NFTs… where do I start from? 2🤔
[you will find a personal note at the end of this article]
When I see the acronym NFT, I experience a wave of mixed emotions ranging from the sadness that I am yet to invest in an NFT, to wondering how I should go about becoming an investor, wanting to know what investing in NFTs entails, to being excited about the future of art, music, and gaming with regards to NFT and accumulating wealth, to sadness that I am not doing enough to be a part of a community with great potential. When I read about people profiting from NFTs and global brands incorporating NFTs into their marketing campaigns, my mixed feelings intensify. Coca-Cola, Pepsi, Adidas, K-Swiss, The NFL, The NBA, WWE, and other global brands are currently reaping the benefits of incorporating NFTs into their marketing strategies, and the list appears to be growing. Snoop Dogg, Naomi Osaka, Doja Cat, Eminem and Stephen Curry are among the sports and entertainment celebrities selling and investing in NFTs. African and Nigerian visual and digital artists are not left out, propelling the continent and country to the forefront of the NFT world. Osinachi, Africa’s most famous crypto artist, Niyi Okeowo, Anthony Azekwoh, Odion Tobi, Oyindamola Oyewumi, and other Nigerian visual artists inspire thousands of Nigerian creative talents with their various levels of success.
NFTs are non-fungible tokens. They are simply digital representations of ownership, whereas cryptocurrencies are fungible tokens; the first part of this article discussed this in greater detail. The NFT market, like cryptocurrency prices, can be volatile due to rising and falling demand, which is enough reason to learn about NFTs and understand what causes demand to rise and fall, what affects NFTs’ prices, what creating NFTs entails, among other things. This article was intended to be solely about investing in NFTs, but recent trends and online chatter have made it critical to address the subject of this article from the perspectives of everyday creatives, so they can understand how to profit from their talent by turning their works into NFTs. In this article, we will look at NFTs through the eyes of an investor and a creative.
Musa has just received a “hooge” annual bonus payment. One minute he’s ecstatic, the next, he’s worried about how he’ll spend it. He’s torn between spending the money on his birthday by inviting everyone cool to celebrate with him or investing it and planning for the future. The online buzz surrounding NFTs has piqued his interest, but he isn’t sure where to start as an investor and collector of digital art in the form of NFTs.
Chioma, on the other hand, is an incredibly talented digital artist and content creator. She recently lost motivation to create more digital artworks because she couldn’t reach out to potential customers and make money off her paintings. She recently learned about NFTs and was curious about applying them. However, she has no idea how to convert her artworks into NFTs.
In the sections that follow, we will look at what investing and creating NFTs entails, NFT marketplaces, the need for Blockchain wallets, what to look for when investing in NFTs, and how to protect your NFT investments and creative works.
NFT Blockchain, Minting, and Minting Fees
The applications of NFTs are expanding daily. They are currently being applied to digital art, collectables, gaming, and music. NFTs are distinct because they are composed of a series of metadata that gives them unique properties and also use the same blockchain technology as cryptocurrencies. Thanks to blockchain technology, any digital asset can become an NFT. The operations that can be performed on NFTs vary depending on the blockchain that supports them. To create an NFT, no prior knowledge of blockchain technologies or cryptocurrencies is required; however, as the saying goes, the more you know, the better.
For Chioma to monetize her work via NFTs, she will need to convert her digital artwork into NFTs through a process known as “minting”.
Minting simply refers to the process of converting a digital file into a digital asset in the form of NFTs. Several NFT marketplaces, including OpenSea, Rarible, KnownOrigin, and Nifty Gateway, have made it simple to mint and trade NFTs with simple instructions; however, minting an NFT usually comes at a cost, in the form of gas fees. Recently, there have been issues with the high gas fees common with marketplaces using Ethereum blockchain technology for minting NFTs. Gas fees are basically fees for converting digital art, photography, videos, games, audio, and other media into NFTs. They are payments for the computing energy needed to process and validate blockchain transactions, similar to banking fees for banking transactions. Gas fees are expected for all blockchain transactions, whether they involve the creation of NFTs or the conversion of cryptocurrencies. Gas fees are paid to have transactions verified on blockchain technologies. These fees may vary depending on the type of blockchain, the amount of traffic on the blockchain, or the computation power required to execute a transaction on the marketplace.
