New York (AltsGen Business)Non-fungible tokens, or NFTs, are the latest cryptocurrency phenomenon to go mainstream. And after Christie's auction house sold the first-ever NFT artwork — a collage of images by digital artist Beeple for a whopping $69.3 million — NFTs have suddenly captured the world's attention.
So what are NFTs?
In the simplest terms, NFTs transform digital works of art and other collectibles into one-of-a-kind, verifiable assets that are easy to trade on the blockchain.
Although that may be far from simple for the uninitiated to understand, the payoff has been huge for many artists, musicians, influencers and the like, with investors spending top dollar to own NFT versions of digital images. For example, Jack Dorsey's first tweet sold for $2.9 million, a video clip of a LeBron James slam dunk sold for over $200,000 and a decade-old "Nyan Cat" GIF went for $600,000.
A CryptoKitty
But NFTs aren't exactly new. CryptoKitties, a digital trading game on the cryptocurrency platform Ethereum, was one of the original NFTs, allowing people to purchase and sell virtual cats that were both unique and stored on the blockchain.
So why is the NFT phenomenon taking off now?
"Some of that interest is from people who enjoy supporting the work of independent creators by purchasing their works," Artsy CEO Mike Steib told AltsGen Business. "Others are intrigued by the idea of taking a digital asset that anyone can copy and claiming ownership of it. The recent headline price records for NFTs seem to have been largely driven by newly minted crypto millionaires and billionaires looking to diversify their bitcoin holdings and more interest to the crypto ecosystem."
Here's what else you need to know:
What are NFTs?
Non-fungible tokens, or NFTs, are pieces of digital content linked to the blockchain, the digital database underpinning cryptocurrencies such as bitcoin and ethereum. Unlike NFTs, those assets are fungible, meaning they can be replaced or exchanged with another identical one of the same value, much like a dollar bill.
NFTs, on the other hand, are unique and not mutually interchangeable, which means no two NFTs are the same.
Think of Pokémon cards, rare coins or a limited-edition pair of Jordans: NFTs create scarcity among otherwise infinitely available assets — and there's even a certificate of authenticity to prove it. NFTs are typically used to buy and sell digital artwork and can take the form of GIFs, tweets, virtual trading cards, images of physical objects, video game skins, virtual real estate and more.
Essentially, any digital image can be purchased as an NFT. But there are a few things to consider when buying one, especially if you're a newbie. You'll need to decide what marketplace to buy from, what type of digital wallet is required to store it and what kind of cryptocurrency you'll need to complete the sale.
OpenSea's marketplace
Some of the most common NFT marketplaces include OpenSea, Mintable, Nifty Gateway and Rarible. There are also niche marketplaces for more specific types of NFTs, too, such as NBA Top Shot for basketball video highlights or Valuables for auctioning tweets such as Dorsey's currently up for bid.
But be wary of fees. Some marketplaces charge a "gas" fee, which is the energy required to complete the transaction on the blockchain. Other fees can include the costs for converting dollars into ethereum (the currency most commonly used to buy NFTs) and closing expenses.
If you're curious and want to know more about what it's like to purchase an NFT, we went ahead and bought one. (And yes, it is a cat.)
Related Article: Jack Dorsey's decision to quit Twitter is not a ballot of self-confidence in the future of social media
How to sell NFTs?
NFTs are also sold on marketplaces and the process can vary from platform to platform. You'll essentially upload your content to a marketplace then follow the instructions to turn it into an NFT. You'll be able to include specifics such as a description of the work and suggested pricing. Most NFTs are purchased using ethereum but can also be bought with other ERC-20 tokens such as WAX and Flow.
How to make an NFT?
Anyone can create an NFT. All that's needed is a digital wallet, a small purchase of ethereum and a connection to an NFT marketplace where you'll be able to upload and turn the content into an NFT or crypto art. Simple, right?
How to Market NFTs
NFT creators and collectors use marketing channels to generate interest in their NFTs and build a community of supporters.
Community members are actively engaged in buying and selling NFTs. You want to build this fanbase with marketing communications and the content of your NFTs. Establishing a community is crucial because it helps build credibility and excitement around your project, which ultimately translates into sales.
Successful NFT collectors and creators use multiple marketing channels to promote their NFTs, including:
- Community engagement
- Social media
- Websites
- Outreach to NFT influencers
- Donations of NFTs to influencers
- Adding the drop to the NFTCalendar
- Advertisements
- Content marketing (informative blogs, videos for users)
- Mailing lists
- Airdrops & giveaways
- Pre-sale sign-ups
- Pre-sale NFTs
Community engagement is one of the most important methods of building interest in your NFTs. Think about the content of your NFT – is it an abstract art piece, a sports-themed collectible, a sci-fi avatar? Talk about your NFT drop in social media spaces where your items will be most appreciated.
Discord, Twitter, and Reddit are popular with crypto supporters. You can join NFT groups on Discord and Reddit. On Twitter, you can use popular NFT hashtags to post content to the right audience.
Industry influencers are often used to promote NFT projects and sales. A few NFT marketplaces allow you to promote your NFTs on their homepage for a payment – another great way to find investors.
You could airdrop your first collection of common NFTs to 1000 people for free. This instantly creates an audience for your brand. These people could tell others about your NFTs or even buy in themselves. You could also ask influencers whether they would accept an NFT from your collection for free. Their fans will notice any new NFTs in their collection.
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