Hello Friends 👋
We are going to talk more about NFTs and here is the recap of what we have discussed to date around this NFT stuff -
NFTs have been a cultural phenomenon throughout 2021, constantly making headlines as celebrities dabble in the space and as shenanigans, scams, and legal fights ensue. With some creators making millions off NFTs, though, it’s understandable why you’d want to try your hand at it or play around with the tech to get a better feel for it.
We’re going to go over how to create an NFT using two of the most popular marketplaces, but before we get to that point, let’s cover some of the basics of what an NFT is (I know again… but it’s needed so hold your horses…) and the decisions you may have to make before deciding to sell one.
Figure Out What The NFT Is?
Listen, there’s no judgment if you’ve arrived here without much understanding of what NFTs are. Maybe a friend said, “Hey, you should sell that picture of your cat as an NFT.” But before you go through the process of creating and selling one, it’s probably best to have some idea about what you’re doing.
NFTs, or non-fungible tokens, are digital tokens stored on the blockchain. Unlike cryptocurrencies, where each coin is the same (there’s no reason to prefer one particular Bitcoin over another), each NFT is unique and can be sold as a way to prove ownership over some sort of digital file.
In almost every case, the files aren’t actually stored on the blockchain itself. Rather, a link to the file is stored, along with the token that acts as proof of ownership over whatever that link points to. There’s also no rule saying that two or more NFTs can’t exist for the same file — you can have NFTs with editions, kind of like trading cards. For example, an NFT can be rare because there are only 10 copies or common because thousands of the same NFT have been “minted,” or written to the blockchain. There’s also nothing to stop someone from taking the file you’ve used for your NFT and creating their own NFT with it (though the blockchain entry will show that it came from their account, not yours).
You can technically sell any digital file as an NFT, but if you’re looking to use a marketplace’s easy minting tools, you’re going to be limited to the formats they support. We’ll touch on that a bit more later, but it’s worth keeping in mind that your first NFT should probably be an image, video, or audio clip of some sort. If you don’t know what you want to sell as an NFT yet, those kinds of restrictions could help you narrow down the possibilities. With that said...
Make Sure You Actually Want To Sell NFT
If you just have the vague idea that you want to make an NFT because seemingly everyone is doing it, there are a few considerations you may want to take into account. The first big one is transaction fees. While the platforms that we’ll cover today will let you create NFTs for free, selling them could be a different matter.
Please remember - YOU CAN END UP SINKING A LOT OF MONEY INTO THE BUSINESS BEFORE SELLING A SINGLE NFT.
Most NFTs are sold on the Ethereum blockchain (we’ll touch on ones that aren’t in the next section), and every transaction on the Ethereum blockchain costs fees that are paid to the miners. These fees are called “gas,” and the amount of gas you need for a transaction (and therefore how much that transaction will cost) can vary significantly. Almost everything you do on the blockchain, from minting an NFT to transferring it to someone else to bidding to purchase one, will cost gas (though there are some ways around this for creating NFTs, which we’ll go over in a moment).
It’s also worth noting that paying gas does not 100 percent guarantee your transfer will go through. You can pay more to give yourself a higher chance, but it is never a sure thing. To be clear, most transactions are likely to go through. However, if something does happen and your transaction isn’t completed, you won’t get the gas fees you paid back.
Then there’s the environmental aspect of NFTs. The most popular (and easiest to use) NFT marketplaces mostly run on the Ethereum blockchain, which uses an energy-intensive “proof of work” system (you can read more about what that means here). While there’s debate on whether individually selling NFTs has an effect on the overall energy use of the blockchain, if your NFTs are built on Ethereum, you are making use of a system that has a big carbon footprint.
There are blockchains that use alternate systems that don’t use as much energy, and Ethereum has plans to move to a more efficient proof of stake system at some point in the future. However, that’s not the case yet, which is one of the reasons people might get upset when others decide to sell NFTs.
Leaving this conversation here for now. In the next discussion, we will talk more about the platforms and marketplaces to create, manage and sell your NFTs.
If you want to share anything or have any suggestions/questions, please leave them in the comments!
That’s it for today :-)
Hope each of you has a great start to your day. I’ll talk to everyone tomorrow.
— Amit
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