the platform hosting Blockchains to which many of these NFTs are anchored, has pledged to move to a less carbon-guzzling form of keeping their systems secure. However, it is unclear when or if ever this switch will take place.
2. Artwork scams
Digital artists have to deal with scammers who steal artwork and sell it as merchandise on user-generated online, such as t-shirt shops, for example. In fact, there is an account that rips off and sells art by minting artist’s tweets of their art.
This happens because of the lack of proper enforcement or investigation into whether or not the person minting an NFT is the actual artist. The anonymity of such crypto environments has built an environment for theft and exploitation.
No NFT can be broken down into smaller units. They exist as an indivisible entity, on their own and complete. This does not happen in Bitcoin, where one Bitcoin is equal to 100 million satoshis.
4. Difficult destruction
Smart contracts are used to store all NFT data on the Blockchain. This makes each tokenized asset practically indestructible. Moreover, it cannot be duplicated or removed.
Is the NFT future or a fad?
The explosion of interest in NFTs is undoubtedly exciting. It unlocks great potential for digital creators and artists looking to sell their artworks at a high price. However, it is also essential to take a step back and understand the ecological impact of NFTs on the world.
Moreover, this has become a breeding ground for scams and exploitation. NFTs still need to be regulated so that all entities can transact safely, securely, and hassle-free.
But the normalization of NFTs brings an exciting prospect in crypto, where intangible and tangible objects can merge or interact with one another. NFTs are not a fad for sure. In fact, they hold a fascinating place in the future of cyberspace.