NFTs are the buzz nowadays, but haziness is still around. This blog article is published as a guide to NFTs. This will help you to create and sell NFTs. Everything you need to know about NFTs.
A quarter into 2021 and NFT mania is showing no signs of abating. Not a week passes without an NFT breaking the past record. By the end of March 2021, NFTs market cap had grown 1,785% since the start of the year.
A high profile NFT got sold for nearly $70 million. Even celebrities are competing to jump into the fray by releasing their own flagship NFTs. When Kings of Leon released their latest album as an NFT very recently, they raised $2 million in the process. Musician 3LAU garnered $11 million from his own release, packaged into 33 separate NFTs.
NFTs allow content creators to tokenize their work and actually 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.
The competition to get into NFTs has reached the level of mania. After all, who would like to be left behind. But just the desire is not enough; developing a marketplace requires sound knowledge of blockchain dApp development and some insight into the functioning of NFTs.
Understanding NFTs (Non-Fungible Tokens)
A fungible asset refers to units which can be readily interchanged, such as money. You will have qualms exchanging your hundred dollar bill with another.
Image source: https://opensea.io/blog/guides/non-fungible-tokens/
This becomes impossible when the asset is non-fungible. In simple terms, a non-fungible asset has unique properties rendering it impossible to interchange it with anything else. A one-of-a-kind painting like Mona Lisa will be a good example of a non-fungible asset. You simply 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 certificates of ownership for physical or virtual assets.
How NFTs function
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 the NFT and sell. Every NFT has an embedded unique ID (metadata). It is this ID which makes this 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 info about the name of the horse, its picture, a description, and any special traits, if there.
Relevant ERC standards
Ethereum Request for Comments 721 aka ERC-721 is an open standard that guides how to build non-fungible tokens on the Ethereum blockchain. It is an inheritable Solidity smart contract standard, meaning developers can import it from the OpenZeppelin library to create new ERC721-compliant contracts with ease. The standard provides a mapping of unique identifiers, each referring to a single asset to addresses, which denote the owner of that identifier.
Image source: https://boxmining.com/erc-1155/
Credited to the Enjin team, ERC-1155 tokens introduce the concept semi-fungibility to the NFT world. These tokens represent classes of assets, rather than single assets. 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 own 1,000 of these swords. In this case assets to another user.
Now that you have a fundamental idea what NFTs are, 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 NFTs
Image source: https://www.coindesk.com/how-to-create-buy-sell-nfts
Though it might be sounding a bit sci-fi for some, creating NFTs is rather a straightforward process.
The first task you have to do is to decide on the blockchain you would use for creating NFTs. Currently, Ethereum is the most popular blockchain for creating non-fungible tokens. However, these can also be minted on blockchains like Cardano, Polkadot, Bitcoin Cash, Binance Smart Chain, EOS, Tron, Flow, WAX, Tezos, Cosmos, and more.
Keep in mind though 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 your NFTs on platforms B, C, and others. To make it even clearer, if you choose 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 an Ethereum-based marketplaces:
- Get a wallet that supports ERC-721 such as Trust Wallet or Meta Mask 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 when minting NFTs on different blockchains
Various blockchains handle NFTs differently. Transaction fees on these blockchains differs as well as the cost to mint NFTs.
Let us compare the cost incurred when minting on Ethereum and Bitcoin Cash (BCH). Minting an 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 of 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. Basically, you have to locate the NFT in your collection, select it and click on the ‘Sell’ button. Again, you have to take into account 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 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 the asset is bought by a new person. Smart contracts ensure immediate release of payment on meeting of criteria.
How users will buy NFTs?
There would be times when you want to buy NFTs to keep them as collectibles or sell later for profits. Here are the general steps for completing the process:
- Go to the intended 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. In such a case, you will have to wait for a card pack drop to be announced and try your luck. 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.
How to create a NFTs marketplace?
In case you want to be more than an NFT creator, trader, or a collector of collectibles, and have your own marketplace, this is what you should do.
You will need to rope in an experienced development team, who will create an NFT marketplace for you with the functionality you want. 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 horizontal 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 when you are working on a project where you are spending real dollars, documentation becomes an important step.
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 creator of the marketplace, you have to work out your monetization model. You will have to spend considerable time to understand the functioning of various NFT marketplaces and the way 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 are able to make a living by selling their NFTs through your marketplace and NFT trading becomes a stable revenue-generating activity, your marketplace will have a steady stream of users.
Is the time ripe to get into NFTs
The NFT craze has just begun. Pundits have already announced 2021 to by year of NFTs. Every day, we hear major brands and celebrities signing deals to release their own NFTs. Football star Tom Brady is set to launch his own platform. Elon Musk’s girlfriend Grimes sold almost $6 million worth of digital artwork in a matter of minutes.
By the end of 2021, the NFT market will reach into billions. Will you want to be left out?
Reach out to QuillHash
With an industry presence of years, QuillHash has delivered enterprise solutions across the globe. QuillHash with a team of experts is a leading blockchain development company providing various industry solutions including DeFi enterprise, If you need any assistance in the NFTs development, feel free to reach out to our experts here!
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