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Fortnite skins are character decals add no real value to one's gaming experience, yet kids across the world beg their parents to spend hundreds of dollars on them to show off to their friends. Digital ownership is a relatively new concept that is becoming increasingly popular, especially with younger generations. NFTs take digital ownership to the next level with the help of the blockchain.
Prior to NFTs, digital ownership relied on central servers of companies, which can be manipulated. After the incident at Travis Scott's concert, for example, Fortnite deleted users' Travis Scott skins, leaving them with nothing. The only way to truly own a digital item is through ownership on a public blockchain; NFTs aren't controlled by a central entity, allowing for true ownership of these assets.
In March, Christie’s Auction house set a record for the highest selling non-fungible token (NFT) to date, a transaction worth more than $69 million in Ethereum. This 1/1 piece dubbed The First 5000 Days by Beeple is just one of many NFTs selling at unprecedented amounts. Artists like Beeple are using NFTs to release digital artwork that can be verified authentic through the blockchain.
Non-fungible tokens are much different from other cryptocurrency investments. Many of these tokens don’t have value from their utility like other cryptocurrencies. Instead, NFTs have value because of the media attached to them –– the most common forms of media on NFTs today are art and music, but NFTs have the potential to tokenize any real world asset.
Learn how you can buy NFTs now.
How to Buy NFTs
- Purchase Ethereum
Since most NFTs are Ethereum-based tokens, most marketplaces for these collectibles accept only Eth tokens as payment. If you already have an account with a cryptocurrency exchange, you can purchase Ethereum on it and send your crypto to your MetaMask wallet.
If you don’t already have a crypto exchange account, Coinbase and eToro are good options for beginners.
- Connect your MetaMask to OpenSea or another NFT Marketplace
There are many marketplaces to buy and sell NFTs. Depending on which marketplace you choose, you’ll be able to purchase different types of art or collectibles. A lot of these websites have secondary marketplaces with a variety of NFTs, but each platform operates slightly differently.
• MetaMask is an Ethereum wallet available via chrome extension and mobile app. To sign on to OpenSea (and other NFT platforms) you'll need an Ethereum wallet. For maximum security, link your MetaMask to a Ledger hardware wallet to mitigate the risk of hacks. Simply download MetaMask, set up a wallet and send over the ETH you just purchased from Coinbase. If this is your first time interacting with crypto wallets, check out the free Crypto & DeFi 101 guide for an in-depth video walk through.
• Ledger is a hardware wallet that stores a variety of different NFTs altcoins. If you're investing a significant amount of money into NFTs, you should secure your investments with a hardware wallet. Software wallets don't offer the same security measures, and unfortunately hacks are common in the NFT space. A Ledger Nano S is $59 –– a great price for insurance on your digital assets.
• OpenSea is a marketplace for NFTs that operates on Ethereum. Users can interact with the network to exchange non-fungible tokens for cryptocurrency. It hosts a variety of digital collectibles, from video game items to digital artwork. To use the platform, you need a web3 cryptocurrency wallet such as MetaMask. Your Ethereum wallet address acts as a username and password and lets you interact with certain platforms like OpenSea. Once you've connected your wallet, you're ready to start browsing the market and placing bids!
Here are some of the other most popular NFT marketplaces:
• SuperRare is a social network for NFTs. Each piece on the platform is unique, and users can buy and sell these original pieces on its website. The platform operates with Ethereum’s network, so you’ll need to fund your account with Eth tokens to make your purchase.
• Nifty Gateway is an NFT marketplace owned by the popular cryptocurrency exchange Gemini. The platform works with popular artists such as Steve Aoki, Grimes, 3LAU and many others to release artwork on the primary marketplace. The company also has a secondary marketplace that allows collectors to resell artwork. You can fund your Nifty account with Ethereum, or you can connect a credit card directly on its website.
• NBA Top Shot is a marketplace for licensed NBA collectibles. These digital items are a new take on basketball cards; these digital cards are more interactive than traditional trading cards. For example, the cards have in-game highlights of the featured players. The highest sold card on NBA Top Shot was a Lebron James Dunk card: the card featured a clip of James dunking on the Houston Rockets and sold for over $200,000.
- Buy Your NFT
It’s an easy process to buy an NFT once you’ve funded your account. Most marketplaces are in an auction format, so you’ll need to submit a bid for the NFT you want to purchase. Some marketplaces operate more like an exchange, using highest bid and lowest ask for NFTs that have several prints.
A benefit of purchasing an NFT from the primary marketplace is the potential resale value directly after the product goes on sale. Some NFTs that are in high demand will sell for 5 to 10 times their initial price right after the release. The downside to buying NFTs on the primary marketplace is it’s hard to estimate the demand for the art. On the secondary marketplace, you can compare your purchase to previous sales.
What is an NFT?
NFTs are typically Ethereum blockchain-based tokens, and they’re used to authenticate digital ownership of whatever asset is attached to the token. Ethereum's blockchain can be thought of as a shared global database and virtual machine. A blockchain token is a uniquely identifiable piece of data whose existence is permanently carved into the chain. Similarly, users of the blockchain are uniquely identified by their wallet address. Anyone can view the contents of anyone else's wallet using a blockchain explorer like Etherscan or The Graph (GRT).
Non-fungible tokens make it possible for artists to release their work digitally without the risk of counterfeits. Sure, you could copy the image file from someone else’s NFT. You could also print out a copy of the Mona Lisa, but neither of these pieces would be considered authentic. Also, many NFTs give special access to events; you need to own a token to get access into these events. For example, Bored Ape Yacht Club has thrown private concerts for token holders, including an open bar, and to get in one must own a mutant or bored ape NFT.