Musa and Chioma will have to consider these and other factors when deciding where to trade and mint their NFTs. Chioma will need to decide which of her designed or owned artwork she wants to transform into an NFT in order to make money from her art. Musa must also choose which NFTs to invest in as an investor. Chioma and Musa will also need to choose an NFT marketplace carefully, taking into account the marketplace’s authenticity and popularity in terms of traffic and reputation, the blockchain technology supporting these platforms, and their minting or gas fees.
The Ethereum blockchain is currently the most widely used blockchain technology for NFTs because it was the first to support NFTs. Still, its high gas fees have paved the way for and drawn attention to other alternative blockchain technologies in the space, including Binance Smart Chain, Solana, Avalanche, Zilliqa, Polygon, Tezos, and Flow. TopExpo, for example, is a marketplace for NFTs built on the Flow blockchain, which was created specifically for the creation of NFTs and massive crypto games. Other marketplaces that have adopted alternative blockchains include OpenSea, which has adopted Polygon to allow for zero gas fees when minting NFTs and allows users to browse NFTs minted on the Polygon blockchain. The blockchain Tezos supports Rarible and a few other marketplaces, while Solsea is supported by Solana.
Since Musa and Chioma intend to trade NFTs and mint digital artwork into NFTs, the high gas fee associated with the Ethereum blockchain on certain NFT marketplaces should be considered in comparison to alternative blockchain technologies used by other marketplaces.
On NFT-specific online exchanges or digital marketplaces, NFTs can be bought, sold, traded, or created. It should be noted that, as previously stated, the unique features of a marketplace or exchange frequently rely on the blockchain technology in place. These marketplaces operate uniquely and include features that set them apart from the competition. Here are a few examples of exchanges and marketplaces:
- SuperRare (for digital art) is a popular peer-to-peer marketplace for purchasing and selling limited-edition digital artwork. It also includes exciting features such as a calendar of upcoming NFT exhibitions, but all transactions are conducted with the Ethereum cryptocurrency.
- Nifty Gateway (for digital art) is an art curation platform powered by Ethereum blockchain technology and owned by Gemini, a well-known name in security technology. This marketplace has a unique feature in that it allows users to store their purchased NFTs on the platform rather than in NFT wallets, which may not be suitable for collectors who want more flexibility with their investments. Nifty Gateway is a centralized marketplace that allows US dollar sales and purchases to be made without first converting them to cryptocurrency, thereby avoiding additional fees.
- Mintable (for digital art, photography, videos, games, templates, and domain names) is backed by billionaire investor Mark Cuban and is an open marketplace similar to OpenSea. It is also worth noting that Mintable supports gasless minting, which means that digital art can be minted without submitting any transaction to the blockchain. Mintable, based on the Ethereum and Zilliqa blockchain technologies, also supports short-run printable series.
- OpenSea (for digital art, music, games, domain names, virtual worlds, sports, and collectables) is a market leader in NFT sales for all types of digital assets; it also has an easy-to-use NFT minting process. Most importantly, it accepts approximately 150 different payment tokens and has over 300,000 users, over 34 million NFTs, and a trading volume of over $4 billion.
- NBA Top Shot — (for sports collectables) is built on the Flow blockchain technology and was launched in early 2020. This NBA-licensed platform allows fans to collect and trade digital “moments” from the NBA league. NBA Top Shot had over one million users, with over 250,000 daily users, according to reports. NBA Top Shot allows users to only buy and sell on the marketplace.
- Sorare (for sports collectables) — is a marketplace for soccer fans. It is a cryptocurrency-based fantasy soccer league in which users can collect player cards as NFTs for use in fantasy soccer league competitions. If you are a soccer fan, crypto or NFT enthusiast and want to learn more about Sorare, you should visit this weblink.
