Money

Everything You Need To Know About NFTs

By Chloe Sputore
24th May 2021

a man sits on the steps in front of a graffiti wall

Heard the term NFT thrown around a lot lately, but have no clue what it means? We get it. Between Bitcoin and Dogecoin and all the other cryptocurrencies, there’s a lot to keep track of in the digital realm. 

Don’t worry though, we’ve got your back. Read on to find out why you should care about NFTs and how to get involved.

What Does NFT Mean?

NFT stands for Non-Fungible Token. And we’re betting that’s cleared absolutely nothing up for you.  

“Non-Fungible” basically means unique. It’s irreplaceable or one-of-a-kind, and that’s what gives NFTs their value. Well, that and all the hype surrounding them at the moment. You could have something that’s non-fungible with zero value if nobody cares, but if loads of people get behind something then its value goes up. 

The “Token” part of NFT represents the piece of Blockchain linked to the digital work. Blockchain is the server that records digital transactions. Similar to how your bank might talk to your mates bank when you transfer them money for last night’s dinner, except Blockchain exists in the public sphere and uses loads of servers to record all of the cryptocurrency transactions. Yes, that includes things like Bitcoin and Dogecoin (if you can be bothered getting your head around them).

So What Actually Are NFTs?

NFTs can be anything that’s digital, but the ones that hold the greatest value at the moment are generally related to art. Yes, there have been Tweets that have sold, along with clips of slam dunks from the NBA, but for the most part right now, it’s all about digital art. And some of it’s even selling for more than “real world” art. 

Beeple, also known as Mike Winkelmann, is the digital artist behind the highest selling NFT of all time. His piece Everydays - The First 5000 Days was sold by famed New York auction house Christie’s for US$69 million earlier this year, making it the fourth-most expensive artwork in the world, and Winkelmann one very happy man.

Historically, digital art has been hard to monetize, thanks to it being freely available online, easy to copy and impossible to distinguish between copies and the “original”. Or at least it was, until NFTs came on the scene. Those unique, non-fungible ‘tokens’ get tied to digital art, identifying it as the true, original, artist-endorsed masterpiece going up for sale. 

“Can’t I just go and look at this digital art anytime I want for free?” You say. Well, yes, you could. But that doesn’t mean you own it, even if you’ve downloaded it to your computer. You can’t hold onto it and then resell it in a few years for squillions of dollars like the owners of NFTs can. 

Another reason digital artists are loving this tech is the fact they retain copyright of their work and can allot a commission percentage for every token they mint (we’ll get to minting in a minute). So when their works are resold down the line, the original artist continues to get a cut of the sale price. 

So How Do I Get Involved?

If you weren’t already interested in this digital revolution sweeping the interwebs, you probably are now knowing you could potentially become a millionaire one day. You’re going to have to stick with us for this part because we’re about to introduce you to a whole bunch of terms that you’re probably unfamiliar with.

How To Make An NFT

Ethereum is the blockchain platform that most NFTs are a part of, so to get started selling your NFTs you need to set up a digital Ethereum wallet. Yes, sadly it does cost money to make money here, kids. There are a bunch of apps out there that let you buy Ethereum, CoinSpot is recommended in Australia for beginners. 

Once you’ve transferred some of your regular dollars into Ethereum then you are ready to hit one of the many NFT marketplaces like Rarible, SuperRare or Nifty Gateway. Before doing anything you’ll have to connect your wallet to your chosen marketplace so you can buy and sell NFTs until your heart’s content (or you run out of money in your actual wallet). 

From here you can “mint” your own NFT. Minting is the process which gets your NFT onto the blockchain. It would be too much for the servers to handle to actually house the artworks that make up NFTs on the blockchain, so instead, tokens are created to sit on the public ledger which will record who owns what, along with all the other exchanges that happen in the crypto world. 

You can decide to mint your NFT as a single or multiple—similar to how a painter might choose to release a one off or 20 prints in a collection. Then you can choose a set sale price or a starting price (similar to what you can do on Ebay) and decide how many royalties you want to receive from future sales of the NFT.

Now it’s time to “gas” your NFT. Which basically means pay for it to exist on the Ethereum blockchain. And you’re away!

How To Buy An NFT

To buy an NFT you can skip the minting and the gassing and just head straight to a marketplace with your Ethereum wallet and buy or bid for your favourite collectible. If you’re hoping to make bank further down the line it pays here to do some research on the artist to see if your NFT is likely to increase in value over time. Nothing is guaranteed though, so you’ve got to have your wits about you.  

What About The Impact On The Environment?

Taking place entirely in the online space, you’d think that this would be one area of your life you wouldn’t have to worry about when it comes to the environment. Sadly, that’s not the case. 

It’s being reported that the servers that hold all the information on cryptocurrency all over the world could have drastic effects on global warming due to the amount of energy they need to run. Some of them use as much energy as entire countries, so this isn’t something to get into lightly if you have an eco-conscience. 

Thankfully some digital artists (Beeple included) are doing their part to help reverse the problem by offsetting the emissions of their works existing on the Blockchain. It’s an ongoing problem that no-one has a solution to just yet, fingers crossed someone comes up with something soon.

Now that you’ve got your head around NFTs, here’s everything you need to know about cryptocurrency

Image Credit: Brian Lundquist/Unsplash 

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