NFTs are the new-in thing for the crypto world. From artists to collectors, they are of interest to so many people for so many reasons!
NFTs have exploded onto the crypto scene and it’s hard to escape the hype! Everyone from celebrities, musicians, digital artists (and even 12 year olds) are successfully creating and selling unique digital assets on the blockchain.
If you are new to NFTs, it can be tricky navigating the landscape. How to know if an NFT project is a good investment? Why pay for something intangible? Can’t I just copy and paste it?
This beginner’s guide to NFTs is everything you need to know about non-fungible tokens. We explain what NFTs are and how they got started, we review NFT terminology and conclude with a useful guide on how to buy, sell and mint NFTs.
What Are NFTs?
Non-fungible tokens or NFTs are cryptographic tokens on a blockchain with unique identification codes and metadata that cannot be replicated. NFTs can be used to represent any real-world items like artwork, sound and video clips, text, real-estate and so on.
Tokenizing these real-world tangible assets allows them to be bought, sold, and traded more efficiently while reducing the probability of fraud. Anything of perceived intrinsic value can be minted as a non-fungible token. Let’s start with some examples of well-known NFTs.
First Ever NFT
The first known ‘NFT’, entitled ‘Quantum’, was created by Kevin McCoy and Anil Dash in May 2014, consisting of a video clip made by McCoy’s wife, Jennifer. ‘Quantum’, was minted way before the crypto art market exploded and sold for $1.47m USD in June 2021, during Sotheby’s “Natively Digital” auction.
First Digital Art NFT
In 2007, a digital artist known as Beeple, created the first NFT digital artwork called ‘Everyday’s: The First 5000 Days’. Beeple created a new digital picture every day for 5,000 days and it quickly became one the most unique bodies of work to emerge in the history of digital art. It was the first NFT to be sold at Christies and sold for a staggering $69m USD.
First NFT Tweet
The founder of Twitter, Jack Dorsey auctioned an NFT of his first tweet for $2.9m to raise awareness of NFTs, so that early adopters could profit from the sale of unique digital assets. The proceeds from this sale were converted to bitcoin and donated to Give Directly Africa Response.
First Blockchain-based NFT Game
Crypto Kitties are NFT collectibles and are purchased using Ethereum. Crypto Kitties launched in 2017 and was the first blockchain-based NFT game to achieve mass adoption. The game represented a real-world use case for NFTs and it eventually became the most prominent decentralized application on the Ethereum protocol. With millions of transactions on its platform, the highest-selling Crypto Kittie in 2021 was Founder Cat #40, with an estimated value of $1,064,022.75 USD.
First Luxury Fashion Brand NFT
Gucci became the first luxury brand to explore NFTs with a 4-minute film inspired by their “Aria” collection in collaboration with Alessandro Michele. It was sold at Christie’s auction for $25,000m USD.
First NFT Home
The world’s first digital home entitled Mars House, was recently sold for more than $500,000. The new owner paid digital artist Krista Kim, 288 Ether for the virtual property. Kim comments on her Instagram account:
“As a Techism artist, I am challenging the power of NFT as an art medium. Mars House will live forever as an NFT, so let it represent an art movement for humanity through the power of digital technology. Let this remind future generations that we are here to create a new and better world at a pivotal time in history. […] We are ready to change the world”,
Making people laugh is extremely profitable, but only if it catches the public’s imagination. Popular memes have generated millions as NFTs and one such example is ‘Charlie Bit My Finger’. The meme was seen by over 880 million people, and became one the most-viewed viral video of all time. The original 2007 video “Charlie Bit My Finger”, sold for $760,999, and the family who created it took down the original from YouTube for good.
NFT Terminology Explained
NFTs have given rise to a plethora of new terminology, some of which is technical or generated from online community forums such as discord. Let’s learn what the key NFT terms are and how to use them.
Fungible tokens are a representation of a digital asset on a blockchain that are interchangeable. For example, CoinField Coin (CFC) is a fungible token because each coin is worth the same at any given moment no matter where it was issued. Trade one CFC for another and you get exactly the same thing. Fiat currency and gold are also examples of fungible assets i.e 1 Euro is 1 Euro, whether it was issued in Spain or Italy. Most importantly, a fungible asset doesn’t have any uniqueness, and the units are standardized
Non-fungible tokens on the other hand are units of data that represent a unique digital asset stored and verified on the blockchain. Non-fungible tokens don’t have any inherent value. For example, a non-fungible token derives its value from the assets or goods represented by them. NFTs use various token standards and deploy different types of smart contracts.
Minting a digital asset refers to the act of tokenizing, i.e. uploading it to a given marketplace platform and issuing a token to guarantee its authenticity.
NFTs are minted through smart contracts that assign ownership and manage the transferability of the NFT’s. When someone creates or mints an NFT, they execute code stored in smart contracts that conform to different standards, such as ERC-721. This information is added to the blockchain where the NFT is being managed.
Gas is the term for the amount of Ethereum required by the network for a user to interact with the network. These fees are used to compensate Ethereum miners for the energy required to verify a transaction and for providing a layer of security to the Ethereum network by making it too expensive for malicious users to spam the network.
