What are NFTs and How do they Work? Everything you need to Know about Non-Fungible Tokens.
If you are still wondering what NFTs are, you probably haven’t seen Beeple’s famous project “Everydays”, Everydays: the First 5000 Days. Beeple-crap is Mike Winkelmann. He sold his work as NFTs (most expensive NFT in 2022) for $69 Million. Other examples of NFT bestsellers include the CryptoPunks, Bored Ape Yacht Club, and DogePound.
True Story: Beeple is actually the reason I switched to Wix as my website builder and hosting platform back in 2019 from WordPress.
Gift: Free Standard Chartered Bank Debit card for your online payments.
Tip: You can also use MTN Mobile money to buy cryptocurrencies (bitcoin).
By the way, you can use Wix to create NFT collection website. Of course, having a crypto wallet address is one of the first steps of launching your NFT collection, but if you want to make your NFT project bigger, you will need to grow a community using a Discord server, or Twitter profile in addition to your website displaying your NFT collection.
But let’s not get ahead of ourselves yet. What is NFT to start with?
What are NFTs? What does NFT stand for?
First of all, NFT stands for Non-fungible Token. Non-fungible in this case means non-exchangeable. For example, If you wanted to exchange your $100 big note, you would get maybe two $50 notes or five $20 notes. With NFTs, you cannot exchange one for another.
What makes the NFTs non-exchangeable and irreplaceable is the Token part of the NFT. The token part represents a unique identification number or non-interchangeable unit of data stored on a blockchain (more on that later). This unique ID prooves ownership of a specific token or NFT.
Does it seem like that’s a whole lot of technical terms?
Okay. Let me explain.
Non-Fungible Tokens Explained. How does an NFT work?
Basically, NFTs provide a way to verify ownership of a physical or digital asset. NFTs, go way beyond Beeple’s Digital Artwork, gift cards, and collectibles. It is important to note that they are built with the same technology as cryptocurrencies. Which means they operate online on the Blockchain. This also means that they have endless possibilities.
What are some NFT examples?
NFTs can be sports cards like GaryVee (VeeFriends) used to sell before he became rich and wealthy, Video clips like the NBA Top Shots highlighting outstanding moments from the Basketball league games, Photo frames like TimePieces NFT collection, Songs/Audio clips like Snoop Dogg’s Death Row Records all digital NFT album B.O.D.R. or even a simple tweet like Twitter C.E.O Jack Dorsey tweeted a link to a tokenized version of the first tweet ever written where he wrote: “just setting up my twttr.” It sold for $2.9 Million worth of ETH.
Tip: ETH is short for the Ethereum cryptocurrency which is used to purchase NFTs. Ethereum is also the blockchain on which these NFTs are created, sold, and traded.
In February 2022, after the Super Bowl halftime performance, Snoop Dogg announced he would be converting his record label, Death Row Records into the first NFT record label.
NFTs can even be virtual physical assets in the Metaverse. The Metaverse is an imaginary or virtual world. Recently, The Sandbox, one of the most popular blockchain-based metaverse game experiences, launched 10,000 Snoop Dogg avatar NFTs. They are all sold out by now. This means you can use NFTs in games, virtual worlds/metaverse.
How do I buy NFTs?
Okay. What are NFTs used for?
What Are NFTs Used For?
Blockchain technology and NFTs give artists and content creators a unique opportunity to monetize their efforts. For example, artists no longer have to rely on galleries or auction houses to sell their art. Instead, the artist can sell it directly to the consumer as an NFT, which also lets them keep more of the profits. In addition, artists can program or set up in royalties so they’ll receive a percentage of sales whenever their (NFT) art is sold to a new owner.
And that, if you agree with me, is an attractive and very generous feature as artists generally could not receive future proceeds after their art was first sold.
Art isn’t the only way to make money with NFTs. Brands like Charmin and Taco Bell have auctioned off themed NFT art to raise funds for charity. Charmin dubbed its offering “NFTP” (non-fungible toilet paper), and Taco Bell’s NFT art sold out in minutes, with the highest bids coming in at 1.5 wrapped ether (WETH) — equal to €3290.05 at time of writing.
Nyan Cat, a 2011-era GIF of a cat with a pop-tart body, sold for nearly €530107.20 in February 2021. And NBA Top Shot generated more than €441.76 million in sales in late March 2021. A single LeBron James highlight NFT fetched more than €176702.40.
Celebrities like Snoop Dogg with his NFT collection (The Doggies — 10K Unique Metaverse Avatars) and Lindsay Lohan have helped make the NFTs even more famous and more valuable than anyone thought possible.
