A nft is a non-fungible token, an authentic certificate underpinned by blockchain technology that represents Internet collectibles like art, music and games. Unlike virtual goods that exist on platforms like YouTube, where the platform makes all decisions related to its content — whether it violates community guidelines, runs ads or gets recommended by the algorithm, for example — nfts live in their owners’ crypto wallets, unchained from any specific platform.
For this reason, NFTs offer an opportunity for creators to control the licensing of their work in a way that’s never been possible before. For example, a 1952 Mickey Mantle rookie card cost less than five cents to make but now sells for millions of dollars due to its history and rarity. NFTs could create a similar market for digital versions of art, video games and other intellectual property.
NFTs are a relatively new phenomenon, and as with any emerging industry there are scams that can take advantage of unsuspecting collectors. To avoid falling victim to these shady practices, do your research before investing significant sums of money in NFT marketplaces. Look out for bogus minting fees and check that you’re getting proper royalty splits from the NFT you purchase.
Many NFTs are digital creations that already exist in other forms, such as iconic video clips from NBA Top Shot or securitized versions of digital art that’s already circulating on Instagram. Others are completely new, launching on NFT-specific blockchains and creating unique collections of artwork, music or video games. NFTs also have the potential to be very valuable, especially when they’re limited in supply or hold a special cultural significance. For example, a wildly popular NFT called Bored Ape Yacht Club, created by the product studio Yuga Labs, is one of the most valuable NFTs around and helped kick off the meme craze that saw users display these quirky digital creations as their avatars on Twitter and other social media.
In order to get an NFT, you’ll need to go through a process known as minting, which requires uploading the file or data associated with the NFT, funding it with a certain amount of ETH (or another cryptocurrency used by the NFT marketplace) and registering the NFT on the blockchain. Some NFTs also use smart contracts to assign ownership and transferability.
Often, the minting and transferability processes are handled by an NFT marketplace, with each marketplace having its own nuances. The most common NFT marketplaces are Etherseed, Rarible and OpenSea. There are also more specialized NFT marketplaces, such as Art Blocks, which has streamlined the creation of NFTs using generative art.
As a result, NFTs aren’t as widely traded on other crypto exchanges as traditional cryptocurrencies. Some people have begun to experiment with NFTs on other blockchains, but the majority of NFT trading happens on ETH and the Ethereum-based EOS blockchain. As a result, if you’re considering trading NFTs on a different blockchain, be sure to understand the minting and transferability processes on that platform.