Cryptocurrencies are now being recognised by governments and accepted by major companies globally. Crypto coins like Bitcoin and Ethereum have helped the rise of new digital assets. One such digital asset is NFTs. In the first half of 2020, there was €12.1 million in NFT sales. This new industry combining new technology with art has skyrocketed ‘to the moon’ with €9.4 billion at the end of the third quarter of 2021.
What is a non-fungible token?
In economics, a fungible asset is something with units that can be readily interchanged – like money. With money, you can swap a £10 note for two £5 notes and it will have the same value. However, if something is non-fungible, this is impossible – it means it has unique properties so it can’t be interchanged with something else.
It could be a house, or a painting such as the Mona Lisa, which is one of a kind. You can take a photo of the painting or buy a print but there will only ever be one original painting.
NFTs are “one-of-a-kind” assets in the digital world that can be bought and sold like any other piece of property, but which have no tangible form of their own. The digital tokens can be thought of as certificates of ownership for virtual or physical assets.
How to Buy NFTs
If you’re keen to start your own NFT collection, you’ll need to acquire some key items:
First, you’ll need to get a digital wallet that allows you to store NFTs and cryptocurrencies. You’ll likely need to purchase some cryptocurrency, like Ether, depending on what currencies your NFT provider accepts. You can buy crypto using a credit card on platforms like Coinbase, Kraken, eToro and even PayPal and Robinhood now. You’ll then be able to move it from the exchange to your wallet of choice.
You’ll want to keep fees in mind as you research options. Most exchanges charge at least a percentage of your transaction when you buy crypto.
Popular NFT Marketplaces
Once you’ve got your wallet set up and funded, there’s no shortage of NFT sites to shop. Currently, the largest NFT marketplaces are:
• OpenSea.io: This peer-to-peer platform bills itself a purveyor of “rare digital items and collectibles.” To get started, all you need to do is create an account to browse NFT collections. You can also sort pieces by sales volume to discover new artists.
• Rarible: Similar to OpenSea, Rarible is a democratic, open marketplace that allows artists and creators to issue and sell NFTs. RARI tokens issued on the platform enable holders to weigh in on features like fees and community rules.
• Foundation: Here, artists must receive “upvotes” or an invitation from fellow creators to post their art. The community’s exclusivity and cost of entry—artists must also purchase “gas” to mint NFTs—means it may boast higher-caliber artwork. For instance, Nyan Cat creator Chris Torres sold the NFT on the Foundation platform. It may also mean higher prices — not necessarily a bad thing for artists and collectors seeking to capitalize, assuming the demand for NFTs remains at current levels, or even increases over time.
Although these platforms and others are host to thousands of NFT creators and collectors, be sure you do your research carefully before buying. Some artists have fallen victim to impersonators who have listed and sold their work without their permission.
In addition, the verification processes for creators and NFT listings aren’t consistent across platforms — some are more stringent than others. OpenSea and Rarible, for example, do not require owner verification for NFT listings. Buyer protections appear to be sparse at best, so when shopping for NFTs, it may be best to keep the old adage “caveat emptor” (let the buyer beware) in mind.
Here are some other websites where you can buy NFT’s:
The sites listed below are just some of those that sell NFTs:
The most expensive NFT
A phenomenon in the NFT marketplace is limited art collections such as Cryptopunks, Bored Ape Yacht Club and Cool Cats.
Each of these collections are limited to 10,000 pieces of digital art. Each day 1000s of NFT artworks are sold. Like traditional art pieces found in an auction by Christie’s or Sotheby’s, the rarer the artwork, the higher the price it can fetch.
The remaining third of a 10,000 Cryptopunks collection was recently sold for over €472 million. This pixelated art piece shows the potential of NFT sales in the future.
Why should I invest in NFTs?
You may wonder why someone would invest in something that you can easily duplicate on a mobile or laptop. Expensive NFTs are being used as profile pictures on social media accounts to show wealth, much like business people wear expensive watches.
Many people are buying into the world of NFTs to be part of an online community. Owning certain NFTs can give you access to exclusive content and live events.
Digital investors are utilising NFT marketplaces to make large amounts of money in what they hope will be a short amount of time. Also, business models from many industries are getting reshaped to incorporate NFT trading. A single NFT can be bought and sold multiple times, but the buyer must pay a royalties fee to the original owner or creator with each sale. The royalties fee is typically around 10 percent.
Charles Morin, Co-founder of Jumy, told Euronews: “Since we can trace the full story of the token at every single ownership transfer, the artists get some money out of the royalties.”
Whether involvement in NFTs comes from financial interest, joining a community, or simply for the love of an art piece, the future of NFTs looks prosperous.
What’s stopping people copying the digital art?
Nothing. Millions of people have seen Beeple’s art that sold for $69m and the image has been copied and shared countless times.
In many cases, the artist even retains the copyright ownership of their work, so they can continue to produce and sell copies.
But the buyer of the NFT owns a “token” that proves they own the “original” work.
Some people compare it to buying an autographed print.
Can anyone make NFT’s?
If you’ve got this far, you might be wondering: can I make an NFT? Well, one would assume so given that when Trevor Andrew drew this Gucci Ghost (above), he managed to sell it for $3,600. Technically, anyone can create a piece of art, turn it into an NFT on the blockchain (a process called ‘minting’) and put it up for sale on a marketplace of choice. You can even attach a commission to the file, which will pay you every time someone buys the piece through a resale.
Much like when buying NFTs, you need to have a wallet set up, and it needs to be stuffed full of cryptocurrency. It’s this requirement for money upfront that causes the complications.
The hidden fees can be prohibitively astronomical, with sites charging a ‘gas’ fee for every sale (the price for the energy it takes to complete the transaction), alongside a fee for selling and buying. You also need to take into account conversion fees and fluctuations in price depending on the time of day. All this means that the fees can often add up to a lot more than the price you get for selling the NFT.
Whether or not NFTs are here to stay, for the moment they are making some people money and they’re creating new possibilities for digital art. We would, however, advise caution and careful consideration of which platforms to use. See our guide to how to make and sell NFTs for more information. And if you want to get creating, make sure you’ve got one of the most powerful laptops available or even one of these top drawing tablets.
Why are NFTs controversial?
There’s a lot of money being made in the NFT market, but you’ll have heard there’s also great controversy, not least due to the impact on climate. The creation of blockchain assets, NFTs included, uses a horrendous amount of computing power – and so a huge amount of energy. Some are worried about the very real impact the craze could have on the environment.
CryptoArt.wtf, a site set up to calculate the carbon footprint of NFTs (which is now offline), calculated that a piece of NFT art named ‘Coronavirus’ consumed an incredible 192 kWh in its creation. That’s equivalent to one European Union resident’s entire energy consumption for two weeks. Was it a particularly big piece? It’s estimated that a ‘simple’ NFT GIF can create the same consumption.