What is Blockchain Technology and How does it Work?
The Blockchain is like a database or an electronic public ledger on which crypto transactions are recorded. For example, whenever we make transactions in the bank, Financial institutions have a way of keeping all these transaction records in something called the ledger. The Blockchain is the ledger in the cryptocurrency world. It keeps each transaction in one block after the other, creating a chain of blocks hence the ‘Blockchain’.
The difference with the blockchain is that this data cannot be changed once the block is entered and (it is open source) everyone with a crypto wallet address is free to participate in the Blockchain and they can see these records/transactions as they take place.
The first Blockchain was created with the birth of Bitcoin back in 2009. It is the same technology used by Etherium to run Smart Contracts, Decentralized App (DApps), Defi (Decentralized Finance), and NFTs (Non-fungible tokens).
The blockchain is decentralized which means it is not run by the government or any bank. It is run by people all over the world over the internet with the computing power necessary to handle all these daily transactions taking place across the globe.
The Blockchain is a way to secure transactions since you cannot manipulate or hack it. This technology can also be used to verify land ownership as it’s already been put to use in Africa for the same purpose.
How to Invest in the Blockchain Technology?
The other way is to buy or sell NFTs. Which we are going to look at today.
What is Ethereum?
Ethereum is the cryptocurrency and blockchain technology that supports NFTs. In the Ethereum world or system, tokens represent a digital asset. Ethereum was introduced in 2015 and has been a driving force for smart contracts among the various features and use cases. Ethereum is a cryptocurrency (ETH) as well as a blockchain system.
Besides Ethereum (ETH), there are other cryptocurrencies that use smart contracts like Solana (SOL), Polkadot (DOT), the list goes on.
What is Minting? How is Minting different from Crypto Mining and Smart Contracts?
Minting is the process of creating or registering your NFT collection on the Ethereum blockchain, Flow, or Tezos. Once your NFT is minted, you receive the digital ownership and you can either keep it in your collection, sell it or trade it.
Cryptocurrency Mining, however, is the process of making or creating digital currencies like Bitcoin or Dogecoin as a reward for contributing to the network (Blockchain) to aid transactions.
For me, crypto mining is simply the unofficial license to print money.
When you have computers or graphic cards powerful enough to participate in cryptocurrency mining, you receive part of the transaction fees as electricity fees for proof-of-work (PoW). Proof-of-work verifies that your computer is the one that solved the equation allowing the transaction success on the blockchain. That’s how crypto mining companies like NiceHash, HashShiny.io, and Genesis mining make huge sums of cryptocurrency money.
Alright. Now you should know what NFTs are and how they work from the NFT examples I shared with you at the beginning of this article.
Remember Beeple and SnoopDogg’s “The Doggies”?
Also, you should have a very clear idea of how to buy, sell or trade NFTs. If not, Next up, let me show you some examples of NFT homes (Marketplaces).
What is NFT Marketplace?
Ethereum, Flow, and Tezos are open source platforms and besides helping develop and deploy smart-contracts, they also address barriers facing blockchain adoption. Ethereum is the most common when it comes to NFTs.
Best NFT Marketplaces
Let’s dive deep into examples of NFT marketplaces you can use to sell your crypto art and funny gifs.
OpenSea is the world’s first and largest digital marketplace for non-fungible tokens (NFTs), crypto-collectibles, sports, music, photography, domain names, and even virtual worlds. You can use NFT marketplaces like OpenSea to buy, sell, and discover exclusive and extraordinary digital items. If you want to get the latest NFT drops, you will need to subscribe to their newsletter.
Rarible is a Multi-chain NFT marketplace with Ethereum, Flow and Tezos integrated. It is a place to trade digital art, music and video NFTs, domain names, metaverse (virtual worlds) land, collectibles among other digital assets. You will find on this platform, a variety of creators and brands, including Twitter, Lindsay Lohan, Floyd Mayweather Jr, LIRONA, Pak, The Watcher, Aavegotchi, and more. Rarible also allows you to create timed auctions, royalties, among other features.
Nifty Gateway is a premier marketplace to buy, sell, and store your digital art. It is owned by Gemini. One of their goals is to see at least a billion people collecting NFTs. They team up with top artists and brands to create very exclusive and limited edition collections available on NiftyGateway platform.
One of the things making NiftyGateway unique is the no-gas fees and being able to retrieve your NFT account from their secured wallet, powered by Gemini’s state-of-the-art custody technology.
You can also use NiftyGateway’s curated and verified drops to avoid scams.
SuperRare is the digital art market on Ethereum. Each artwork is authentically created by an artist in the network, and tokenized as a collectible digital asset. SuperRare is a marketplace to collect and trade unique, single-edition digital artworks.
