NFTs continue to grow in popularity and just like cryptocurrencies they keep on intriguing and fascinating the world. Some early adopters immediately jumped onto the Bitcoin craze to become part of this decentralised financial system, while others remain hesitant about buying something that they believe cannot be backed-up by physical resources, like with the historical gold standard.

But, times are changing fast, especially in the world of tech. There’s a new generation who trusts technology and its capabilities more; youngsters, tech savvy investors, artists and entrepreneurs who place more focus on how these technologies can be used to change our world for the better.

NFTs created an open digital platform for artists of all types to sell and market their art, cryptocurrency takes control from financial institutions and government to place the control in the hands of the people, and the blockchain technology is creating daily digital solutions that are backed with transparency, security and traceability.

But why would 28 982 NFT collectors pay over $90 million dollars for an art piece like The Merge?

What is the craze around non-fungible tokens and can anyone get in on this speculative game to get a piece of the $17.7 billion dollar pie as (2021 NFT sales)?

We've put together a series of short articles to give newcomers an understanding of NFTS, how they are created and traded, how easy it is to get started, but also how it takes a bit of experience and work before you’ll be able to make attractive proceeds from it.

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Explaining NFTs, Blockchain and Cryptocurrencies

What determines the value of something and why will someone pay millions for a work while others deem it as insignificant?

The crypto community is a great example of how a specific group of people can create value through their views, perceptions and beliefs. They bought into the metaverse and believe that blockchain technology is something you can trust. It is this ethos that binds them together and together as a collective they build a stronger and stronger community.

To understand why NFTs are so special, you’ll have to explore some of the basics around the setup of cryptocurrency and how blockchain technology created the backbone for crypto and NFT development. Here’s a simple definition for each.

NFTs

NFTs is short for non-fungible tokens. They are various forms of digital art pieces that are marketed and sold in the digital world.

Fungibility means something is ‘mutually interchangeable’ and replacing a R100 note two R50s is an example where the perceived value stays the same. Non-fungible assets means the items cannot be converted or chunked down into something ‘similar’. They are unique, one-of-a-kind digital art pieces, with a token assigned that cannot be duplicated.

Just like buying the print copy of an original painting you might be able to take a screenshot of an NFT, but the real owner of the original artwork, will always be verified as the one whose name is on the smart contract. Also known as cryptographic assets, the ownership of an NFT is recorded on a blockchain to ensure ownership authenticity.

Cryptocurrencies

Crypto or cryptocurrency only exists in the virtual world and is endorsed and used by a peer-to-peer network. This network is built on a blockchain and it is thus not reliant on central bodies like government or financial institutions. Bitcoin is one of the first, more known cryptocurrencies that was created because of distrust in financial authorities, but it only started bubbling in 2011. During this time crypto miners also started working on other currencies, like Ethereum and Litecoin.

You can buy Bitcoin with money when you open your first crypto wallet, but essentially it’s not the same thing because the government has no control over how it’s traded, it’s value or influencing the amount of currency in a market. That is all done through the mining process on the blockchain, all online and all in the hands of the network.

Blockchain

Blockchain is essentially a network of computers who digitally record transactions on each of them. This technology makes hacking or fraudulent activities around the ownership of assets almost impossible as each change in a transaction is recorded among each block, or computer, along the blockchain.

The most popular blockchain used for NFTs is the Ethereum (ETH). This means that should you be interested in buying NFT, you’ll have to open a crypto wallet and purchase ETH, the most accepted cryptocurrency for NFTs. A token under the ERC (Ethereum request for comment) standard will be issued that will certify your ownership of the asset.

You can learn more about NFTs and cryptocurrency in this article.

ethereum coin
Ethereum is the most popular cryptocurrency for NFT trade. - Source: Pexels

Creating NFTs

Almost anyone and everyone can get involved in NFTs. Among the NFT boffins you’ll find NFT collectors, traders, millionaires, corporates, gamers and then those involved in the creation and development of NFTs like artists, developers and blockchain specialists.

To be successful you’ll have to know where to find the right audience, what they like and how you can involve them in marketing initiatives.

NFTs are generally sold on NFT marketplaces and it is the ideal place to browse art and see the content that remains popular among the community. Marketplaces tend to cater for different audiences and finding the right NFT marketplace will allow you to upload, mint and sell your artwork to appropriate people.

