The competition to get into the NFTs league has reached the mania level. After all, who would like to be left behind? But just the desire is not enough; whether it is creating NFTs or creating your nft marketplace, it requires sound knowledge of blockchain dApp development and some insight into the functioning of NFTs.
NFTs allow content creators to tokenize their work and own the property rights for what they create and profit accordingly. And that is not the end, as the use cases of NFTs are steadily increasing. Some of these are
- commodifying digital creations such as art, music files, and video games
- verifying ownership information of digital products
- verifying licenses and certifications
- making unique collectibles such as crypto kitties
- tokenizing sports tickets and royalties
- tokenizing open source code
- creating sports merchandise such as NFTs mentioning past achievements of a team
- presenting crypto domain addresses such as myname.crypto or myname.eth.
What are Non-Fungible Tokens (NFTs)?
A fungible asset refers to units that can be readily interchanged, such as money. You will have qualms exchanging your hundred-dollar bill with another.
This becomes impossible when the asset is non-fungible. It has unique properties that render it impossible to interchange with anything else. A one-of-a-kind painting like Mona Lisa will be a good example of a non-fungible asset. You cannot replace the original Mona Lisa painting with any other. Similarly, NFTs are one-of-a-kind digital assets. You might think of these digital tokens as ownership certificates for physical or virtual assets.
How do NFTs Work?
Generally, you can create as many duplicates of digital files as you want with ease.
Not with NFTs, which are tokenized to create a digital certificate of ownership. One can buy and sell NFTs. Every NFT has an embedded unique ID (metadata). This ID makes it a matchless piece. Information about every ownership transfer is registered on the blockchain.
Metadata informs about a specific token ID. For instance, if NFT ID #12005 represents a horse, the metadata might provide information about the horse’s name, picture, description, and special traits.
Must-Know ERC standards as an NFT User
Ethereum Request for Comments 721, ERC-721, is an open standard that guides building NFTs on the Ethereum blockchain. It is an inheritable Solidity smart contract standard.
The standard provides a mapping of unique identifiers, each referring to a single asset to addresses, which denote the owner of that identifier.
Credited to the Enjin team, ERC-1155 tokens introduce semi-fungibility to the NFT world. These tokens represent classes of assets rather than a single asset.
For instance, a token might represent a gun, while a wallet could have a hundred of these guns. The token allows a developer to get the number of assets owned by a wallet and execute the transfer of the example; an ID might represent “swords,” and a wallet could hold 1,000 of these “swords,” in this case, assets to another user.
Now that you have a fundamental idea of NFTs, it is time to learn how to create an NFT. Artists and sports enthusiasts out there might be yearning by now to hop high and create their first NFT.
How to create NFT?
Though it might sound sci-fi for some, creating NFT is rather a straightforward process.
The first task you have to do is decide on the blockchain you would use to create NFT. Currently, Ethereum is the most popular blockchain for creating NFT. However, these can also be minted on blockchains like Cardano, Polkadot, Bitcoin Cash, Binance Smart Chain, EOS, Tron, Flow, WAX, Tezos, Cosmos, and more.
Remember that each blockchain has its own NFT token standard, compatible wallet services, and marketplaces. When you choose blockchain A, you might not be able to sell NFTs on platforms B, C, and others. To make it even clearer, if you select an Ethereum-based NFT marketplace like OpenSea to create an NFT, you won’t be able to sell it on a platform based on the Binance Smart Chain.
Here is a step-by-step process of creating NFTs in Ethereum-based marketplaces:
- Get a wallet that supports ERC-721, such as Trust Wallet or MetaMask, with $50-$100 of ETH.
- Register on the platform.
- Click the ‘Create’ button and connect your wallet with the marketplace. On some marketplaces, you may have to digitally sign a message to verify your ownership of the wallet address.
- A window will appear to enable you to upload your artwork, add a name, and include a description.
- Create a folder for your newly minted NFTs to go in.
- Assign an image for your collection.
- Click on the ‘Add New Item’ button and sign another wallet-related message.
- Upload your NFT image, audio, GIF, or 3D model.