As prices for NFTs increase, the clubs behind these NFTs become more exclusive. Notable members of Bored Ape Yacht Club include Stephen Curry, Lil Baby, Jimmy Fallon, Post Malone, The Chainsmokers and the list goes on. Most of these celebrities show off their apes by using them as their profile picture on Twitter, further expanding the influence of the brand.
Similar to fungible tokens like Uniswap or Aave, the price of a non-fungible token reflects demand for what the token represents. You can think of NFTs as an authentication method for digital media and ownership. These NFTs can't be regular cryptocurrencies, as each NFT has a distinct value, hence non-fungible. Other cryptocurrency, like Bitcoin and Ethereum, are fungible, meaning that each ETH or BTC holds the same value as any other BTC or ETH.
Although NFTs can be expensive, you’re paying for more than just a JPEG file. The token gives you ownership rights to the piece you receive, and you’re able to sell your NFTs on marketplaces like OpenSea and Nifty Gateway. Saying that NFTs are just JPEG files is the equivalent of calling a Google image of Van Gogh's The Starry Night the real thing. Similar to traditional artwork, the value of NFTs comes from ownership of the "original".
How to Buy Metaverse NFTs
The two most known metaverses in which you can purchase land are Decentraland and The Sandbox, but to buy either you will need to make an investment of over $10,000. If you want prime real estate, expect to pay 6-figures.
While land in Decentraland and The Sandbox is extremely limited, Upland has mapped out real-world addresses into a play-to-earn metaverse game. Since there's so much real estate in Upland, you can own a plot of land for as little as a few dollars. Prime locations sell for large premiums, and there are plenty of options to choose from within Upland. Upland's native token, UPX, is used as an in-game currency which can be used to buy and sell land. Get started today and receive a 6,000 UPX token bonus to jump start your metaverse land ownership.
Current Crypto Prices
Based on previous changes in value, NFTs usually appreciate when the fungible token markets are idle. The beginning of 2022 saw many NFTs skyrocket in value, but many collections have since settled down. However, unlike cryptocurrencies, the NFT market shows low volatility spillover within NFT marketplaces. This means that, unlike the heightened volatility cryptocurrencies experience among one another, NFTs act more independently of each other. Additional factors influencing NFT value include utility and projected value based on supply and demand. Check out our table below for the most up-to-date prices on cryptocurrency prices:
How are NFTs Created?
Creating an NFT is a surprisingly easy process. All you need to do is make an account with a marketplace like OpenSea that lets its users create NFTs. You don’t need to know how to make an ERC-721 (NFT) token or have any experience with blockchain for that matter.
Although anyone can create an NFT, that doesn’t mean you can make money selling NFTs. Tons of NFTs made by random people never sell or sell for extremely low values. For an NFT to have value, the media needs to have some sort of significance. NFTs often gain value from the artist’s reputation or the historical significance of the media.
Pros and Cons of NFTs
NFTs clearly benefit artists who produce digital media. Before NFTs, it was extremely hard to verify the authenticity of digital media, as anyone would be able to copy and paste the file.
However, not all NFTs are valuable, and there are clear pros and cons of NFTs.
- Non-fungible tokens make it easy to buy and sell digital media online.
- These tokens use the blockchain to make it easy to verify authentic artwork and digital ownership.
- NFTs can make collectibles like trading cards more interactive and engaging.
- The NFT craze has made prices for some collectibles extremely expensive, and they may not hold their value in the long term.
- If you don’t store your NFTs safely, they may be at risk for being hacked in a similar way to other cryptocurrencies.
Top NFTs & Collectibles Tokens
There are many types of NFTs, but the most popular categories are art, music and collectibles. Big name musicians who’ve created NFTs include Grimes, Kings of Leon, Steve Aoki and 2 Chainz.
A lot of artists who use digital media as the medium for their art have been drawn to NFTs, such as Jon Noorlander, Mike Greg and Beeple. Even the public company Score Media and Gaming Inc. (SCR) has started covering NFTs in its weekly show Mint Condition.
One of the first big NFTs was a crypto collectible called CryptoKitties. These digital cats were released back in 2017 are collectible in a similar way to Beanie Babies. There are many other unique collectibles such as NBA Top Shots, Cryptopunks and in-game items for video games.
The Future of NFTs
Right now most NFTs are used to sell digital art and collectibles. This may be a fad or it could be the new form of exchanging collectible assets ranging from trading cards to artwork.
In the future, NFTs can be used to tokenize any real world asset, making ownership of assets transparent and incorruptible. Non-fungible tokens could be extremely valuable for real estate deeds, intellectual property rights and business ownership. While the future of NFTs is uncertain, it's clear that this technology has the potential to change the entire landscape of the internet –– and we are still incredibly early.
Frequently Asked Questions
Non-fungible tokens are commonly ERC-721 tokens on Ethereum’s blockchain. Unlike ERC-20 Ethereum tokens, ERC-721 tokens each have a distinct value. Since each NFT holds its own value, they can’t be exchanged for one another like normal cryptocurrencies. Because of this, NFTs act more as a form of authentication than a form of exchange.
NFTs aren’t exchangeable for each other, so they don’t act like normal cryptocurrencies. Instead, non fungible tokens are unique tokens used to verify the authenticity of digital media. In the future, NFTs could be used for tokenizing real world assets, making transactions of these assets more efficient and transparent.