OpenSea has a broad-based appeal where SuperRare is more niche, allowing fewer quality pieces and therefore involve a more rigorous approval process for new artist profiles. Any artist can create and upload an NFT onto a marketplace, as long as it’s work that can be digitised, is unique and you are the original owner of it.

NFT formats can include an image, meme, video, sound clip or a GIF, but a new artist should really expose themselves to the market and discover how artists make use of technology to create new forms of art.

Some coders become popular artists in NFT as they understand and use computer code to generate unique and technology driven work. You don’t have to be able to code to get in on NFTs, but if you are interested you can research programming languages like Python, HTML and Java.

A token is created for each NFT according to ERC standards on the Ethereum Blockchain.

Most marketplaces make the process fairly easy for a newcomer, but you’ll require a crypto wallet that will be linked to the marketplace you choose to list your art on. Artists need this for accepting proceeds from their work and some platforms require some form of payment for gas fees (the cost of minting your artwork and assigning a digital blockchain certificate of ownership).

Luckily upfront gas fees are being phased out where the money is lately only deducted once the art is sold.

The collectors of NFTs will also need cryptocurrency to purchase their new founded, digital artwork. Be sure you use the currency required by a specific marketplace. Even though NFTs tend to favour Ethereum ETH they are opening and trading more frequently in other blockchains and currencies.

These two articles in our series will provide more info on developing NFTs or discovering how NFTs are created.

What Determines The Success of NFTs?

Getting on-board is only the beginning, but becoming good at NFTs will take networking and plenty of research on trends and what is sold on the NFT market. One of the most important things if you want to become an NFT collector or trader, is to have a growing interest in blockchain technology, cryptocurrencies and NFTs. This could even help you if you are a fine artist who wants to create and sell NFT collections as you’ll better understand the community, grow closer to their needs and form relationships that could get them to click the buy button.

Like any business, you have to know who your customers are and generally those who better understand them have shared interest in the success of crypto and NFTs. We cannot stress enough how important knowing your community is to drive and determine the success of your NFT ventures. Community trust brings groups together to invest in a specific artwork, share information about upcoming artists and together make a stronger blockchain connection to the interest of all peers.

Become part of the community by following NFT and crypto influencers on Twitter, following their channels on YouTube, or engaging socially on Discord. Read news and as many blogs as you can and be on top of global financial trends. This knowledge will create an informed view on potential new currencies and NFTs that could potentially grow into massive investments.

We need a bit of an understanding around how events influence human behaviour as this will enable the identification and potential prediction of trends in the NFT marketplace, so keep on learning.

This companion article will give you some more tips on making your NFT project a success.

fog in forest
Any unique image and become NFT if you own it and mint it on an NFT marketplace. - Source: Unsplash

Spending time and energy to read news about the latest NFTs sold and for what amount of money will make you better at the NFT game. Conversations with potential buyers will also become easier, but most of all, you'll use your newfound knowledge to inform your own investment in time or money to acquire assets that suit trends and market developments.

Frederci Auerbach is a Swiss-American photographer, and he became known for creating striking profiling images as shown in the earlier image. To him it is easy to create something unique, as each image is as unique as the individual. But as an artist and collector you always have to consider what makes the work different and special.

The world of gaming played an important part in the emergence of NFTs. Cryptokitties was the first game to really bring NFT into the mix. You can still buy an ERC token to an exclusive character or accessories to enhance your experience of the game.

Avatars, like the Ape bought by Eminem for almost half a million dollars, forms part of 10 000 apes in the bored ape yatch club collection, and CryptoPunks is another highly profitable NFT venture. We're almost certain you'll encounter them in your research.

One of the most poplar trends in NFTs is how the purchased asset also provides exclusive gifts, content or opportunities to the owner. Crypto Baristas is a fairly new, avatar-driven NFT that allows the holder free coffees in New York and access to exclusive events.

Currently there are no courses to make you better, but if you follow the leaders in NFT you'll quickly gain the knowledge to start, and with continued effort, succeed.

Enjoy your NFT journey and may the odds be in your favour.

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Mauritz

Writer and qualified yoga instructor, who is passionate about health and well-being.