NFT is a topic making rounds in the digital world. With millions of dollars being used to purchase arts daily, the question, “what is NFT?”, is raised. How does NFT work? Is it a cryptocurrency? Where can you get one? How much can you buy one? In this article, I will be providing answers to these questions and other questions NFT-related questions. You will get to know everything about NFTs.
So, let’s dive right into it.
What Is NFT?
An NFT (Non-fungible token) is a digital asset that is built with blockchain technology to make each of them unique, secure, original, and unable to be replicated.
Its unique and non-fungible nature makes it unreplaceable, and non-interchangeable.
These tokens have unique data saved on them, which makes the validation and verification of ownership easy. This data also helps ease the process of transferring NFT ownership.
One of the renowned examples of NFT is the digital artwork that was sold by Beeple for a whopping $69 million.
But contrary to what most people believe, NFT is not only used for digital artwork. It could be music, a domain name, real estate, a photograph, an essay, or a game.
It could even be a good tweet. Funny, right? The CEO of Twitter, Jack Dorsey recently sold one of his tweets for close to $3 million.
It could also be a video reel, like the cosmic dunk by Lebron James is currently being sold at $208,000.
Features Of NFT
- They are unique.
- They cannot be duplicated.
- They are secure.
- They are scarce.
- They are transparent.
Is NFT A Cryptocurrency?
No, it isn’t. However, it is built with the same blockchain technology that was used to build cryptocurrencies.
A major feature that differentiates them is the Non-Fungible nature of NFTs which makes it impossible to trade them, unlike cryptocurrency.
However, NFTs can also be built under a blockchain network of a particular cryptocurrency such as Ethereum, and traded using that particular cryptocurrency as a native token.
Where Can I Buy and Sell NFT?
The safest and most common place to buy and sell your NFT is an NFT marketplace. There are several marketplaces you can make use of, they include:
The OpenSea marketplace is without a doubt the largest NFT marketplace in existence.
Apart from being the world’s first NFT marketplace, it also has a mining tool that aids creators to make their own items and collections.
This platform gives you access to countless digital assets of all kinds and more than 100 payment options.
It also includes ERC-721 and ERC – 1155 tokens and makes the development of smart contracts stress-free for creators.
OpenSea Marketplace is also currently rated as the most secure NFT marketplace in the world.
This marketplace charges a commission of 2.5% on all transactions carried out and gives you a royalty of up to 10%.
There is a gas fee that also has to be paid but it is based on the demand and supply of the token.
Signing up on this platform is free.
It is a fun-filled marketplace that allows the transactions of digital estate and has a lineup of virtual parties, casino nights, etc. Decentraland is very secure and allows the use of Ethereum for transactions.
This marketplace charges a commission of 2.5% on all transactions.
Rarible is another great marketplace that you can use to sell or buy your NFT.
The interface of the Rarible marketplace is user-friendly and can be easily navigated even by people who know nothing about NFT and those visiting the site for the first time.
It is a marketplace that makes all kind of assets available for trading and allows sellers to make more than one artwork NFT and sell it multiple times.
Rarible charges the same commission of 2.5% on each transaction just like OpenSea and gives you a royalty of up to 5 – 10%.
Its gas fee is also based on the demand and supply of the token.
The Foundation Marketplace is renowned for the sale of the infamous Aplex Twin and Nyan Cat NFT on its platform.
This invite-only marketplace also uses Ethereum and charges a 5% commission on every transaction.
SuperRare is another marketplace with a user-friendly easy-to-navigate interface.
It also allows the use of Ethereum for transacting NFTs and also recently created its own token called “SuperRare” on the Ethereum blockchain. SuperRare charges a 2.5% commission on every transaction and gives you a royalty of 10% with a 15% commission charged on your first sale.
Mintable is another great marketplace that makes diverse NFTs including music and photographs available for purchase and sale.
The Mintable marketplace which is supported by Billionaire Shark Mark Cuban uses Ethereum for its transactions.
Different commissions are charged on this platform based on what is being traded:
Everyday Items — 2.5%
Gasless Items — 5%
Printable Series — 10%
Note that before trading on an NFT marketplace, you need to:
- First of all find out which particular cryptocurrencies are allowed on the marketplace.
