NFTs – A Brief Glimpse into an Enigmatic World

NFTs - a Brief Glimpse into an Enigmatic World

Before we guide you on what NFTs are, let’s look at a few facts –

Total NFT Sales for the year have already exceeded $37 billion. And this, while we are not even halfway through the year is a remarkable feat.

During Q1 2022, collectible NFTs have remained the most popular. They represented 76% of the total trade volume in NFTs.

With a focus on always being trendy, millennials are thrice as likely as Gen Z to buy NFTs.

‘The Merge’ by the artist PAK is the most valuable NFT to ever be sold at the price of $91.8 million.

OpenSea witnesses trades involving around 250,000 people every month.

That’s interesting, but what exactly are NFTs?

NFTs are tradable digital assets that are stored on the blockchain. The ownership of an NFT is assigned through smart contracts and recorded in the blockchain. Smart contracts also enable this ownership to be transferred from one owner to another, which makes the trading of NFTs possible. Generally, NFTs are associated with digital files but are sometimes backed by a real-world asset too. For example, they may represent physical artwork or real estate. So, despite NFTs being usually thought of as digital art, some NFTs are backed by a real value in the physical world, like iOWN Token real estate NFT.

NFT is short for Non-Fungible Token. In contrast, cryptocurrencies or even fiat money fall under the fungible category. This means that a single cryptocurrency coin or token (or a fiat unit) can be changed with a duplicate, and it would not affect its value. However, NFTs are unique and hence, cannot be replaced or interchanged.

So, NFTs seem like a good way to invest in digital or physical assets, owing to blockchain technology. But what determines the price of an NFT?

For NFTs that reference physical objects, the value is directly proportional to the market value of the object. However, digital files are intangible objects and carry a speculative value. Accordingly, the value of such an NFT would be determined by how much the market values it and wishes to pay for it. However, certain factors like the creator, investment potential, and the rarity of the file also affect the value of an NFT.

If the creator or subject of a digital file is popular, their NFTs would fetch a higher price. For example, Jack Dorsey, CEO of Twitter and Square, sold his first tweet as an NFT for $2.9 million.

Similarly, musician Grimes sold a collection of digital artworks for $6 million. And artist Beeple’s ‘Everydays – The First 5000 Days’ managed to fetch $69 million. The artist is known for creating digital portraits every day. From this series, the first 5000 days of his work were compiled to create the said art.

So, can anyone create an NFT?

Indeed, anyone can create an NFT. First, you need to pick a unique digital asset that you own or create original digital artwork. Then, select a blockchain technology that supports the minting of NFTs. Even though a majority of NFTs are minted on Ethereum, other blockchains like Solana, Tezos, Flow, Binance Smart Chain, etc. also support NFT minting. Post this, you need to set up a wallet on the blockchain you have selected. Ensure your wallet has sufficient cryptocurrency to fund your initial investment. You can buy crypto with cash in a fast and secure way through IN4X Global.

After this, select a reputable NFT hosting platform that fits your needs. OpenSea, Larva Labs/CryptoPunks, Foundation, and Nifty Gateway are some of the major platforms that allow the minting and selling of NFTs. Then, connect your wallet to the platform. This will ensure that you are able to pay for the minting process and able to collect sales proceeds. Next, upload your digital file and mint it into an NFT. The process for minting differs on the basis of the chosen platform. Lastly, set up a sales process for your NFT. You may choose to sell it for a fixed price, or auction it.

Anything I should be wary of?

As in the case with anything that makes a lot of money, scammers exist in the NFT space too. Some of the most common ways that people are scammed through NFTs are:

Phishing
Bidding Scams
Investor Scams
Rug Pulls
Counterfeit NFTs

But you can stay safe from these scams if you remember to never share your private keys, and DYOR (like we always say). Additionally, you can also cross-check other NFT prices, create strong passwords, and always use due diligence.

Please note that this article is an opinion, and does not represent financial advice by IN4X Global.

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