TL;DR - Watch the video at the end of this article!
If you are a creator or an artist, you’ve probably already heard a whole bunch of stuff about this new NFT and Web3 trend. Although there seems to be a lot of information out there about it, when you start digging into it, you notice that most of it is scattered and unclear. It’s kinda hard to put all the pieces of this puzzle together by yourself, and really understand how this technology works. Is it good? Is it bad? Is it for me? Should I give it a try? Oh, I’ve been there, trust me!
In this article, I’m gonna show you everything you need to start your NFT journey in the best way possible. I’m calling this “a complete guide to NFTs”. An "NFT for beginners" guide that will hopefully provide all the information you need to make educated decisions in this space, while also addressing some common misconceptions. We are gonna go through:
What NFTs are and how they actually work
The most relevant blockchains for NFTs at the moment, and the differences between them
The different types of NFTs
And where to mint your creations as NFTs and put them for sale
Now let’s dive into it!
What NFTs are and how they work
For the 1st part of this article, I wanna go back to the fundamentals and give you an overview of what NFTs are, and how they really work.
At this point, you might have already heard that NFT stands for non-fungible token, but what does this mean, really? Basically, it means that an NFT is a digital representation of something non-fungible, that is, something that is unique and which can't be replaced with something else; or a representation of a unique digital item that can’t be exchanged for another one of its kind. To illustrate, an example of a non-fungible item would be a painting, since it can’t be exchanged for a copy of itself; It’s a unique item! On the other hand, a bitcoin is fungible, it can be easily exchanged by another bitcoin, holding the same characteristics and value.
Ok, but how do NFTs work? How do you create an NFT? Well, NFTs only become NFTs after their data is included in the blockchain through a process called “minting”. In most cases, what is inserted in the blockchain is not the image, or music itself. This is actually a very popular misconception. What is actually stored in the blockchain when an NFT is minted, is data, including the wallet address that minted that NFT, the address of the contract where it was minted, and a link which points to where the NFT is stored (which is usually on IPFS). Music and image files are usually too large and heavy, and it would be extremely expensive to store them on the blockchain! Keep in mind that most blockchains were not made to store images or big files. I’ve already wrote an article where I dive deeper into IPFS and its importance, so make sure to check it out! There are, however, some exceptions to this rule. An example is the Cryptopunks collection. The team behind the project was able to put both images and attributes of the collection on-chain (the Ethereum blockchain, in this case). This was only possible, because Cryptopunk images are fairly small at 24x24 pixels each.
Another very common misconception is related to the copyright of NFTs. Buying an NFT does not accredit you the copyright over that work, unless the creator states that the NFT is a CC0 piece with no copyrights reserved. In this case, the creator renounces their copyright over that piece. There are a few NFT projects with this characteristic, such as Loot and Nouns, but this is a topic for another article. So owning an NFT doesn’t mean you own the rights to it as well; its copyright is traced to the NFT creator on the blockchain.
Blockchains
Up to now, I’ve been repeating the word blockchain a lot, but haven’t yet explained what a blockchain is. Here’s the TL;DR: Blockchain is a distributed database that stores data in blocks that are linked together. As new data comes in, it is entered into a new block. Once the block is filled with data, it is chained or linked with the previous block and verified by the other computers in the network.
Now that we know what a blockchain is, let’s take a look at the most relevant ones for NFTs. These blockchains listed below were chosen because of their significant NFT trade volumes, but this doesn’t mean these are the ONLY options out there.
An interesting thing to point out is the reason why Bitcoin isn’t included in this list. Bitcoin is also a blockchain, right? Why is it not used to mint NFTs? Well, the thing is: Bitcoin, unlike Ethereum for example, was designed to be mainly a decentralized payment network, with its own currency. It wasn’t created with the intention of allowing the development of applications or smart contracts by other developers. You can think of smart contracts as computer programs that are stored on a blockchain. They run when specific, predetermined conditions are met. NFTs are powered by smart contracts, and every time you mint an NFT, you do it within a contract. Although it is possible to create NFTs that are secured by the Bitcoin blockchain, it’s not commonly done.