- Include specific attributes to enhance the uniqueness factor of the NFT.
- Confirm the creation of the NFT.
Cost Factor While Minting NFT on Different Blockchains
Various blockchains handle NFTs differently. Transaction fees on these blockchains differ, and the cost to mint NFT.
Let us compare the cost incurred when minting on Ethereum and Bitcoin Cash (BCH). Minting NFT via a smart contract on Ethereum and using the ERC721 token standard might cost anywhere between $40 to $100. However, NFT creation on a network like Bitcoin Cash (BCH) will cost only $0.003 to mint a Simple Ledger Protocol (SLP)-based token.
Technically it costs zero to mint an NFT. However, the smart contract charges a fee for adding a new NFT or listing new NFTs in the marketplace.
If you are wondering why many are leveraging Ethereum despite transaction costs, it is because of the wider ecosystem of Ethereum blockchain. You get access to far more marketplaces and compatible wallets when working with Ethereum-based NFT ecosystems. Vast Ethereum eco-chamber includes artist incubators, luxury art galleries, and markets such as Opensea, notfungible.com, Makersplace, Nifty Gateway, and more.
How to Sell NFTs?
Selling an NFT is rather a simple exercise. You have to locate the NFT in your collection, select it and click on the ‘Sell’ button. Again, you have to consider the blockchain your NFT has been built on, and it can only be sold over a supportive platform.
Program Loyalties – Create Lifelong Passive Income Streams
On most NFT marketplaces, you will find the option to program royalties. In the process, you can create lifelong passive income streams. You can choose which ERC-20 token you want to receive in return for the NFT.
Thanks to Royalties, NFT creators can take home a commission every time a new person buys the asset. Smart contracts ensure the immediate release of payment on the meeting of criteria.
How to Sell NFT?
There would be times when you want to buy NFTs to keep them as collectibles or sell them later for profits. Here are the general steps for completing the process:
- Go to the intended NFT marketplace.
- Connect your wallet with the platform.
- Purchase NFT(s) and complete the sale.
You also need to determine if the NFTs you want to buy are being sold at a certain time via a pack or art drop. You will have to wait for a card pack drop to be announced and try your luck in such a case. These methods are becoming increasingly common to sell scarce NFTs. Buyers are required to sign up and fund their accounts beforehand. The whole process of pack and art drops could be over in seconds, so you have to be geared up. Also, learn here about best practices for NFT auctions.
How to Create an NFT Marketplace?
If you want to be more than an NFT creator, trader, or collector of collectibles and have your own NFT marketplace, this is what you should do.
You will need to rope in an experienced development team to create an NFT marketplace for you with the functionality you want. The custom development process for the NFT marketplace involves these steps:
Define your niche
Determine whether you are on a vertical or a horizontal market. Vertical market suppliers meet the needs of a specific target group, while flat market suppliers sell a-z stuff to everyone.
Choose user roles
NFT marketplaces generally have three user roles – creators, buyers, and administrators.
It may look like a boring task, but documentation becomes an important step when working on a project where you are spending real dollars.
This is the stage when your idea transcends into life.
Implement smart contracts
The smart contract acts as the logic of your marketplace. As the web app is a decentralized platform, a major chunk of the data is verified on the blockchain.
Test & deploy
Conduct proper testing to find and fix bugs to ensure your marketplace is reliable, high-performing, and secure.
How to Earn with an NFT Marketplace?
As the marketplace creator, you have to work out your monetization model. You will have to spend considerable time understanding the functioning of various NFT marketplaces and how they generate income for their administrators.
You also have to ensure your NFT marketplace is a winning draw for NFT creators and traders. Only when the creators can make a living by selling their NFTs through your marketplace and NFT trading becomes a stable revenue-generating activity will your marketplace have a steady stream of users.
Is the Time Ripe to Get into NFTs?
The NFT craze has just begun. Every day, we hear major brands and celebrities signing deals to release their own NFTs. Football star Tom Brady is set to launch his platform. Elon Musk’s girlfriend Grimes sold almost $6 million worth of digital artwork in a matter of minutes.