Musicians, artists, creators and influencers are all making non-fungible tokens to create digital collectibles. Celebrities like Logan Paul, Kings of Leon, Grimes and Diplo have all made NFTs with different digital media. The most common media on NFTs today are art and music, but digital collectibles are also becoming quite popular.
Created in 2017, Cryptopunks were among the 1st NFT collectibles minted on Ethereum’s blockchain. These collectibles are pixelated characters, and most are human, but some Cryptopunks are aliens, apes and zombies. Although each cryptopunk is unique, nonhuman Cryptopunks sell for much more than normal cryptopunks due to their scarcity.
Cryptopunks are algorithmically generated characters in a 24×24 pixel art frame. Similarly to art and trading cards, these Cryptopunks are collectible and scarce. Unlike traditional collectibles, however, the creators of Cryptopunks can’t mint any new pieces, so the supply will never exceed 10,000 NFTs.
The creators of Cryptopunks, Matt Hall and John Watkinson, can’t mint more Cryptopunks because these collectibles are authenticated by Ethereum’s blockchain. The code written on the blockchain limits the number of NFTs that can be minted, and since the blockchain is decentralized the creators can’t change the code on Ethereum’s network.
The code that makes NFTs possible is the ERC-721 token standard. ERC-721 is a type of token on Ethereum’s blockchain, and ERC-721 tokens are unique because they are non-fungible. Fungible tokens, like Bitcoin and Ethereum, can be traded for one another, as they all hold the same value. ERC-721 tokens are non-fungible, meaning that each token can hold a distinct value, allowing for the tokenization of unique assets like art and digital collectibles.
Step 1: Make an OpenSea account.
OpenSea is the largest marketplace for non-fungible tokens with over 2 million different NFTs listed for sale on the platform. To make an OpenSea account, all you need to do is connect a web3 enabled Ethereum wallet to the platform. Some crypto wallets that connect to OpenSea are Coinbase Wallet, Metamask, Dapper and Fortmatic.
Your account is associated with your Ethereum wallet, so you’ll need to connect your wallet whenever you want to access your Opensea account. What’s great about this is that your NFTs don’t need to be stored by OpenSea. Instead, your NFTs are stored in your Ethereum wallet and only leave your wallet if you sell your NFT. The same is true for buying NFTs –– when you buy an NFT it gets deposited into your Ethereum wallet.
Step 2: Buy a wallet (optional).
To use OpenSea, you’ll need to connect a software wallet to the platform. The most commonly used software wallet on OpenSea is Metamask, as its Google Chrome extension makes it easy to interact with websites that transact in cryptocurrency.
If you want to hold your NFTs safely, you should keep them in an Ethereum wallet. The 2 main types of Ethereum wallets are hardware and software wallets. Software wallets, like Coinbase Wallet and Metamask, are computer programs that store your cryptocurrency and NFTs.
Hardware wallets are physical devices that store your cryptocurrency and NFTs offline, and they’re the most secure way to store your digital collectibles. Most hardware wallets can store a variety of cryptocurrencies, so you’ll only need to buy one wallet for all your digital assets.
Best Hardware Wallet: Ledger Nano S
Ledger has been making hardware wallets for cryptocurrency since 2014. The company is well known for its multi currency support, as Ledger supports over 1,000 different cryptocurrencies. Since the wallet supports Ethereum-based tokens, you can store any ERC-721 non-fungible token in the wallet.
The Ledger Nano S comes in at just over $50 on Amazon, making it an affordable choice for most NFT collectors and cryptocurrency collectors. If you want a more premium hardware wallet, Ledger offers the Leger Nano X for $119 on its website.
Best Software Wallet: Coinbase
Coinbase has one of the most secure software wallets on the market. The company recently added support for NFTs, and you can view your digital collectibles directly on the Coinbase Wallet app.
Coinbase also lets you interact with decentralized applications (dapps) directly on its wallet’s interface. Dapps are applications built on Ethereum which let you interact with cryptocurrencies and NFTs without needing an account with a marketplace. This feature allows you to trade NFTs, earn interest on cryptocurrencies and exchange crypto tokens all from your wallet.
Step 3: Buy a piece from the collection.
All 10,000 Cryptopunks have already been minted on Ethereum’s blockchain. This means that if you want to buy a Cryptopunk you’ll need to purchase it from someone who already owns the collectible. OpenSea has many Cryptopunks listed for sale, and the prices for these collectibles range from around 1 Ether to several dozen Ether tokens.
To buy a Cryptopunk on OpenSea, all you need to do is purchase a listing using cryptocurrency in your Ethereum wallet. Some listings are auctions, so you can submit a bid for the Cryptopunk you want to purchase. If the seller accepts your bid, the transaction will be processed through Ethereum’s blockchain and the NFT will be sent to your Ethereum wallet. Most listings use Ethereum as a form of payment, but some use other Ethereum tokens, like stablecoins.
The average price paid for a Cryptopunk over the past 12 months is just under $26,000. Being as scarce as they are, Cryptopunks are extremely expensive digital collectibles. If you’re interested in collecting NFTs but aren’t ready to shell out the money for a Cryptopunk, the NBA has made their own collection of NFTs called NBA Top Shots which have been gaining traction among crypto enthusiasts and sports fans alike.
Best Cryptocurrency Exchange Platforms
If you don’t already own cryptocurrency, you’ll need to use a cryptocurrency exchange to buy crypto with a bank account. Some popular U.S exchanges are Coinbase, eToro and Gemini. These exchanges offer several different cryptocurrencies, but if you plan on using OpenSea, then you should purchase Ethereum and send it to your Web3 enabled Ethereum wallet.
Current Crypto Prices
The non-fungible token craze has taken place in the middle of a cryptocurrency bull market. Since the beginning of the year, many cryptocurrencies have appreciated over 100% in price. Bitcoin, the largest cryptocurrency by market capitalization, became a trillion dollar asset for the 1st time just last month. To get an idea of how crypto prices have been moving, check out some of the most popular cryptocurrencies and their prices below.
Cryptopunks or Cryptocurrency?
Many investors see cryptocurrency as a more sound investment than digital collectibles. Digital collectibles are fun to collect, but their prices are highly speculative and offer little intrinsic value. However, if demand keeps rising for NFTs, you can expect the prices for these collectibles to rise too. There are only 10,000 Cryptopunks ever made, and each punk is different. This scarceness attracts collectors who think Cryptopunks will continue to be a popular digital collectible.
Frequently Asked Questions
Q. What are crypto collectibles?
Crypto collectibles are digital media that’s authenticated by the blockchain, typically verified on Ethereum’s network. By tokenizing digital media, you’re able to distinguish between an original file and a copy of the original. NFTs create digital scarcity, making it possible to trade digital collectibles that have a finite supply.
Q. Are NFTs a bubble?
Some non-fungible tokens have sold for ridiculous amounts of money –– the highest sold Cryptopunk sold for north of $7.5 million. It’s hard to justify that these prices will continue to rise, and many investors see NFTs as a bubble. One thing is certain, however; non-fungible tokens are here to stay, and the use cases for NFTs are quickly growing.
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