NFTs have taken over the digital world of art and collectibles, likewise storming the game world too. NFTs have created an opportunity for digital artists to sell to a large crypto audience and also created room for investment for celebrities who have seized the opportunity to connect with fans. NFT was first created in October 2015, Etherian was launched and demonstrated in London three months after the launch of the Ethereum blockchain.
What exactly are NFTs? How to make NFTs, how it works, and also the controversy around NFTs will be covered in this article.
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Table of Contents
What are NFTs?
NFTs also known as non-fungible tokens are cryptographic assets on the blockchain with unique identification codes and metadata that distinguish them from each other. It is unique because it is non-interchangeable, unlike cryptocurrencies that are fungible where the value of one bitcoin is equal to the value of the same amount of bitcoin. They can be used to represent real-world items like artworks.
In early March 2021, it was recorded that digital artist Beeple sold the most expensive pieces of digital art which were worth over $69 million. It comprises the artist’s first 5,000 days of work.
Buying an NFT simply means you are buying a digital file and proof that you own the original copy, anything that the digital file can be easily reproduced and can be stored as NFT to identify the original copy including photography, art, music, tweets, memes, etc.
How does NFT work?
NFT was first launched on the Ethereum blockchain before other blockchains like FLOW and Bitcoin Cash started supporting it. The original file comes in different forms like GIF, MP3, and JPG among others. NFT can be bought and sold, just like any other art the price is largely determined by the market demand.
NFTs are different from ERC-20 tokens such as DIA and LINK, which make each token completely unique and indivisible. The unique identity and ownership of NFTs are verifiable through the blockchain ledger. It is liable to only one owner at a time, ownership is managed through a unique id and metadata that no other token can replicate.
Some NFTs have replicated versions of the original, there are parts of the blockchain that are totally valid, but will not have the same values as the original.
The NFT Market
NFTs can be bought on different platforms, there are certain things you need to consider before you buy NFTs. You need to know which marketplace to buy from what type of digital wallet is required to store it and what kind of cryptocurrency you’ll need to complete the sale. Due to the high demand for NFTs, they are released as drops, buyers are expected to register have their wallets to be topped up, and get ready to spend.
Popular sites to purchase NFTs are as follows:
NFTs can also be purchased in video games this includes avatars, unique weapons, and skin among others.
NFTs are sold on marketplaces and it varies based on the platform, the seller uploads the content to a marketplace then follows the instructions to turn it into NFT, a description of the work, and also suggests the price. NFTs are mostly bought using Ethereum and also with other ERC-20 tokens such as WAX and Flow.
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Uses of NFTs
NFTs have created an opportunity for content creators by baking ownership into the content created. It gives room for a content creator to get paid directly without intermediaries and also creates possible chances for original creators to receive royalties.
Rainbow cat, is a popular art NFT that sold for $690,000. It creates a medium for artists to sell their art for a huge amount of money just like the Beeple which was also the third-highest price ever paid for a work by a living artist.
Nowadays NFTs can be purchased in video games but anyone being purchased is still owned by the game company, it is meant to be used by the gamers temporarily within the game but still, create the medium for gamers to sell within the game to other gamers. Moreover, whole games have now been made based entirely on NFTs.
Brands are now using NFTs as a source of revenue streams, Taco Bell released 25 taco-themed GIFs and images that sold out in 30 minutes. Taco Cards are now selling for up to $3,500 on the secondary market.
NFTs have grown so much in popularity in the sports world, NBA Top Shot is sold as NFTs collectibles in the form of trading cards embedded with iconic basketball moments. NBA has a plan to increase its revenue stream by adding virtual jewelry, accessories, and clothing.
One of the most popular NFTs that got sold is the first tweet of the co-founder of Twitter Jack Dorsey for $2.9 million. Musicians are also selling the right and originals of their work, as well as short clips of their music videos. Digital real estate is now sold as NFTs.
Why are NFTs controversial?
People have been criticizing NFTs due to their impact on climate, the creation of NFTs uses an extreme amount of energy. The study done by Wired reported that NFT uses as much energy in 10 seconds as a house uses in a whole year.
The University of Cambridge concluded that the energy Bitcoin uses is more than the energy used in the Netherlands, this shows that blockchain technology also has a similar problem with NFT.
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Researchers also claim that selling an edition of hundred works has ten tons of carbon footprint (Co2) which is more than an individual’s annual per capita footprint in the European Union. It is largely criticized because of its impact on the environment.
A site CryptoArt.wtf has been set up to calculate the amount of the carbon footprint although the site is now offline. It calculated that a piece of NFT called Coronavirus consumed 192 kWh in its creation which is equivalent to two weeks of energy consumption by one European Union resident.
How to make NFTs?
Now it is obvious you are curious about how NFTs are made, basically what is needed is a digital wallet, a small purchase of Ethereum and a connection to an NFT marketplace where you’ll be able to upload and turn the content into an NFT.