Non-fungible Tokens (NFTs) are non-interchangeable units of data stored in a blockchain that can be sold and traded. They are unique digital assets that present ownership of real-world items like art, video clips, music, and more. Their digital tokens are stored on the blockchain and unlike cryptocurrencies where each coin is identical, each NFT is unique and it can be sold as a way to prove ownership over a digital file.
The NFT itself is not stored on the blockchain but a link to the file is stored which acts as proof of ownership over that particular NFT. Only one NFT doesn’t need to exist in 1 file. NFTs can have editions too, like a rare NFT which has only 20 copies.
Most NFTs are sold on the Ethereum blockchain. Each transaction costs fees that are paid to miners called gas fees, which is the amount of gas you need for the transaction. Every activity on this blockchain costs some gas. There are significant gas fees to mint an NFT here. The more congested the blockchain, the more expensive the fees are. Ethereum blockchain also has the drawback of leaving a big carbon footprint and being harmful to the environment as it uses a huge amount of electricity to run.
Lazy minting is an option that users can use to avoid gas fees by using lines of pre-existing code. The fees are borne by the buyers rather than the seller. Technically any digital file can be sold as an NFT but usually, the first one is an image, video, or audio clip. If something happens and the transaction does not go through you cannot get back the gas fees they paid.
There are many blockchain platforms where one can sell NFTs and each one has unique rules, fees, and features that must be properly understood before using it. The basic platforms are Rarible and OpenSea. These use the Lazy Minting system which lets you create an NFT and sell it without being written on the blockchain thus avoiding any gas fees. The fee is instead bundled with the NFT price and transferred to the buyer. However, one needs to be careful as to remove the NFT from the sale, one needs to pay a fee. Some blockchain platforms may require a one-time fee for account initialization.
One does not necessarily need a Marketplace blockchain platform to create an NFT. People can make their Smart Contract, save it in the blockchain, and then mint tokens. But this requires a high level of technical knowledge. One needs to create a wallet to store cryptocurrencies and the NFT one minute or buy. Some common ones are Coinbase and MetaMask.
Both provide the user with the “seed phrase” – 12 random words which help them recover their account. It is very important to keep this safe as it is the only way to access their wallet.
After connecting their wallet to the platform, one can click on the Create button and start creating, either a single NFT or a collection and after completion, list it for sale on the platform chosen. The sale can be a fixed price or an auction, depending on the user. Due to the recent buzz around NFTs, everyone seems to be making them. However, to successfully sell them, they should be unique or be exceptionally marketed.