Foundation is a platform that aims to build a new creative economy — a world where creators can use the Ethereum blockchain to value their work in entirely new ways, and build stronger connections with their supporters.
Foundation kind of combines Rarible, OpenSea, and SuperRare. It is a curation platform that fosters a network of mutual support between creators and collectors. All you need to do is connect your wallet to get started collecting NFTs.
How to Buy NFTs in 4 Simple Steps.
Step 1: Start by activating a CryptoWallet address. You can either use Coinbase or MetaMask.
Step 2: Fund your account. Buy some cryptocurrency, you will need some ETH for purchasing your NFT. There is something called Gas Fees which is simply the amount charged per transaction on the Ethereum Blockchain to deploy your NFT for sale on the marketplace.
If you remember, earlier, we talked about how the Blockchain is managed by high-power machines connected from all over the world via the internet. Well, that requires a lot of electricity as well, and that’s where the Gas Fees come in. It is important to note that some NFT marketplaces dont ask for a gas fee.
Tip: Always try to mint when the gas fees are low.
Step 3: Go to your favorite NFT Marketplace and start browsing for your NFT.
Step 4: Create/Connect your Wallet address to the NFT marketplace and purchase your preferred NFT collection.
Once you purchase an NFT, it will be added to your collection and your proof of ownership can now be verified on the blockchain. By the way, Twitter has a special way of representing an NFT profile (hexagon-shaped profile). If you own a crypto wallet and NFT, all you need to do is connect your Coinbase Wallet, Ledger Live, MetaMask, Trust Wallet, or any other NFT supported wallet of your choice to get verified.
How to Create an NFT
So, to create NFTs, you can either use your creative skills to draw them one by one and save as a JPEG, PNG, GIF, video or use programming to generate random computer-generated graphics. After that, simply follow the rest of the process. Creating the wallet address, connect it to the NFT marketplace, and begin participating in the NFT and Metaverse.
Again, you can learn programming from Codecademy, LinkedIn Learning, or PluralSight, Udacity, Udemy among other online learning platforms.
How to Sell NFTs in 3 Very Simple and Easy to Follow Steps.
To sell your NFT, you simply need a well thought and well-designed NFT or full collection, your crypto wallet address, and some ETH.
Step 1: Have your NFT Collection, JPEG, PNG, Audio, Video clip, or whatever you have planned to sell as your NFT ready to go. You may also consider building an NFT website where you can showcase your collection and provide more information about your NFT.
Step 2: Visit your preferred NFT marketplace and connect your crypto wallet address.
Step 3: Create or upload your NFT Collection, (JPEG, PNG, Audio, Video clip, or whatever you have planned to sell as your NFT. Each platform may have different pages throughout the application but they are very similar.
How can I get Cryptocurrency in Uganda using Mobile Money?
If you are just learning cryptocurrency in Uganda or other African countries like Nigeria, Tanzania, Ghana, Kenya, Malawi, or wherever you might be, you are probably wondering, Is it possible to purchase bitcoin or crypto using your Mobile money.
Yes, it is. Depending on your country, there are some companies and/or apps you can even access through the PlayStore that can help you buy bitcoin and other cryptocurrency using Mobile Money or even trade it.
For example, Paxful, Binance, Coinbase, the Yellowcard, among other apps allow you to buy and sell bitcoin, Ethereum & Tether with Mobile money in Uganda and around Africa. The same apps you can use to withdraw bitcoin to Mobile money in Uganda.
If you ever wanted to get into the crypto world but thought it complicated, I think NFTs make it real simple and easy to understand and participate in blockchain technology while making money online in cryptocurrencies.
Artists/Musicians like Jay-Z, Eminem, and Grimes made the NFTs very popular by purchasing some crypto punks and even selling their own music as NFTs. Snoop Dogg turned Death Row Records into NFT record label.
NFTs set up a very huge opportunity for local artists all around the world to be able to sell their work at the same time helping the rest of the world track and verify property/asset ownership using tokens on the Ethereum blockchain. Even if your work is duplicated, the world can still be able to know the Original owner of your masterpiece.
Again, as we discussed at the beginning of this article, NFTs are not all about Art but they have proved to perform best in that direction.
I hope this helps you learn something about and get started in the cryptocurrency world especially the Ethereum smart contracts and NFTs in particular (crypto art, Metaverse, collectibles and more).
Drop your NFT collection. Let’s support each other. Also, leave your questions in the comments and share the article to help more people learn about cryptocurrency and the underlying technology of the blockchain.