5. NFT (Non-fungible tokens)_ ERC721 vs. ERC20 and what is minting?
Non-fungible tokens (NFTs) and fungible tokens
- Non-fungible tokens are unique tokens, such as an individual’s mobile phone number, but they share the same properties and value, like two $1 bills.
- Non-fungible tokens cannot be divided into smaller units, while fungible tokens can be divided into smaller units.
NFT is digital assets like digital photos, videos, or digital paintings. Unlike cryptocurrencies such as Bitcoin, an NFT is a non-fungible and unique token, each having a different value.
Features of NFTs:
1. Non-fungible nature: These tokens cannot be exchanged on a one-to-one basis with another token and are considered unique tokens in their own right.
2. Scarcity: NFT developers have the ability to produce them in large quantities, but their preference lies in creating a limited, rare, and unique supply of NFTs.
3. Indivisibility: NFTs cannot be divided into smaller parts and, unlike cryptocurrencies, they lack the divisibility feature. NFTs always remain intact and indivisible.
4. Uniqueness: NFTs contain recorded and unchangeable information, and this information serves as the certificate of authenticity for the NFT
Benefits of NFTs:
1. Transferability: NFTs can be bought and sold on specialized marketplaces. The price of an NFT is determined by its uniqueness.
2. Authenticity: As you know, there is no possibility of forgery in the blockchain space. Non-fungible tokens also operate within this framework.
3. Ownership: Once registered on the blockchain, the information associated with NFTs becomes immutable and cannot be altered or removed. Since NFT data is recorded on the blockchain, the original ownership rights of the artwork or asset are preserved and cannot be changed under any circumstances.
Applications of NFTs:
- Digital artworks (SuperRare, KnownOrigin, Async Art, Rarible, OpenSea)
- Digital music (Mintbase, InfiNFT, Airnft, and Audius)
- Virtual real estate (Cryptovoxels, Decentraland, and Sandbox)
- Virtual reality wearables (VR)
- Gaming and computer games (Axie Infinity, Sorare, Gods Unchained)
- Event tickets or admission licenses (get protocol)
- Proof of attendance or participation tokens (POAP and Galaxy)
- Blockchain domain names (Ethereum Name Service, Unstoppable Domains, and TNS)
- Tokenized luxury goods
- Tokenized insurance policies
- Financial NFTs
Steps to buy NFTs:
_Create an NFT wallet or a wallet that supports NFT storage.
_ Deposit the cryptocurrency required to purchase NFTs and the transaction fee into the wallet.
_ Click on the desired NFT. You will now be presented with two options: “Buy Now” or “Make an offer.”
_ If you choose “Buy Now,” you can purchase the token by paying the specified amount.
_ If you choose “Make an offer,” you need to state your proposed amount and wait for the auction to end.
_ Wait for transaction confirmation and receive the NFT in your wallet.
Difference between ERC-20 and ERC-721 tokens:
ERC-20 tokens are all identical and have no difference in value. For example, two ERC-20 tokens are equivalent in terms of their value. but there are differences between ERC-721 tokens, and their values are distinct from one another. Each ERC-721 token is unique and different from other ERC-721 tokens. With the help of this standard, you can create NFT tokens.
Minting is the process of converting a digital artwork into a digital asset on the blockchain network. Just as coins need to be minted for production, NFTs need to be minted for creation and placement on the blockchain network.
(Gas fee: paid to miners to verify and validate the NFT minting transaction. If the Gas Price is set too low, there is a possibility that your transaction may never be checked by miners.) Gas fees vary at different times based on market demand. Therefore, it is recommended to compare gas fees before minting. Some platforms offer free minting and the cost is borne by the buyer.
Steps to mint an NFT:
1. Prepare the NFT file or artwork: In the first step, you need to choose or create an artwork.
2. Purchase Ether (ETH): Now it’s time to buy some Ether. You can create NFTs on various blockchain platforms, but for simplicity, let’s assume you’ll use Ethereum. Ether is the most popular digital currency, and prominent NFT marketplaces support it. Minting an NFT may incur costs, so you’ll need an Ethereum wallet with some Ether (the Ethereum-based digital currency) in it. One of the simplest wallets is called “Metamask.” The price for minting an NFT can vary significantly. Make sure you have at least $100 worth of ether, but keep in mind that the minting process may incur additional costs based on the minting time.
3. Create a digital wallet: To create an account in the NFT marketplace for minting NFTs, you need an encrypted wallet. We’ll choose Metamask, as mentioned before since it’s one of the most widely used and accessible wallets. When you create your wallet account, you’ll be given a 12-word phrase, which is your unique password. Keep it safe, and don’t share it with anyone. The seed phrase acts as your security code (it’s useful in case you forget your password).
4. Transfer Ether to your wallet: If someone wants to deposit Ether into your account or if you want to transfer Ether from another wallet to Metamask, follow these steps:
— Open the Metamask application.
— Select “add funds.”
— A QR code will appear, which you can scan to immediately send ETH or an ERC20/721 token. Copy your account address by clicking on the account name.
— Paste your address in the “recipient” section of the application, from where you’ll send your ETH or tokens.
5. Choose a suitable platform and mint your NFT: Now that you have everything prepared, you need to select a platform where you can create your NFT virtually and then lose it. One of the recommended platforms is seed.photo.
Conclusion :
In this article, we have grasped the concept of NFT and understood that it is essentially a non-exchangeable token that can be used for buying and selling artwork. However, before an artwork can be introduced into the blockchain network like minting a coin, it needs to be minted as an NFT. The process of minting an NFT has been explained above.
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