Read this as your final bus stop as a beginner, trying to understand NFTs.
NFTs are Non Fungible Tokens. But how does that sound? More confusing right? Just like with every other concept that has made the news, NFTs have sparked rousing interests among the greater crypto population and without. And being properly positioned will further help us make the most out of this innovation. But only a fool goes fishing without first learning how to fit the hook, and I bet you’re not one. So what really is the craze about NFTs?
Non Fungible Tokens connote a unique digital representation of value, usually in the form of jpegs. In my opinion, NFTs are the truest definition of value on the blockchain. The famous Mona Lisa painting has only one original work all over the world. As much as other artists have tried to recreate the work, it remains that there would be no other one with the exact same line curves, paint thickness or even texture. Whether or not anyone tries, the initial original one remains unique. Come to think of it, in the case of humans, is there anyone like you? We often say “only you can be you, and that’s your true power”, so if NFTs are unique then I won’t be sued if I say “I am NFT” right? You bet.
But Why NFTs?
Why are they even sold for up to $50,000? Can’t I just screenshot them? Or right click save? Why are you all going crazy over random 3D arts of a useless bored ape?
Maybe you’re right, that we are all crazy for believing in NFTs. But whatever you think, remember there are loads of people who make a living off NFTs, either as creators or collectors. Like I’ve already stated, NFTs represent value on the blockchain and are as such created to preserve real-life value which may be carelessly managed by humans. An NFT not only allows the buyer to own the original item, but also carries inbuilt authentication, which serves as a proof of ownership. Just like most people value the privilege of studying in Harvard university more than the degree in question, NFT collectors value those “digital bragging rights-pfps” more than the NFT itself. So you won’t blame them for being crazy over jpegs. In recent times, we have also seen human photographs qualify as NFTs, so NFTs are not just, monkeys.
The How-To NFTs
Now that you’ve understood what NFTs are, at least just quite, let’s learn how to own one. Before throwing some cash into purchasing an NFT, one must know that for anything to qualify as an NFT, it must be stored and secured on the blockchain. Anything can be an NFT but not everything will be an NFT.
Moving on, to own an NFT, one would need a wallet, an NFT marketplace and obviously some funds.
A wallet serves as a digital medium with which individual funds are stored on the blockchain. You can see it as a bank on the blockchain, but you are your banker, in the case of decentralized wallets. While an NFT marketplace as the name implies, is a platform that enables the buying and selling of NFTs, and earns commissions by doing so. Like eBay connects buyers to sellers, an NFT marketplace connects creators and collectors together. Depending on the blockchain and marketplace, you would need to hold different accepted cryptocurrencies for individual marketplaces. For example, to trade Solana NFTs, your best bet would be to trade with Solana on MagicEden marketplace. More on this as we progress.
Where To Trade NFTs
Like has earlier been stated, a marketplace is the most reliable place to trade NFTs. However, most new projects prefer to sell their initial collection via launchpads. Although most launchpads are also marketplaces, not all marketplaces are launchpads.
As it is often said, “different strokes for different folks”, there are also different marketplaces for different blockchains. Let’s quickly look through the major ones across Ethereum, Solana, Near, Binance, and Avalanche blockchains.
On the Ethereum blockchain, the most notable mention here is OpenSea NFT marketplace. It was established in december 2017 and has since then seen over $10 billion in transaction volume. It is quite easy to create an account, connect and fund a wallet, and with proper knowledge however, you can either create or collect NFTs.
On the Solana blockchain, MagicEden tops the charts with an all-time 10 million Solana trade volume and 33,000 active wallets in the last 24 hours. MagicEden is the King of the streets when Solana NFTs are talked about. Other honorary mentions include CoralCube, Solanart, Hyperspace, and Solsea.
Paras.id dominates the Near NFTs ecosystem, which is gradually coming up. There is more to be seen of Near NFTs, don’t be told.
ToFu NFT serves as the largest multichain NFT marketplace, playing host to Binance, Arbitrum, Evmos, MoonRiver, Harmony, Polygon, Metis, and even Ethereum NFT trades, to mention but a few. As always, users will only need to connect their wallets to the different networks, depending on which NFT they want to trade. Other marketplaces include Trove on Arbitrum, Stratos and Agora NFT marketplace.
Things You Need To Know
Like with any other field of life, there are things you should know before investing in NFTs. And here are a few of them.
Minting: In simple terms, this refers to buying an NFT. NFTs are usually minted for a pre-determined price or through an auction and most often, a launchpad, before it is traded on a secondary marketplace. Early buyers can enjoy the privilege of selling at higher prices on the marketplace if the fortunes go in their favour. It is just like when real life traders order goods from China to sell locally.
Whitelist: Often written as WL, is used by most NFT creators to serve as a first hand ticket, offering members who meet certain criteria to mint an NFT before the public. Having a WL is more like sitting at a VIP table at a concert. However, a WL cannot be touched, it’s just a digital badge.
WL Grind: Whether you’ve heard this term before or not, ‘grind’ is used to describe all the actions a person will employ to get a whitelist. It ranges from talking about unnecessary things, at odd times, with unnecessary people who you don’t know and probably don’t care about, to creating fan arts(music, drawings, paintings), to curating Twitter threads, etc.
Floor Price: is the lowest possible price one can purchase an NFT on a marketplace. Just like with every other speculative asset, most people buy into NFTs at a low price and hope to sell it at a higher price for profits.
Gas: This is the amount, in native currency, required to completely execute transactions on the blockchain.
Doxxed: When the identity of an NFT project creator(s) is public, known and verifiable, a project is said to have doxxed. In the NFT world, the presence of a doxxed team helps to increase investors’ confidence and trust in the project, such that there are minimal chances of a rugpull or scam event.
Metadata: Refers to the necessary and unique data that makes up an NFT, and defines its appearance. The metadata is basically the DNA of an NFT; DNA on the blockchain.
Before I end this, I’d like to quickly note the types of people involved in NFTs.
The Creators: As the name implies, bring their idea of digital art to life on the blockchain. Depending on the inclusivity of their idea, people will buy into the idea and eventually, into the project.
The Collectors: They collect random NFTs, both the ones they believe in and the one they don’t. This set of people usually console their losses with a “I’m here for the art” lie. Their DNA has a lot of copium and hopium blood cells in it.
The Flippers: Don’t really care about anything but that their bags are forever in profits. They patronize paperhands.
The Paperhands: Can’t stand the thought of a 10x gain. They are okay with -30% profits. Yes, you read that right.
The Stake(orrs): Always buy into NFT projects for the purpose of staking their NFTs. An act which more often than not, goes wrong.
The Undercutters: These ones deserve to be strangled. They are here to keep providing liquidity for the market. An undercutter buys high and sells low; mints at 2 SOL and lists for 1 SOL when the floor price is at 2.5 SOL. Mind you, they are in their right senses. They take pleasure in making the rich richer, while praying so hard to leave the trenches. I like to call them generous people.
The Bagholders: The ones really here for the art. They keep buying NFTs and never take profits. “I’m a maxi” is their motto. They have maximum bags with minimum pockets. Bagholders and Stake(orrs) are from the same bloodline.
Then there’s me, who wishes to own every top-tier NFT, but probably never would. I keep coping with each passing day.
Then there’s you, who is trying to fit into your right place already. Nice to meet you, Mr. Paperhand.
To learn more about NFTs and crypto in general, follow me as I would be bringing the gospel of NFTs oven-fresh for your reading pleasure.
You can also send me a direct message on Twitter, here. I share insightful threads, updates on projects I’m looking into and keep my audience in the know about NFTs and Decentralized Finance.
Till next time, keep learning.
