You’re probably feeling left out… everyone on your Twitter and Instagram feeds is talking about NFTs (Non-Fungible Tokens), and you don’t even know what it is. Well, if you are interested in knowing what the rave is all about, then you should read this detailed guide to getting started with NFTs for beginners.
NFTs today show as much promise as Bitcoin did in its heyday, and many pioneers are taking their cut out of this pie.
Getting Started With NFTs
Before you think of buying NFTs, you should understand what they are.
What Are NFTs?
A non-fungible token or NFT is a smart contract that runs on a blockchain and is used to indicate the ownership of an item. The items, in this case, could be a song, digital art, and in-game avatar, or even real-world assets like real estate and cars.
These tokens are termed non-fungible because they are unique and irreplaceable. For example, new iPhones come out in batches every year, and each one has equal value to another in that series. So, if I took your brand new iPhone 11 and replaced it with mine, there wouldn’t be a difference since they are both the same, i.e, fungible.
A non-fungible item, however, is one of a kind and can’t be replaced. For instance, you want to get a piece of land to build a mall. While you can get a couple of plots anywhere, you’d most likely go for one that’s close to busy areas.
But not just that, you’d also consider its proximity to bus stations, security in the area, population, etc. All these are unique traits that make the land rare and valuable. So you can say the land is non-fungible since you cannot replace it with the same piece in a suburb.
You can also say the same for a pair of cut diamonds. Even if they’re from the same mine, they are not equal in value since some diamonds are cut better than others, are much larger than others, and are of a higher quality than others. So you can say that both are non-fungible since one has a higher value than the other.
How NFT Works
NFTs help artists and creators to prove ownership of their items. While it’s mostly geared towards digital artists, it also benefits traditional creators.
Before now, the digital era was the graveyard for artists. Someone can drop an image online, and it’ll spread immediately without anyone remembering its true source. People can even retouch and reproduce it without crediting the author. The same thing happens to songs, videos, articles, codes, and much more.
With NFTs, owners can add another layer of authenticity to their original works by storing them on the blockchain in a process known as minting. Minting is when you create a smart contract containing several information and commands and encode it into the blockchain.
So, when you purchase an NFT, the smart contract automatically includes your information as the new owner and other unique metadata, including the art itself, the date you minted it, and how royalties are handled. Check out our guide on how NFT smart contracts work.
So when you buy a digital asset, you can easily verify your ownership by visiting the token address on the blockchain and viewing the metadata. Even though people can right-click on the image and save it, they still can’t call it theirs.
What do you get when you buy an NFT?
Although buying an NFT allows you to legally own digital art, it doesn’t give you complete rights over intellectual property.
Simply put, buying an NFT allows you to own a key to the lock containing that digital art. You can display it, and brag about it to your friends, but you can’t modify it. Only the original author can do that.
So what you get when you buy an NFT is a digital receipt that grants you ownership of a specific file along with necessary information to prove its authenticity.
Or, you can say that in an era where copy and paste are prevalent for digital art, owning an NFT gives you (and only you) the right to copy and paste that digital art.
Why would anyone buy an NFT?
So what else do you stand to gain besides just being the legitimate owner of an asset that anyone can copy and paste? Well, NFTs are quite valuable as they offer lots of benefits for anyone buying them.
Here are some reasons why you would buy an NFT
- Owning an NFT allows you to own and boast about rare images. I mean, how many people can say that they’ve got a copy of Jack Dorsey’s first tweet?
- Many concerts these days sell tickets as NFTs. Concerts held on Decentraland are examples.
- Play-to-earn blockchain games store most character power-ups and features in the form of an NFT. So, owning one allows you to empower your in-game character.
- Most NFTs also have great market value and the potential to make you a millionaire in the twinkling of an eye. For instance, people who got Crypto Punks for free when they first launched now sell their PFPs for millions.
What do I need to get started with NFT?
Your essential kit to getting started with NFTs includes a smartphone or laptop, a crypto wallet (preferably MetaMask), and some coins in the wallet. Since most NFTs launch on the Ethereum blockchain, you’ll have to purchase some Ether.