- Get a cryptocurrency wallet that supports the transactions of that particular cryptocurrency that the NFT you want to buy or sell is based on.
- Open a user account with the marketplace of your choice before buying or selling NFTs.
How Much Can I Buy an NFT?
There is no specific amount that you can use to purchase an NFT. The cost of an NFT is determined by the price tag placed on it by the artist or the reseller, and the gas fees involved — as the transactions are oftentimes done using Ethereum.
How Much Can I Sell My NFT?
There are no specific price at which you can see your NFT. You can sell your NFT for tens or even millions of dollars.
However, the price at which you can sell your NFT depends on different factors.
Here are some of them:
Buyers always want to be sure that the cryptocurrency with which the token is underlaid is secured.
Now, NFTs underlaid with Ethereum are most priced as it is presently considered the safest blockchain platform.
The saying that “the increased scarcity of an item equals its increase in value” is one that perfectly applies to the price of NFTs. Making your NFTs rare and uncommon in the marketplaces will increase their value.
Making your NFTs rare will lead to their high demand, and their high demand means that they will likely increase in value over time.
However, this doesn’t mean that all NFTs will increase in value over time — only those that prove themselves to be authentic and those that also have strong demand among buyers and resellers alike.
The identity and track record of the person who is selling an NFT can play a huge role in the value placed on it. More value is placed on tokens owned by renowned creators, as compared to others.
NFTs created before 2020 are considered new and tend to have a higher value than the ones created before then.
The unstable movement in the value of a cryptocurrency which is primary to an NFT token could also influence its price.
For now, Ethereum is the top blockchain used in the NFT market. So, if for example, Ethereum’s price goes up, the price for all Ethereum-based NFTs will probably also go up.
Features and Recognition:
Features and recognition are other factors that play a key role in the price of tokens.
NFTs that feature or recognize celebrities tend to have more value than ones that have less-popular individuals featured on them or ones that don’t have any Features or recognition.
Is It Hard To Sell An NFT Art?
Yes, it is hard to sell an NFT art. But not to worry, there are certain things that can make it easier for you. Let’s take a look at them:
Building An Audience or A Community:
Building and maintaining a community or an audience isn’t a walk in the park but it is a great way of showcasing and hopefully selling your NFT.
However, while building your audience or community, make sure it contains your target audience as it will also further increase your tendency of making sales.
Furthermore, while building a community or an audience, make sure your art is not plagiarized, as this could lead to loss of trust and lower patronage.
Giving them proper utilities and discounts can also play a big role in gaining their trust.
If you can’t build your audience or community, attending physical NFT events and joining already-built communities on social media platforms such as Twitter can also play a key role in helping you make sales.
Using A Marketplace Or Website You Can Use To Sell Your Nft:
An NFT Marketplace is a great way of connecting with potential buyers, as they frequently browse through the marketplace searching for arts or tokens to purchase. This gives your token a good chance of being selected by one of the buyers.
Using your website to sell your NFT is another great way as it also allows you to get a wide reach and also keep a higher percentage for each sale as opposed to using an NFT marketplace.
Though selling NFT on your website guarantees you a larger percentage of the sales, experts have warned that sticking to using a traditional NFT marketplace for business is better and more secure.
Can You Lose Money In NFT?
Yes, you can lose money in NFT.
However, if you must avoid losing money in NFT, here are a few things you must know:
- You must first of all gain adequate knowledge of what NFT is and how it works before purchasing one. You must also gain knowledge of how its market works.
- You must endeavour to do enough research on an NFT before purchasing it. This because buying an NFT that won’t appreciate in value but rather depreciate can make you lose money in the long run.
- You could also lose money in NFT if its underlying cryptocurrency drops in value or its underlying creator or company lose its popularity.
- In addition, you could lose money if the general NFT market experiences a dip in financial flow.
- Another way of losing money in NFT is to purchase an NFT that does not have a digital asset attached to it.
- Buying NFTs without utility is one of the ways in which you could lose money because it could later become difficult to sell or would later be sold at a lesser rate.
- You should also be wary of the artists or creators you purchase NFTs from, as some of them are scammers who will dupe you of your money.
- Also, if you want to invest in NFT, you should invest the amount of money you do not mind losing.