Ethereum
So let’s start with Ethereum. As you may have realised, Ethereum is the most popular blockchain for NFTs today, by far!
Ethereum was the first open-source platform, powered by blockchain technology, to support decentralized apps and smart contracts, with its native cryptocurrency called ETH. The programmable characteristic of Ethereum allows the creation of different digital assets, such as NFTs. On Ethereum, there are 2 standards for NFTs: ERC-721 and ERC-1155.
An ERC-721 token is unique, and can be owned by only 1 wallet address. These tokens also have their own on-chain identity and history of transactions.
An ERC-1155 token, on the other hand, can be owned by many different wallet addresses. This is a bit counter intuitive, since it goes against the non-fungibility concept, but ERC-1155 as a standard can cover both fungible and non-fungible tokens. It’s usually called “fungibility agnostic”. There are great use cases for these tokens, especially in games.
To mint an NFT on Ethereum, you’ll need to have an ETH wallet, the most common one being Metamask. You can easily download it online for free. You’ll also need to purchase some ETH, since that’s the only currency accepted to pay for the network fees (or gas fees).
The main drawback of using Ethereum to mint NFTs is its gas fees system. Basically, you need to pay these fees in $ETH, which are called gas fees, to have your transaction computed and inserted in the blockchain. It could be very expensive to mint NFTs on Ethereum, since the process demands a lot of gas, especially if the network is busy. I’ve written an article where I explain everything you need to know about gas fees on Ethereum and how they work. The link is in the description too, in case you wanna dive deeper into this subject.
One solution to this problem, that has been offered by some NFT platforms, is the “lazy minting” option, known as the “free minting on Ethereum”. It’s very important to know that, when you choose this option, your NFT is not included in the blockchain until someone buys it. You are just uploading the file to the platform’s website. So, although it’s a valid option; it doesn’t really provide the same security as paying gas fees and actually minting your NFT on the blockchain does.
If you wanna skip the high fees altogether, one option is minting your NFTs on Solana.
Solana
Solana is also a smart contracts platform, often referred to as the possible “Ethereum killer”. It provides very fast transactions at very low cost, paid in its native currency $SOL. Solana is one of the fastest growing blockchains, and has seen its NFT ecosystem grow exponentially in the last few months, attracting a vibrant community of creators and collectors.
At this moment the network can process about 3000 transactions per second. For comparison, Ethereum can process only about 15 TPS. This is why transaction fees can get very expensive when the network is overloaded. Too much competition for block space!
To mint your NFTs on Solana, you’ll need a SOL wallet and some $SOL to pay for network fees. The Phantom wallet is the most common one and you can easily download it on Phantom’s website.
Flow
Flow is one of the leading blockchains for NFTs and games. It offers fast and low cost transactions that are paid in its native currency called $FLOW.
Flow was built by Dapper Labs, the creators of the CryptoKitties and the NBA Top Shot projects. This blockchain was created to leverage mostly NFTs and games applications, so I believe it will continue to grow and be extremely relevant in the NFT space.
A very common Flow wallet is Blocto, which you can download for free on their website.
Polygon
Polygon is an Ethereum scaling platform that enables developers to build decentralized apps with low transaction fees (paid in its native currency $MATIC), but within the framework and security of the Ethereum network.
Polygon was founded in 2017 as Matic Network and it is committed to go carbon-negative in this year of 2022. Polygon can be described as a sidechain of Ethereum, which means it can settle transactions on its own chain, while still being compatible with Ethereum’s apps and technology.
Because of that, you don’t need to download a Polygon wallet to mint your NFTs. You can simply use your Metamask wallet, only changing the network setting.
Other blockchains
Besides these blockchains I just mentioned, I’d also like to highlight Tezos, which has a very vibrant community of serious artists, creators and collectors. If you are into quality visual art or music, definitely check it out.
Types of NFTs
Now let’s talk about some of the most common types of NFTs.
