What is a Non-Fungible Token (NFT)?

In my journey to understand cryptocurrency, I had a lot of difficulties getting my head around what an NFT actually is.?After researching different NFT auction platforms I decided to create my own NFT for a hands-on learning experience.?The vintage historical photo I selected from my personal collection seemed significant enough to be an NFT, but I had my doubts it would sell.????????????????????????????????

As half-expected, the auction deadline came and it had not sold, so to continue the learning experience, I bought my own?NFT. The total investment to set it up and buy it was under $100 dollars or approximately 0.0509 Ether (Ethereum).

Now I have a much better understanding of what an NFT is, and I want to share the fundamentals with you.??

The?Wikipedia definition of an NFT says:

“A non-fungible token is a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable. NFTs can be used to represent items such as photos, videos, audio, and other types of digital files.“?

You should still be confused. I was.

The challenge in understanding NFTs is you also need a fundamental understanding of what a blockchain is, what cryptocurrency is, how Ethereum works (or "wrapped ETH" - wETH). Another aspect that makes it confusing is that it is not like things in our everyday life that we are familiar with.?An NFT is entirely digital so there's nothing tangible you can touch or hold. What’s useful is to think of it as a digital certificate of authenticity with some visual or auditory content associated with it. One of its exciting offerings is that it provides an opportunity for visual artists and musicians to gain royalties over time and retain more control over their content.

Imagine you had a uniquely stamped baseball card, where there was only one of it in the world and it was also signed by a famous baseball player. If no one would buy it from you it would only have the value you personally gave to it. If someone else was willing to spend thousands of dollars for this card, then it would of course have that much more value.

NFTs are digital items such as text, video, audio, or a photo that you could think of as having a very unique identifying number that cannot be changed.

That NFT is connected to the Ethereum blockchain (a distributed non-changeable ledger). People who want to sell this type of digital content or put it up for auction will usually use a platform that helps connect their content to the Ethereum blockchain in a way that is like a digital contract.?I used the website OpenSea.io to set up my NFT auction because it seemed to be the most user-friendly method with the lowest extra charges.?

Another way to understand NFTs

Imagine I created an NFT of a little unique graphic I made of a hopping bird and then you bought it from me. You would literally just have a link to this graphic of the hopping bird and then you would be able to sell it to someone else.?Now you could make copies of this hopping bird, but those copies wouldn't be uniquely connected to the blockchain that I sold you.?Let’s say you knew I was a famous artist and I said that this was my own original creation and you and others believed that, also you believed your life would grow in value if you owned it or for some other reason it went up in market value, then you could sell it.?An NFT functions just like any unique piece of art --its value is based on whether or not there is somebody who would pay more for it in the marketplace. A piece of art could have significant personal meaning to you and may not have significant value in the marketplace, but you may still want to own it; this could also be true of an NFT.?

NFT of the World Wide Web source code from Tim Berners-Lee (creator of the WWW) sold for?$5.4 million.

The story: https://www.forbes.com/sites/rashishrivastava/2021/06/30/nft-of-the-world-wide-web-source-code-sells-for-54-million/?sh=3e40bc2160be ?

What do you get when you own an NFT?

A link to some content that is registered on the Ethereum blockchain and encoded, that you and only you can sell or give to someone else. That’s it in a nutshell!! The value to sell is based on someone's will to buy it and for how much.??

Why would someone spend money on an NFT?

Purchasing an NFT requires either an emotional connection to it that is high enough or the perception that as an investment, it will go up in value over time.?If Andy Warhol were alive today he would likely make a digital image of the first draft of one of his paintings and sell that as an NFT.?You would not own the first draft or even the copyrights to the first draft image, just that one NFT from Andy Warhol.?I know it still may be hard to understand, especially for those of us who did not?grow up understanding the value of digital things.????Another example is a one-of-a-kind digital rendition of the Nyan Cat meme from 2011 sold for about US $590,000 in an NFT online auction Friday, Feb 19, 2021.?The Nyan Cat story: Why an Animated Flying Cat (Nyan Cat) With a Pop-Tart Body Sold for Almost $600,000 https://www.nytimes.com/2021/02/22/business/nft-nba-top-shot-crypto.html

What are the big picture steps to buying or selling an NFT?

To Buy an NFT:

1. Set up an NFT Marketplace Account
2. Use one of their approved “Crypto wallets” and buy or add Ethereum (a cryptocurrency)?
3. Buy or bid on your NFT
4. If you win or pay what they want then you’ll have the key to it in your wallet that you “own,” which you can sell or give away?

To Create and Sell an NFT:

Before you sell an NFT, a few things to consider:

• It’s important to have a niche and/or a large following, so build an audience first! It can take years of hard work building your brand/story/value/identity to be an “overnight” success.?
• Also, it’s important to have consistency over time as an artist.?Your NFT can include music, images, photos, video etc.?
• Remember you are not trying to reach everyone but just one person who is willing to buy your NFT. You only need to reach the right audience of one, then do it again. You want someone to help that customer move from a “this is really cool” reaction to an “I must have that NOW” reaction.?
• NFTs do have a real learning curve, so you may want to start with a small project and prepare to spend about $100 to learn about the field. There is no better way to learn than by doing it!?
• Opensea.io has good leaders on board to get an idea of what is selling but that does not rule out the potential of trying something unique..?
• Twitter right now is a leading platform for NFTs and Crypto. Play well with others and support artists you admire who are involved in NFTs..?
• Decide which NFT marketplace you are going to use and find out what “crypto wallet” they accept.
• You will need a crypto wallet and about $100 in it for expenses.
• You will need to join an NFT Marketplace – You will connect to it with the “wallet.”
• Next, turn content into an NFT and upload it with text about it.?
• Choose where to offer it, at a fixed price auction, and if you want to set a royalty amount allowing you to get a royalty after it’s been sold (usually 10% to 30%).?

