Decrypting NFTs

Every generation had their personalised currency. Millennials had Pokémon and wrestling cards, Generation X had baseball cards and mailing stamps and the baby boomers had their magic 8 balls and comic books. While we would like to believe we live in a single paper currency economy, this isn’t true. Children exchange video games for favours, adults offer old wine for reciprocity and retirees trade favours with cigars. It is not just the incarcerated who have parallel economies, we all do!

Why does the original near mint condition 1988 Spider-Man comic fetch thousands at the pawn store? And why not my reprint on glossy paper? Its ‘fungibility’ of the item which complement or moderate values. Since the barter system, we have agreed on the value of different commodities, based on their demand. Demand for consumption, hoarding or fashion-ability. Commodities which are replicated and can be exchanged for the same ‘value’ of the same item are called fungible.

A five-dollar note and 2 kgs Taj Mahal basmati rice bag is fungible. However, a five-dollar bill with Mohammad Ali’s autograph or the first basmati rice ever grown in outer space are ‘non-fungible’. The same applies to digital commodities, 1 cryptocurrency can be exchanged for another, making it fungible, but the first tweet ever is an ‘original’.

 

What is a token?

Non-fungible digital commodities have recently been making headlines for their commercial lucrativeness. Memes, social media posts, sports clips, gifs, images etc are sold for millions of dollars. There is an interesting difference between physical non-fungible items and digital non-fungible tokens. Non-Fungible Tokens (NFT) don’t necessarily have to be intrinsically ‘original’, however the ‘token’ is unique. When you purchase a cat meme, a token is generated against that purchase, which is recorded under your name and identification. This token is unique and non-fungible, hence making your cat meme NFT!

To put it more simply, an NFT is a digital asset, even a digital version of a real-world occurrence, with a receipt which confirms your ownership. NFTs can be recording of ‘real-world’ art-form, soundbites, memes, tweets, painting or video clippings. One can cash on digitizing existing popular culture phenomena or create your own crypto art.

How to make Crypto Art or NFTs?

Making crypto art and putting it out isn’t too complicated nor does it require intricate knowledge about block chain technology. Your fist step will be to decide which blockchain you want to support and issue your NFT. While there are many including WAX, Cosmos Trom, Binaca Smart Chain etc., Ethereum is by far the most popular and robust choice at the moment.

The catch is here, how and where you sell your NFT is dependent on your block chain. It is the block chain which records and confirms your token giving you ownership of an NTF. Each blockchains have their ecosystems which allow you access to marketplaces and digital wallets. In other words, you can’t use the British pound to buy bread in Australia, your access to different platforms and markets is restricted by the blockchain.

Ethereum, which is the most popular blockchain for NFT. The Ethereum wallet gives you access to the thriving markets of OpenSea, Rarible, Mintable and Makersplace. Once your art is ready and you are prepared to sell it as crypto art. You should explore the different market space and decide on your appeal and personal preferences. From here, it’s quite straight forward. However, just as in an arcade you can only trade in their currency. Here the currency is ether! Ether is your cryptocurrency. You will have to link your wallet which has your ethers to your profile on NFT the marketplace. And you are good to buy or sell NFTs!

Mechanics of the crypto art market

So, first of all purchase some ether from Coinbase website and store it in your Metamask wallet. Coinbase and Metamask are the most reliable and popular platforms in the crypto world. However, they are the preferred choice for those who trade in larger volumes on cryptocurrency, hence can justify the higher operating costs. New users can explore alternatives to Coinbase, Liquid, Gemini, Binance, Bitstamp, Kraken, BitMEX. It is imperative to weigh the pros and cons of each of these. While initially a preferred choice for all users due to its user-friendly interface, increasingly Metamask is found to be expensive. Fortmatic, TrustWallet and Portis are other wallets which are compatible with Opensea.

Once your crypto wallet is set up linked with your Opensea profile, you can update your information. The Opensea dashboard is very professionally designed and easy to use. You can ‘create’ your collection and upload your art, name it, add description and detail, and link to the artist’s website. To add more value you can add properties, which demonstrates the uniqueness of the crypto and other details like levels and stats. However, these are popular largely within the gaming community. An important aspect is unlockable content. Which is a message you can deliver to the buyer, it could be pleasantries or contact details or links for more value in addition to the sale.

The money spinner, gas prices!

Now comes the interesting bit of gas price. Before that you will have to choose your selling model, from highest bid, set price and bundle. Affiliate boundaries to increase opportunities of sale. Schedule sale time for a future date and time. And you post a listing. Here comes the gas fee. Gas fees are a steep ask for most amateur content creators. It is the cost you pay for your listing. It does vary depending on your urgency, if you are willing to upload the art over a few more days, your fee reduces. If you want it uploaded immediately, you will have to pay the maximum set price. This cost varies depending on the day of the week and the time of day. It is said, cheaper costs are found during weekends. Further, when you go to buy an NFT you have to pay a smaller gas fee.

Hype or Future?

NFTs could be a bubble as crypto sceptics have claimed. But similar claims had and are being made about crypto currency, the crypto market has seen some recent downturn with dogecoin, but so, did Bitcoin and it has bounced back! Increasingly more and more countries are looking at ways to monetise this technology and users are increasing. Its acceptability moved past a fad.

NFTs future may not be created, but it has opened up a whole new world of content creators and artists. For example, Niio Art has demonstrated how users can rent art without owning it for a time period. Blockchain has used a new age to authentication, and this is set to continue revolutionizing creative business models. NFTs are a manifestation of this revolution, which will keep evolving hence investing in it may not be a bad idea.