An NFT project is a collection of digital assets that are all distributed as part of a road map. Typically, the artist or creator will give a ‘Roadmap’ for their concept, which is intended to assist you grasp the scope, purpose, and direction of the project. Understanding a project’s tokenomics is crucial and helps determine whether or not you want to participate.
The Floor Price is the least amount of money you can spend to become a project member (i.e. own a NFT). The floor price is set by the person who owns an NFT in a certain project and is selling it for a lower price than all other vendors in that project.
When you flip an NFT, you buy it and sell it quickly (usually within a few days) in order to make a quick profit.
PFP refers to a profile picture and is one of the most popular types of NFT. PFP’s are algorithmically generated and unique for each owner. Its only purpose is to act as a unique profile picture, and examples include Crypto Punks and Bored Ape Yacht Club.
Buying and Selling NFTs
NFTs are purchased using cryptocurrency and there are many places to buy and sell NFTs. Coming soon is The CoinField NFT Market Place, where you can register your interest. CoinField customers will be able to trade NFT’s on the CoinField platform 24/7 via a dedicated hub to mint, buy and sell unique digital items on the blockchain.
Buying an NFT
- To get started, your crypto wallet will need to be connected to the NFT platform of your choice. A cryptocurrency wallet is an app that allows cryptocurrency users to store and retrieve their digital assets. For example, CoinField operates a state of the art wallet management system to enable users to quickly and securely interact with their assets on the Blockchain.
- To buy an NFT, you can either place an offer to the owner or choose ‘Buy Now’. When making an offer, choose the amount you are willing to pay and an expiration date. After the exchange is complete, the NFT is transferred into your wallet.
- Check the terms of the marketplace as they will take a percentage cut from every purchase on their platform.
Selling an NFT
- To sell an NFT, go to your chosen marketplace and pick a fixed price (if you would like to sell it for a specific amount), or pick a timed auction if you want people to bid on your NFT.
- Check if there is an account initialization fee for your first listing (usually 2.5%). For fixed price sales, the buyer is responsible for the gas fee.
- If a seller accepts an offer made on an NFT, then they pay the gas fee.
Minting an NFT
There is a misconception that you need to be technical to mint an NFT – this is certainly not the case. Follow these simple steps to mint an NFT and become a first-time creator.
- The most important step is to decide on the concept for your NFT – it could be any digital asset ranging from digital art to video clips or text.
- Next you need to connect your crypto wallet to the marketplace of your choice.
- Once your wallet is connected, create a marketplace profile. Take your time to complete your profile as it’s your chance to create excitement for your NFT. The more you add to your profile the better and links to your website and social media channels is a must. Also specify which cryptos you’ll accept as payment when someone purchases your NFTs.
- Minting an NFT requires a gas fee. Make sure to purchase some Crypto (such as Ethereum) on an Exchange or trading app e.g. CoinField.com and deposit into your wallet. Depending on the marketplace, you can then transfer the crypto from your wallet to your NFT marketplace account.
- Create your NFT by clicking the create button and upload a digital file and name your NFT. Similar to the process of selling an NFT, include a compelling description for your NFT, links to your website and social media channels, and specify which blockchain to base the NFT on (like Ethereum).
- The next step is to set up how much you’ll be paid in royalties if your NFT gets sold again later on. The standard royalty payout is 5 – 10% of the secondary sales price.
- Now click “Complete” to mint your first NFT!
Before You Invest in NFTs
Some NFT’s have fetched millions of dollars, but a common question asked is are they worth it? As with any investment, it’s important to DYOR (do your own research) and exercise caution. Similar to any physical artwork or asset, you need to be sure that the NFT has the ability to grow in value.
Here are three things to consider before buying an NFT:
1. How legitimate and rare is the NFT? Checking the properties of an NFT to confirm that it’s legitimate is a crucial step as scammers can upload copies of popular NFTs, but cannot replicate the properties. Go to the properties section of the NFT’s page and check the properties and rarity of the NFT. The goal of a good investment is to get an NFT with the lowest percentage of commonness among the collection.
2. Is the seller verified? Make sure the seller has a blue verification tick next to their account name to prove that they can be trusted and are not impersonator accounts.
3. What is the NTFs liquidity? Similar to cryptocurrency, NFT’s are driven by supply and demand. Naturally, if there is a surge in the demand the price will increase but there are no guarantees that prices will keep on increasing. It is important to note that the only way to liquidate your NFT is to find a buyer.
Closing Thoughts on NFTs
Whether you want to mint, buy, or sell NFTs, the process is becoming a lot easier. The CoinField ecosystem is growing fast and will include exciting new NFT projects and games with rewards in CFC
CoinField customers will be able to trade NFT’s on the CoinField platform 24/7 via a dedicated hub to mint, buy and sell unique digital items on the blockchain. Be the first to join our NFT Marketplace and get a chance to win a prize pool of 500 CFC.
We hoped you found this guide useful and happy minting!