Big Picture Steps for How to Create an NFT for Someone to Bid on Using OpenSea.io:

1. When using OpenSea.io you will need an Ethereum Wallet that OpenSea accepts.?
2. If you use METAMAX for the wallet, buy about $100 in Etherium with a debit/credit card.?

I did not because I was just learning. I started with $55 in Ethereum paid for with a debit Visa card.?

~0.01569059 ETH - ETH Exchange Rate (3505.29 USD) -?

Transaction fee 5.00 USD Network fee 3.68 USD Purchase Total 63.68 USD.?

1. Then upload your media with keyword-rich content to increase traffic. Decide if you want it to be offered at a fixed-price auction and if you want to receive a royalty if it re-sells. I just picked an auction with no royalty to start and set a month or so for it to be listed.?
2. Pay in Ethereum to list that can be from $50 to $250 based on “gas rates.”?I was told to submit it late at night because the rates are lowest then.?It cost me about $50 to list.?
3. Then distribute and promote it! Share info on its back story, why it is of value and drive potential customers to it.?
4. If it sells (mine did not, nor did I expect it to) then your account will receive the funds minus OpenSea.io’s cost.?It will no longer be in your OpenSea.io account because now they “own” it.?

For me, on the last auction day, I did what I had planned and bought my own NFT. I set up a different account with ETH in it, placed a bid of about $50, then switched back to my original account, then created and accepted the offer. This process let me see what it was like to both bid on and “own” a bought NFT (see videos)

My video is about bidding on an NFT and what it is. My first Non-Fungible Token (NFT) Auction

My video about placing a bid on an NFT - Bidding on a Non-Fungible Token - Part 1 of 2

My video about accepting an NFT Offer - Accepting a Final Offer on a Non-Fungible Token - Part 2 of 2

Here’s my NFT that I posted for sale and then bought https://opensea.io/assets/0x495f947276749ce646f68ac8c248420045cb7b5e/111820636569831505811351389191932565322531473654508767962945811681857243185153/ myself. Scroll to the bottom to see the “trading history;” this is the account that I own and control that put it up for bid: MBrossman and this is the account I used to bid on 6B72E and the “bid” was accepted by MBrossman (me).?The following is a screen shot of the "trading history" of my NFT:

Summary:?

NFTs are relatively new and not for everyone; they’re not just easy money and like any new technology, there is risk involved.?They do have the potential for the right group, person, or artist with a good presence or a significant following, and for those who are willing to put in the time to create the following, they can be highly profitable. They do introduce the public at large to the idea of owning a unique digital asset and they open up new opportunities.?Right now NFTs have a steep learning curve for most of the small businesses I know and they aren’t possible for some others. NFTs tap into two key human experiences: the desire to gain more money (even if it starts as cryptocurrency) and the emotional desire to be connected to something that gives life more meaning.?

Please add your comments and other helpful resources in the comment area.?

We offer training for professional groups and associations about understanding this new world of Bitcoin / Blockchain / Cryptocurrency and NFTs and if you know anyone interested please pass this on: https://martinbrossmanspeaks.com/bitcoin-cryptocurrencies-blockchain-nft-for-professionals/ ?

A few other relevant resources:?

Wallet options?

• Metamask (I used Metamask for Chrome)?https://metamask.io/
• Coinbase Wallet https://wallet.coinbase.com/ ?
• Rainbow Ethereum Wallet (can buy with Apple Pay) – Need to use WalletConnect?https://rainbow.me/

NFT marketplaces?

Relatively easy but also a bit of a free-for-all????????????????????????????????????

• https://OpenSea.io (what I used)
• https://rarible.com/ ??

More complex/ restrictive:?

• NiftyGateway.com (Must apply to be an artist)
• SuperRare.co (Must apply to be an artist)

Ways to connect your wallet to the marketplace if needed

• WalletLink https://walletlink.org/#/
• WalletConnect https://walletconnect.org/

Software options for creating an NFT?

• https://www.kapwing.com/
• Adobe Illustrator / Photoshop?
• Creation Software For GIFs and Pixel Images: Adobe Photoshop (GIFs) and Piskel (animated sprites and pixel art)

Other Articles and Videos by Martin Brossman related to Bitcoin, Cryptocurrency, and Blockchain:

• Bitcoin, Energy and the Environment https://www.dhirubhai.net/pulse/bitcoin-energy-environment-what-news-telling-you-martin-brossman/
• There’s More to Bitcoin & Cryptocurrency Than You’re Seeing In the Media https://www.dhirubhai.net/pulse/theres-more-bitcoin-cryptocurrency-than-youre-seeing-media-brossman/
• Blockchain & Bitcoin is a paradigm shift in the world - with David Amerland & Martin Brossman https://youtu.be/YoNGJvI-_lI
• Transferring 20 US dollars of Bitcoin from Raleigh NC to Japan live! https://youtu.be/7991jYeOv7A
• A CPA working with clients involved in Cryptocurrency and Bitcoin https://youtu.be/mm000Qonlp8
• Keep your Cryptocurrency Mnemonic Phrase Safe https://youtu.be/HbYybEQhkC8
• About our Professional Training on Understanding Bitcoin, Cryptocurrency, Blockchain, and NFT https://youtu.be/u47tNIc8HwM

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