Teenager Jaiden Stipp has sold a digital illustration (a waving astronaut) for 20 ETH (works out to $62,000 at the going rate). 18-year old Victor Langlois has raked in $18 million from NFT sales in 2020. His digital art work, titled The Everlasting Beautiful, fetched a staggering $550,000.
No wonder NFTs have captured the attention of the art world.
While the level of success achieved by Stipp, Langlois, and Beegley is certainly not the norm, marketplaces for digital collectibles are thriving.
Here, we have put together an easy guide to understand the nuts and bolts of NFT art.
What are NFTs?
NFT stands for “nonfungible token.” Each NFT is a unique digital file stored on a blockchain.
While your digital art can still be seen, screenshotted, and downloaded by anyone online (at approximately the same quality), the express purpose of NFTs is to assign an agreed-upon value of ownership for your digital art. The blockchain ensures the ownership and validity of NFTs.
“Imagine you owned a pair of expensive Air Jordans. If Nike went out of business, those sneakers wouldn’t suddenly disappear from your closet. Why should digital goods—like a Fortnite skin or an original Beeple—be any different?,” says Duncan Cock Foster, the founder of Nifty Gateway (the online marketplace which hosted the Beeple auction).
Meanwhile, billionaire entrepreneur Mark Cuban likened his ownership of NBA Top Shot reels to collecting baseball cards instead of printing them out. According to him, digital goods are as valuable as physical goods and function on the same principles of supply and demand.
Who owns what?
Here is a short summary of the relationship between the NFT platform, crypto-artists, and NFT purchasers.
- The NFT platform charges a service fee for using its marketplace.
- The artist owns the copyright of the work. Furthermore, selling digital art through blockchain technology allows automatic resale royalties to trickle back to the artist. That said, the automated resale royalty is not guaranteed if the artwork is resold on a different platform.
- The buyer receives a smart contract that verifies their ownership, which also tracks previous owners of the work.
Process of mining an NFT
To mint and sell an NFT, you have to go through the following steps:
- Before you can mint an NFT on any platform, you have to be in possession of a crypto-wallet (since most NFT marketplaces operate on the Ethereum blockchain).
Before choosing a wallet, you may want to consider whether you want a software wallet or a hardware wallet, which one has the best protection, and check which wallet is accepted by the NFT marketplace you are interested in.
- The next step would be to select a marketplace.
There are several different marketplaces to choose from including Nifty Gateway, SuperRare, Decentraland, MakersPlace, OpenSea and Rarible.
Platforms like Nifty Gateway and SuperRare are curated and invite-only, while others (called open NFT marketplaces) simply require user verification before transactions and allow anyone to mint new works (such Rarible and Foundation).
Most of these platforms charge a service fee: for instance, Foundation charges a 15% commission, while Nifty Gateway claims 5% plus $0.30 for every secondary sale. The fee is used to cover the energy expenses required to convert a digital work into an NFT on Ethereum, and typically fluctuate with network demand. There are, however, platforms like OpenSea that offer a “lazy minting” option,
allowing artists to defer their payment of gas fees until they’ve made a sale. Mint
Fund aids first-time crypto creators with covering their gas fee.
- Develop hype for your product and connect with other artists and collectors
The value of NFTs hinges on the narrative around it. The more interesting or absurd the story behind your collection is, the more press you’re going to get and the more people are going to be drawn to it.
Hype is the name of the game. It would pay to invest time in studying the market and learning trends.You should also devote time to cultivate followers through posting on social media, churning out daily content, and creating your own website to attract eyeballs.