- Rarible (for digital art, photography, music, games, metaverse, and memes) is one of the largest marketplaces for all types of NFTs, and is similar to OpenSea. Still, unlike OpenSea, Rarible supports a total of three blockchains — Ethereum, Flow, and the Tezos blockchain technologies. Furthermore, Rarible users can only trade with the marketplace’s token — Rari. Also, Rarible allows NFTs to be minted for free, lowering the barrier to entry for NFT creators.
Some of the marketplaces mentioned above act as an intermediary; for example, Nifty Gateway allows users to interact with one another while acting as an escrow for a sale, where users deposit funds before exchanging NFTs. Other NFTs marketplaces, such as OpenSea and SuperRare, allow users to connect directly without the need for an intermediary while maintaining users’ anonymity and autonomy. At this point, it is agreed that high gas fees can be discouraging for new NFT marketplace users, emphasizing the importance of understanding the differences between NFT marketplaces and deciding which to use based on the type of blockchain technologies used by these marketplaces. Understanding the terms of sale, royalties, and copyright ownership on NFTs marketplaces is also critical.
As a creative, Chioma’s gas fees may differ between NFTs due to the actual valuation of her digital artwork turned tokens, which may be significantly higher than the actual cost of the NFTs she is selling. Furthermore, when considering NFT marketplaces for their interests, Chioma and Musa will need to develop strategies to sell and trade their NFTs in order to succeed as creators and investors, respectively. Developing strategies will also aid in understanding the various components that contribute to some level of success in trading NFTs.
Other factors to consider when selecting a marketplace include the daily trading volume, the number of daily users transacting, niche factors, the ease of minting or creating NFTs, the type of wallets permitted to be linked to the platforms, and so on. The NFT marketplace of choice for a creative or an investor can also influence the value of their NFTs; for example, highly curated marketplaces such as SuperRare and Nifty Gateway are more selective of the artists who use their platforms, influencing the values of NFTs on their platform. For new users, it is critical to use community-governed and community-supported marketplaces such as Rarible and Mintable.
Some other examples of NFT marketplaces include — Axie Infinity (for video games), MakersPlace (for digital art, short film, motion animation), Foundation (for digital art), Zora (for digital art but invite-only) Valuables (to auction tweets as NFTs), Venly (for video games, metaverse), Grow.House (for cannabis enthusiasts, crypto, decentralized finance), Zeptagram (for music as NFTs and music royalties), BakerySwap (digital artworks, collectables and game assets), AirNFTs (built on Binance Smart Chain), F1 Delta Time (for Formula 1 enthusiasts) and Decentraland (for video games, metaverse).
Need for Blockchain Wallets
After they have minted, owned, or traded NFTs, Chioma and Musa will need a wallet for their NFTs as well as for their cryptocurrencies.
It’s also important to understand that the blockchain wallet functions similarly to a debit card in that it doesn’t hold your NFTs like a physical wallet does with your Naira notes. A blockchain crypto wallet does not directly store your assets; instead, it acts as a gateway to the blockchain, where your funds are stored. A blockchain wallet is simply a method of securing the digital key that controls access to your cryptos or NFTs while also making trading and collecting NFTs easier. Blockchain wallets are essential for an investor or a creative because they provide a level of security to prevent the theft or loss of minted, traded or gifted NFTs. The value of having a blockchain wallet to store newly minted, traded, or collected NFTs cannot be overstated, as it is best practice to transfer your NFTs from the marketplace where you traded, minted or collected the NFTs to your wallet. Just like with cryptocurrencies, having a blockchain wallet for your NFTs before purchasing any aids in better control and the peace of mind that comes with knowing where your tokens are.
For each blockchain wallet, there is a public and private key. In transactions, a representative form of the public key is frequently used. When using crypto or NFT wallets, it is critical to remember that the private key to the wallet secures the wallet and must be kept private. The private key grants a cryptocurrency user ownership of both the funds in their wallet and the wallet itself. If a third party compromises a private key, the cryptocurrencies or NFTs in a wallet can be stolen. The security of a wallet is determined by how much access to the private key is granted. Whoever has access to the keys provided by the wallet technically controls the assets.