Of course, some projects launch on cheaper blockchains and layer 2 platforms like Polygon, Arbitrum, or Immutable X. For Polygon, you’ll need to purchase some $MATIC, Arbitrum works with ETH, or $MAGIC if you’re using TreasureDAO while Immutable X works with Ether, only cheaper.
Your first step would be to set up your Metamask. Simply download the phone app or web extension and set up your wallet. Check out our in-depth guide on setting up your MetaMask wallet so you don’t make mistakes that might leave your assets vulnerable to hacking. After that, you need to buy some coins from an exchange.
You can purchase Ether or MATIC on Metamask or popular exchanges like Binance or Coinbase. However, they don’t sell MAGIC since it’s a Layer 2 coin. But you can swap from ETH or other currencies for MAGIC using the Arbitrum bridge or Uniswap. There’s a full website with ample information on how to get started with $MAGIC.
Once you have your wallet and coins, you can now purchase your NFT.
How Do You Buy an NFT?
Buying an NFT is simple; all you have to do is find a profitable NFT, follow the project’s progress, grind on their Discord server to get a whitelist spot, or wait for a public launch and mint one for yourself. You can also buy an NFT on the secondary market, which is basically people who minted first selling to others on a designated marketplace.
Most projects hold their public minting on their website while secondary sales are made on popular marketplaces like OpenSea, Treasure Marketplace, or TofuNFT – this usually depends on the blockchain they launch on.
So, once you’ve set up your wallet and purchased some coins, follow this step to purchase your first NFT. I’ll be using OpenSea for this guide, but the process is usually the same across platforms.
- Open the OpenSea marketplace in your web browser.
- Find the NFT you’re looking for by exploring the platform.
- Click the “Buy Now” button.
- Select “Checkout” once you’ve agreed to the marketplace’s conditions. The MetaMask addon will open displaying your purchase price. In addition, you may be charged a gas fee based on network usage, which can occasionally exceed $100.
Note that most projects are sold using Dutch auction, meaning you have to bid for them.
NFT Discords To Follow
If you’re just getting started with NFTs, you need to stay updated on all the latest development in the space. This also ensures you don’t fall into common NFT scams or make wrong investment decisions. Most projects and reputable NFT communities have Discord servers where you can interact with others and learn more about non-fungible tokens.
There are a lot of NFT Discords out there, with some focusing on NFT investors, others on NFT artists, and some catering to all things NFT for beginners like you. So, just find a suitable Discord from the options below and join one.
Frequently Asked Questions (FAQ) For Getting Started with NFTs
Can Anyone Create an NFT?
Anyone can create their own NFTs and sell them on the blockchain using a smart contract. Just create your art, set up your wallet, list it on a marketplace like Opensea, and get buyers to purchase your NFT. Make sure you own the intellectual property rights to your work before selling it though so you don’t have to worry about getting sued later.
Does NFT Increase Value?
The value of an NFT is defined by its rarity, uniqueness, scarcity, and desirability. An NFT that’s unique or scarce increases its value further. And if there are many copies floating around out there, then they’re less rare and therefore worth less. So yes, NFTs do increase the value of items.
Can You Lose Money From NFTs?
You can lose money from NFTs because the market is illiquid. If you want to make money off of NFTs, you need to be able to buy low and sell high. But if there aren’t enough people buying and selling, then prices will drop and you’ll end up losing money.
How Do You Make Money With NFT?
There are different ways to make money with NFTs. One way is to sell them as PFP projects, or profile pic collections like BAYC and CryptoPunks. Another way is to create a play-to-earn game where players earn tokens by completing tasks or trading in-game items. Or you could stake them in a staking pool and receive rewards based on how much you stake. NFT royalties also exist, which allow artists to collect profits from sales of their artwork.
This detailed guide to NFTs for beginners should help you understand what NFTs are, why they matter, and how to get started with creating your own. I hope this article provides all the knowledge you need for getting started with NFTs and preparing you to start making your own or investing in other peoples’ creations.