PFPs and Avatars
Let's start with the most popular type, which are avatars (or pfp - the profile picture) NFTs. This format is what most people outside the NFT sphere think of when they think of NFTs.
They are usually collections of unique characters with different traits, which ownership gives access to exclusive communities of fellow collectors.
Examples of this type of NFTs include: Bored Apes, CryptoPunks, Cool Cats, Doodles, and many more.
One-of-one (1/1) artworks
As the creator, you have the option to mint your work into multiple editions (which means more than one copy of that NFT), or single editions (the famous 1 of 1s). This is where the whole concept of ERC-721 vs ERC-1155, which I mentioned earlier, comes into play.
Going the 1/1 route means only one person can own the piece at a given time, giving it more value on the open market.
Generative art
Generative art is art that has been generated by a computer, usually using AI. The most famous project in this category is Art Blocks.
Photography NFTs
Photography NFTs are growing in popularity and should continue to grow as more established photographers adopt NFTs. Up to now, we’ve seen photographers like Julie Pacino, Justin Aversano, and J.N. Silva entering the NFT space.
Music NFTs
Music NFTs are tokenised versions of a piece of music. It could be a song, album, or even a music video.
The emergence and dominance of streaming platforms like Spotify receive most of the revenue generated from music, leaving musicians struggling to actually make money from their work. Selling NFTs is another option for musicians to generate new revenue streams from their music.
Gaming items
As more crypto-native games are created, more players can own in-game assets like skins, weapons, digital accessories, characters, and virtual land in the Metaverse as NFTs. Some of the most popular games include Axie Infinity, Gods Unchained, and Decentraland.
Minting NFTs
We now know the most common blockchains for NFTs and the different types of NFTs out there, but how do we start minting our own creations as NFTs? Well, there are a couple of options: you can deploy your own smart contract by yourself (if you know how to code) or use one of the available NFT platforms that offer this service; or you can use a minting platform (which is also usually an NFT marketplace) that allows you to mint on a shared contract.
Owning your own smart contract is always the best option if you are a serious creator. You can think of creating your smart contract as creating your own collections. Your contract, deployed by your address, is the proof that that content was minted by you, the creator. It’s super important as this will serve as a certificate of authenticity. I’m going to write a future article where I explain this further and go through the different services available.
Minting NFTs on marketplaces is still the most popular option today, so I’d like to briefly go over the most common ones.
OpenSea
OpenSea supports Ethereum NFTs, as well as Polygon, Solana and Klatyn. It’s super easy to navigate their website, making it a good beginner friendly option. As of the time of this article, OpenSea doesn’t offer the creation of your own smart contract though their site.
Rarible
A multichain marketplace that supports Ethereum, Flow, Tezos, Polygon and Solana NFTs. Like OpenSea, it’s open to everyone, it’s super easy to navigate their website and it’s also a great beginner friendly platform. You can easily create your own contract through rarible.com’s website by choosing the ERC-721 or ERC-1155 contract option on the "Create Collection" section.
Foundation
Which at this moment only supports Ethereum NFTs. Foundation allows you to create your own smart contract and add NFTs to it. The platform is also now open to everyone.
KnownOrigin
This is a very cool marketplace for artists and photographers. The only caveat is that you’ll need to apply to join and must go through their teams’ evaluation to be approved. It also only supports Ethereum NFTs.
After minting your NFT in one of these websites, you can put them up for sale immediately, since they are also marketplaces. I recommend looking into the different options out there and find out which works best for you as an artist and/or a collector. Doing your own research is always the best way to go before adventuring yourself in such a wild space that is the NFT land.
Final Thoughts
Before we finish this post, I’d like to point out that, although the NFT space provides a world of opportunities that could be great for you, it could also be a very hostile place. The amount of scams involving NFTs have increased A LOT in the last few months and it’s always a good idea to navigate this space cautiously and carefully. I also have a video I made a while ago explaining the most common scams and how to keep your NFTs and your crypto safe from them.
Comments