NFTs.

What Is an NFT? How Do NFTs Work?

What Is a Non-Fungible Token (NFT)?

Frequently Asked NFT Questions

What is an NFT?

An NFT is a unique unit of data stored on a blockchain infrastructure that cannot be copied or replicated, providing a secure record of ownership (typically associated with a digital asset like an image, animation or video that lives on a blockchain). 

What Does NFT Stand For?

NFT stands for non-fungible token. Non-fungible essentially means it cannot be substituted or interchanged, even with other similar assets.

 

NFT Examples
How to Buy an NFT
How to Create an NFT
NFTs and Web3
NFT Examples

A digital image of the famous Mona Lisa painting.

NFT Examples

NFTs can be proof of ownership for physical or digital assets like artwork, collectibles, memorabilia, games, real estate, music … and the list goes on. 

Here are some popular examples of NFTs you can buy and trade:

  • Axie Infinity: An NFT game where players can collect creatures that battle and hunt for treasure
  • Bored Ape Yacht Club: Digital ape collectibles with members-only benefits
  • CryptoKitties: An NFT game where players can collect and breed digital cats, one of the first games on a blockchain
  • CryptoPunks: Pixel art collectibles, one of the first NFT collections
  • Decentraland: A virtual world where users can buy digital plots of land as NFTs
  • NBA TopShot: Digital collectible sports moments
  • The Sandbox: An NFT game where players can buy digital plots of land

Here are examples of some of the most well-known NFT purchases:

  • Beeple’s Everydays The First 5,000 Days: A JPG collage NFT that famously sold at Christie’s auction house for more than $69 million dollars
  • Jack Dorsey’s Tweet: The co-founder and former Twitter CEO sold his first tweet on the platform as an NFT for $2.9 million. It reads “just setting up my twttr".
  • Nyan Cat: An animated flying cat NFT that sold for nearly $600,000
  • Quantum: Artist Kevin McCoy is frequently recognized as the first person to mint an NFT. The animated NFT sold for more than $1.4 million. 
  • The Merge: Selling for $91.8 million on Nifty Gateway, the most expensive NFT is considered to be The Merge, created by the artist Pak
  • WarNymph: Digital art collection sold by the music artist Grimes for $6 million. 

Here are some examples of the celebrities and brands that have launched NFTs:

How to Buy an NFT

Two digital people transferring a box labeled NFT.

How to Buy an NFT

The first step to buying an NFT is to purchase some cryptocurrency, which is digital, encrypted currency that uses a decentralized payment network built on blockchains, rather than using banks.  

Most NFTs are purchased with ether (ETH), the native cryptocurrency of the Ethereum blockchain. Other examples of blockchains are:

You can convert U.S. dollars to cryptocurrency on popular exchanges like:

These exchanges typically will have wallets, which allow you to securely store your cryptocurrency and NFTs. To purchase NFTs, you will need to connect your wallet to the NFT marketplace where you would like to buy your NFT. NFTs are often sold through an auction system where you will put in a bid for an NFT. Some sites like OpenSea offer an option to buy an NFT for a set price.

The price of an NFT varies greatly. The price of NFTs started plummeting during the first week of May 2022 when the Wall Street Journal reported that NFT sales fell to a daily average of 19,000 that week, a 92 percent decline when compared to 225,000 in daily average sales in September 2021, according to analysis of figures from the website NonFungible.

If you want to be invested indirectly in NFTs, it might make sense to look at options on the stock market. While you can’t buy NFT stock, you can purchase shares of cryptocurrency exchanges that are invested in NFTs. Some examples of NFT-related stocks are:

Where to Buy an NFT

There are a variety of NFT marketplaces where you can purchase an NFT. OpenSea is considered to be the first and largest NFT marketplace. Some examples of where to buy NFTs include:

How to Create an NFT

Digital assests and images being added to a box labeled NFT.

How to Create an NFT

If you are wondering how to make an NFT, the first thing you should know is that the process is called minting. NFT minting is the process of converting digital data into a unique digital token recorded on a blockchain. 

The first step to mint an NFT is to identify an asset that you have intellectual property rights to  and want to sell as an NFT. This could be an animation, video, online graphic or music, to name a few examples.

Next, you will want to determine what blockchain you want to use and connect to it. You will need to create an account to manage transactions. Ethereum, for an example, has highly detailed instructions on how to mint an NFT. 

Similar to buying an NFT, you will need to purchase cryptocurrency and connect it to a wallet like MetaMask or Coinbase Wallet. There are fees to mint an NFT like gas fees for blockchain transactions, account fees and listing fees. 

Next you should choose the marketplace where you want to sell your NFT. That marketplace will have instructions like these from Open Sea for how to upload your files and instructions on how to sell it.

It’s important to know that smart contracts are a part of the NFT minting process. Smart contracts are digital contracts stored on a blockchain that are automatically executed when certain conditions are met between an NFT owner and the buyer, like when an NFT transfers ownership and the original artist receives royalties.

What Is NFT Art?

NFT art or cryptoart is typically digital artwork that is minted with NFT technology, which contains unique tokens on a blockchain. To understand how to create NFT art, you will need to learn how to mint an NFT.

“NFTs lend themselves to a particular kind of art, which is resulting in a static image, typically that is the size of your web browser or smaller, and it’s a single digital file,” said Jon Ippolito, professor of new media and director of the digital curation program at the University of Maine, in a January 2021 interview with Built In. “When you buy an NFT, you’re actually not buying the JPEG of the unicorn and the rainbow, you’re only buying a token that points to that JPEG on the blockchain.”

What Are NFT Games?

NFT games are on the blockchain and typically involve buying and trading NFTs in a virtual world. GameFi refers to blockchain games that offer economic incentives to the people that play them like earning crypto tokens, virtual land, avatars and other NFTs.

Examples of NFT games include:

NFTs and Web3

Digital assets and files floating in digital cubes representing the blockchain they were created on.

How Do NFTs Relate to Web3?

Web3 is the idea for a new iteration of the internet on blockchains, focused on decentralization and token-based economics. NFTs, cryptocurrency, decentralized autonomous organizations (DAOs) and decentralized finance (DeFi) are all considered part of the Web3 ecosystem.

GLOSSARY OF NFT LINGO

  • Blockchain: a distributed database that stores information electronically in a digital format. 
  • Cryptoart: typically digital artwork that is minted with NFT technology, which contains unique tokens on a blockchain.
  • Cryptocurrency: digital, encrypted currency that uses a decentralized payment network built on blockchains, rather than using banks.  
  • NFT: a unique unit of data stored on a blockchain infrastructure that cannot be copied or replicated, providing a secure record of ownership (typically associated with a digital asset like an image, animation or video that lives on a blockchain). NFT stands for non-fungible token.
  • NFT minting: the process of converting digital data into a unique digital token recorded on a blockchain. 
  • Smart contracts: digital contracts stored on a blockchain that are automatically executed when certain conditions are met between an NFT owner and the buyer, like when an NFT transfers ownership and the original artist receives royalties. 
  • Web3: the idea for a new iteration of the internet on blockchains, focused on decentralization and token-based economics.

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