Though data on blockchain technology is secure due to its decentralization mechanism, it is important to note that certain levels of vulnerability can still occur on blockchain-connected components, such as crypto and NFTs wallets.
There are two types of blockchain wallets: custodial and non-custodial. Custodial wallets are more like traditional bank accounts, whereas non-custodial wallets are like safe boxes in homes or offices. Similarly to traditional bank accounts and banks, the third party in this case — NFTs marketplaces and cryptocurrency exchanges — stores sensitive user data and assets, including the wallet’s private key. Because the private key is stored by the user and is not accessible to a third party, non-custodial wallets give the wallet owner complete access. Wallets are also classified as hot or cold, with the main difference being that the former is connected to the internet and the latter is not.
To make an informed decision about which blockchain wallet to use, Musa and Chioma must first understand how blockchain wallets work, as well as the key characteristics to look for in the best NFT wallet for their needs.
Wallets are necessary, especially if NFTs were minted outside of the marketplace and need to be transferred. Creators should always keep newly minted NFTs and NFT collections in a wallet that can be linked to their preferred marketplaces. It is also necessary to have a wallet compatible with the marketplace’s currency and the blockchain technology that supports the marketplace. Some wallets, such as Trust Wallet or Metamask, support multiple cryptocurrencies and multiple NFT marketplaces. Some of the available blockchain wallets include:
- Metamask is a blockchain wallet that enables users to interact with the Ethereum blockchain with ease. Metamask began as a browser extension and continues to be available as a browser extension as well as a mobile app, serving as an Ethereum wallet for the storage and transfer of Ethereum-compatible tokens. Metamask also simplifies the process of creating multiple addresses for your cryptocurrency or NFTs. It has an in-built swap feature that allows users to easily swap currencies for use on various blockchain technologies, as well as features that support other blockchain technologies.
- Coinbase Wallet is appropriate for beginners because it allows users to send and receive NFTs using usernames rather than public wallet addresses. It also accepts the majority of popular cryptocurrencies as well as some Ethereum-compatible tokens and also has its own web browser extension.
- AlphaWallet is an open-source Ethereum-based blockchain wallet that allows you to mint and collect NFTs. ChainZ Arena, OpenSea, CryptoKitties, and a variety of other applications directly support AlphaWallet. It also uses a TokenScript framework that allows tokens to become smart by giving them a diverse set of information, rules, and functionalities. You can read more about smart tokens here.
- Enjin is a blockchain-based wallet that lets you collect in-game NFTs and other collectables. The Enjin NFT wallet includes a marketplace for trading digital assets, but you must use the Enjin project’s native token, ENJ, to do so. It also has an appealing user interface for NFT collection and sets itself apart from other wallets by offering a customer support desk.
- Trust Wallet is recognized as the best Ethereum wallet and cryptocurrency wallet for storing your preferred BEP2, ERC20, and ERC721 tokens. Among many other advantages, Trust Wallet does not collect user data. It also enables passive income generation through staking while supporting approximately 53 blockchains and over a million cryptocurrencies. It should be noted that, at the time of writing, Trust Wallet only supports NFTs on the Ethereum blockchain and the BNB Smart Chain. Trust Wallet also includes a dApps browser for accessing a list of decentralized apps for art marketplaces, ensuring one-click access to NFTs marketplaces such as Axie Infinity, OpenSea, and others, which is its most promising feature.
When deciding which blockchain wallet to use, consider blockchain with features that meet your needs. The ability of the wallet to function across multiple blockchain technologies is an important feature for blockchain wallets to note. A good user interface on a blockchain wallet is also an important feature to look for, especially for new users. It is common for blockchain wallets to have a built-in decentralized applications (dApps) browser to find more NFT marketplaces and direct access to decentralized finance (DeFi) applications. Other blockchain wallets include Math Wallet (a strong alternative to Metamask), Coinomi, Guarda, Edge, Rainbow, and Gnosis Safe.
