The last couple of months have been difficult for the enthusiasts who actively participate in Web3. The Crypto bear market has been going on with no apparent symptoms that the situation will change by the end of 2022. NFT wallets with a profit of $100,000+ declined to a record low of 272 in Q3, and Total Profit at NFT reselling dropped by 84% compared to Q2 2022 (read our recent NFT Blog post to find more market insights).
The tough times don’t mean that the NFT market is over. On the contrary, some premises indicate that digital artwork may become even more vital than it used to be during its boom at the end of 2021. While NFT collectibles, often purchased for the sake of profit and speculations, are gradually losing the attention of NFT investors, the new category “Utilities NFT” takes leadership in various categories.
What this means is that while NFT projects are struggling, they may still benefit from blockchain technology and bring tangible benefits to those who engage in the NFT space. In this article, you will find answers to 5 commonly asked questions to help you understand the emerging form of digital art.
What is an NFT?
NFT stands for Non-Fungible Token. It’s a unique, cryptographic asset on blockchain that cannot be duplicated and substituted.
NFT collections are unique, which makes them attractive to potential investors, and it is also one of the reasons why NFTs are commonly used for speculative purposes. However, in recent months, collectibles have lost their value as a new category, utilities NFT, gains in importance.
NFTs have multiple applications. They may be used for tokenization purposes, making trading real-world assets more straightforward. The NFTs can also be utilized to represent property rights and identities.
NFT has many other adoptions. As Web3 develops and trends such as P2E (Play-to-Earn), L2E (Learn-to-Earn), or Metaverse gain importance, NFT technology is more often used.
It may, for example, provide additional utilization and broaden the offer of P2E projects. NFT may be used as in-game assets that hold collectible value but also grant other benefits, such as improving your character’s power or giving a competitive edge to the participants of particular events.
How Does NFT Work?
Each NFT token is unique and non-divisible. NFTs can represent digital art, real-world items, and any other rare piece of data.
The ownership of NFT is managed through unique ID and metadata. They are minted through smart contracts to assign ownership and manage transferability.
As NFTs information is added to the blockchain, it assures its specific features:
- It’s easy to prove your own NFT.
- Nobody can manipulate the ownership.
- You can sell the NFTs and transfer ownership; sometimes, the original creator will receive resale royalties.
You can either sell NFTs or securely hold them in the wallet. Decide what option you find the most suitable.
How to Create an NFT?
NFT creators can receive tangible benefits that may encourage them to issue nonfungible tokens, which include:
- Easily proving that you are the creator.
- You are determining the scarcity of your NFTs.
- They are earning the creator’s royalties.
- Ability to sell it on any NFT marketplace.
Regardless of the market difficulties, creating NFTs can still be enticing for Web3 market participants. Find essential information on how to create NFTs below:
- While NFTs are most often digital art, they may as well have a form of other digital files such as audio or video clips. So first, decide what you want your NFTs to represent.
- Then, decide what blockchain for NFT you want to use. While the Ethereum blockchain is one of the most popular for NFT projects, you can also utilize other blockchains, such as Solana, Flow, or Tezos.
- Another component you need to hold your digital assets is an NFT Wallet. MetaMask, Coinbase Wallet, and secure hardware wallet Ledger Nano X are popular wallets you can use to create your NFTs.
- Then, choose an NFT platform that allows you to create an NFT. OpenSea, SolanaArt, and specific crypto exchanges that support NFT creation (such as Binance Exchange) can serve your brand-new NFT collection.
- After completing the above steps, proceed with the creation of your NFT. The process varies depending on the platform you choose. For example, on the OpenSea marketplace, click the profile icon in the right corner and select Create. Then you can follow the instructions on the creation page. You will be asked to upload your file, name it and provide other customizable information, including the token supply and blockchain you want to use.
- Once you have created your NFT, you can list it for sale. Again, follow the instructions that are available on the platform of your choice. Listing is often free, but the possible fees depend on your chosen exchange.
What are NFT Marketplaces, and Where to Buy NFTs?
An NFT marketplace is a digital platform for trading NFTs. OpenSea is one of the most popular NFT marketplaces for buying and selling NFT art. Other platforms are Rarible, Magic Eden, Binance, and Coinbase NFT.
Each NFT marketplace will have different fees, payment options, and available blockchains in the offer.
The largest NFT marketplaces may offer additional features like creating your own NFTs.
What is the Difference between NFT and Cryptocurrency?
The most significant difference between NFT and cryptocurrency is that non-fungible tokens are unique and non-divisible. While many people can hold one or two Bitcoins, and they will have the same value (dependent on their current exchange rate), NFTs are always unique.
Cryptocurrencies are divisible, which means you can split them into smaller pieces. NFTs are quite the opposite.
Another differentiator is that their utilities often determine the value of NFTs; some NFTs have pure collectible value.
However, NFTs and cryptocurrencies are often related to one another. For example, for buying NFTs, you will use cryptocurrency.
Non-Fungible Tokens (NFTs) Explained. A Brief Summary
The NFT market has been struggling lately, but many circumstances prove that non-fungible tokens are not a fad. The above answers will help you understand how NFTs function, and at this stage, you may even consider creating your NFT project.
Influential transactions of Bored Ape Yacht Club tokens and a few other mainstream projects endorsed by celebrities are not a good representation of the entire market. You may find your chances in the new digital economy, even though it’s been a rough few months for Web3 enthusiasts.