Everyone is talking about NFT (Non-Fungible Token) which is a non-fungible digital object/origin. But what is it anyway and how and how you can make money with it. This practical tip is meant to provide some insight. However, at the outset, it must be said that you are aware of all the criticisms and problems involved with NFT before you even begin. So trading in NFTs, like anything to do with cryptocurrencies, can be very volatile: some make money with cryptocurrencies, but very many don’t and have to record high losses and have portfolios that are depreciating sharply. There is no safe “bet” when it comes to trading and using cryptocurrencies. This practice advice is not a recommendation to create, buy or sell NFTs that it is only intended to be explained.
What is NFT – Non-Fungible Token and What Can You Do With It?
The NFT is actually a special reference for a digital resource, such as a digital image on the Internet. While digital images can be copied indefinitely, the uniqueness of NFTs is that they are not divisible or interchangeable, they are one of a kind. They can be used to make digital image files tradable as individual items. Trade, manufacturing (miniaturization) and proof of ownership are mapped using checksums in the blockchain. It looks a little different for theory in practice, especially when the issue of copyright and ownership of a digital image or artwork is not made clear. The question then arises whether the right to use the image itself is acquired through the NFT or only to refer to the image. NFTs are traded on trading platforms based on the blockchain and identify buyers and sellers in the form of their crypto wallets. Risk: As with all blockchain applications, protecting your wallet is very important.
What should you pay attention to when creating and selling an NFT?
Step 1: Create digital artwork
The first step is to own or craft something that can be turned into irreplaceable code. There are many possibilities here, for example elements from video games or memes, but also due to ownership issues, we are looking at the field of “digital art” here. So you can take a “valuable” digital image in PNG or JPEG format, save it to the server and you’re ready for the next step.
Step 2: Set up a crypto wallet and fill it with cryptocurrency
Now you have to make sure that you have a crypto wallet, i.e. a file that is a type of wallet, and a cryptocurrency wallet. This crypto wallet must be loaded in accordance with the currency that is using the blockchain of the platform primarily used to pay fees. The only way to play in the cryptocurrency world is to own a wallet and deposit a few dollars in it. The reason you need a wallet is because you can receive funds while you have to buy some cryptocurrency yourself to pay the fees associated with selling the NFT. It should be noted that only any “wallet” can be used, as not all wallets are compatible with all platforms. That’s why the third step is also important.
Step 3: Choose a blockchain and marketplace to sell
One of the most important steps: You have to decide where to sell the NFT. This can be a difficult decision as different platforms can charge different fees, set different terms, and even specialize in different types of NFTs. More importantly, they can also offer different blockchains to place NFTs on, which may affect security and usability for different people. Another thing to consider when choosing a platform is the legal aspect: some platforms offer a contract where you get the copyright with NFT, while others keep it with the original manufacturer.
Platforms that support more than one type of blockchain can be interesting. Almost all markets primarily offer Ethereum, but be careful not to confuse it with its associated cryptocurrency, Ether. In addition to Ethereum, there is also the popular Bitcoin, but also Polygon, Klaytn, and Flow. Each of these other blocks has its own advantages and disadvantages, including when it comes to fees. With Ethereum, for example, a type of transaction fee called “gas” applies to every single transaction. But the “gas” is not just a drawing, it is created, for example, through which commands are executed on a virtual machine. For example, if you want quick validation, the fee may be higher.
Step 4: Fabrication NFT (SC)
Once you’ve decided which platform and blockchain might be best for your NFT, it’s time to upload your NFT to your crypto wallet and prepare it for sale. Uploading an NFT to the blockchain is called minting and it is actually a simple step where the user’s NFT marketplace usually takes his hand and gives instructions such as adding description and binding (server) when uploading the NFT to the wallet. This is where so-called smart contracts come in, which make it possible to store information on the NFT transparently and securely. These “smart” contracts run on the Ethereum blockchain, for example, and can verify ownership of NFTs and deal with portability. Resale proceeds can also be allocated to the actual author. It is important to know that this “engraving” can also cost a fee. Some platforms charge this fee when NFT is sold, and others want the fee in advance.
Step 5: Sell NFT
Now it’s time to sell. On most platforms, it’s as simple as hitting a button called “Sell” for every NFT you have in your wallet. Selling options typically fall into one of three categories: fixed price, limited-time auction, unlimited auction, or “open to bid.” It reads almost like an online auction house and almost. With fixed pricing, you offer an NFT at a certain price and wait until someone pays that amount. In a time-limited auction, you offer your NFT to potential buyers within an individually specified period of time. At the end of the period, the highest bidder receives the NFT. An unlimited auction is an auction with no time limit, where the seller simply decides when he thinks he has received the best bid and ends the auction.
In the end, the process is automatic: the buyer pays the price of the NFT plus some fees, the seller gets their money back minus some fees, and the NFT is changed.
conclusion: NFTs show that digital things can also have value. But when NFT is in it, it does not necessarily bring financial added value. In this way, NFTs of holiday photos will surely become a slow seller, unlike paintings painted by famous artists. You should also know how to market your NFT, because hardly anyone will ever notice an NFT on their own. In addition, one should always be careful when trading and dealing with cryptocurrencies and in the markets. NFTs are guesswork and rarely an investment and on top of that there are very high fees.
Note: This is just practical advice, Knowledge Status Spring 2022. Status of information may vary at the time the article is recalled.