At this point, it’s critical to mention an important open-source protocol called WalletConnect, which allows many blockchain wallets to easily connect with the many decentralized finance dApps. For example, if you are low on cryptocurrencies, you could use a valuable NFT as collateral to borrow some cryptocurrencies from the MonFinance DeFi application. WalletConnect will establish a secure connection between your wallet and MonFinance, enabling MonFinance to view the contents of your blockchain wallet. WalletConnect is the bridge that connects your wallet to DeFi and dApps. More on WalletConnect can be found at this link, and more on dApps and deFi can be found here.
Other Things to Consider
So far, we have covered the concepts of minting NFTs, gas fees associated with minting, what to look for when choosing NFT marketplaces, blockchain wallets, and their importance.
The NFT market, like cryptocurrency prices, can be volatile, with rising and falling demand. Changing tastes, as well as a shift toward NFTs with utility — such as added functionality or perks — can all play a role in selling trading NFTs. For investors such as Musa, it is easy to get caught up in the hype and begin collecting whatever NFTs influencers make popular, which may be a bad move in the long run. It is also easy to become a victim of wash trading, which is why it is critical to check these things before purchasing an NFT. Esther Kuforiji provided some advice on how to avoid being duped as an NFT investor. Bagsy also provided some NFT investment advice in this Twitter thread.
Since NFTs have provided almost every creative, such as Chioma, with a new way to make money, this means that as long as you can create something visually appealing or interesting online, you can sell it as art. Chioma can sell her NFTs through a limited release, an open release, or an auction, but the type of release she chooses should be consistent with her goals. Furthermore, because gas fees are highly dependent on how busy the network is, they typically peak when Blockchain traffic is high. Keeping this in mind, it’s critical to keep an eye on peak times to avoid paying higher gas prices. According to this report, the best days to buy Ethereum gas are Saturdays and Sundays, and the worst days to buy Ethereum gas are Tuesdays and Thursdays. As previously stated, some marketplaces, such as OpenSea and Rarible, allow for free minting, and for minting on OpenSea, Rarible, and Mintable, please visit this page. You should also check out this link for a list of platforms for minting NFTs.
The Ethereum Name Service (ENS) is another critical concept to grasp regarding NFTs. To receive or send NFTs, Chioma and Musa will need to share their blockchain wallet addresses, which is a long unique sequence of digits and letters that functions similarly to an email address. Given the possibility of having multiple wallet addresses for your NFTs or cryptocurrencies, managing these wallet addresses may be confusing. As a result, there is a need for ENS, which allows a user to create a universal nickname for all of their public addresses. Instead of an unreadable string of keys for each crypto wallet address, you’ll have a single ENS domain, such as Buhari.eth, where you can receive any type of crypto or NFT. The Ethereum Name Service helps to use a domain name to represent wallet addresses in a more readable format. It’s similar to purchasing a domain name for a website that allows users to receive cryptocurrencies and NFTs. Trust Wallet is one out of many wallets that allows users to get a .eth domain name or their wallet addresses and also allows for purchasing and setting up unstoppable domain.
To conclude this article, I have included a list of some useful NFT resources below;
★ NFTs stats for top NFT collection and top-selling NFTs
★ For tracking, discovering, and analyzing the most recent dApps, NFTs, cryptocurrencies, and DeFi projects.
★ For better insights on the NFT landscape
★ The Non-Fungible Token Bible
★ A noob’s guide to NFTs
★ A creative talked about his journey to becoming a professional NFT artist.
★ Are you skeptical of NFTs? This Twitter thread may convince you.
★ A go-to resource for artists and creators, developers, corporations and institutions, and communities on the NFT.
★ And if you are still not convinced that NFT is a generational innovation? You should read Ben Yu’s 111-minute-long article.
Congratulations if you made it this far in the article, even if you skipped ahead 😀. I try not to write lengthy writeups, but this one had to be.
It took a long time for me to finish this, but I’m glad I did. In context, I wrote this to gain a better understanding of how NFTs, Blockchains, Marketplaces, and Crypto Wallets operate.
Writing about interesting subjects that interest me also helps me improve my information-seeking, information-analytical, and information-architecture skills, as well as my ability to break down complex concepts and ideas.
What will you give me as a grade for this article? A+, B, or B- lol.
Till the next article, thank you for your time and thank you for the engagement 🙏🏽