Cryptocurrency NFT

What’s the Big Deal with NFTs and How to Use them Practically?

What's the Big Deal with NFTs and How to Use them Practically
What's the Big Deal with NFTs and How to Use them Practically

When Eminem and Justin Bieber bought BAYC NFTs, what were they thinking? How can an algorithmically generated image of a monkey fetch millions of dollars? If these are the questions that intrigue you to learn more about NFTs, you are at the right place. 

Most definitions of NFT floating around on the web can be surmised as “NFT is a token created on a blockchain that can represent a single entity and is completely non-interchangeable”.  

For a layman, NFT can be thought of as tokenized art with its very own unique identity on the Internet. For example, a BAYC ape #3001 (bought by Justin Bieber) is entirely different from a BAYC ape #9055 (purchased by Eminem). Although both the apes share similar characteristics and are part of the same collection, they are one of a kind. 

The fact that they are ‘one of their kind’ is the reason why they are so precious. Why? 

Because the uniqueness of an item allows it to be ‘rare’ on the Internet. And, when something is rare, its price increases over a period of time.

How Elusiveness and Rarity of NFTs Increase their Price? 

When we see these celebrities buy NFTs on the Internet, we might consider them to be crazy. However, there is a method behind their craziness. Do you know the reason why Bitcoin experienced a boom? 

Because Bitcoin only had a limited number – 18,945,250 to be precise. 

Now, there are only 10,000 BAYC apes in the world. So, whenever a celebrity buys a BAYC ape, it causes intrigue.  

Intrigue builds speculation. And, we start thinking that these 10,000 BAYC apes have ‘Value’. 

So, just like Bitcoin – a cryptocurrency working on the Proof of Work (PoW) consensus mechanism – a BAYC NFT working on Ethereum’s Blockchain can also boom. 

But remember, there is a clear distinction: Bitcoin is a cryptocurrency, whereas BAYC NFT is digital art.  

But also remember, we live in a money-minded world where everything with the potential to make money sells like hotcakes. Therefore, whenever a new celebrity buys or gets a gift in the form of an NFT (Do you know Reddit founder Alexis Ohanian gifted his wife Serena a BAYC NFT?), the stock of the relevant collection shoots up. 

Practical Value of NFTs for the Artists 

A Non-Fungible Token is not just the dominion of celebrities. In fact, it has actual meaning in the tech-heavy world of today. NFT is a concept that has underlying value for artists. Yes, millions of artists develop digital artwork but not all of them get paid what they deserve for their hard work. Do you know why? 

Because people find it easy to just steal someone’s artwork by copying and pasting. Don’t tell me you haven’t copied or pasted digital artworks without crediting the creator. Yes, we all have done it and kept the artist’s identity a secret. 

But with NFTs, it will become possible to share a piece of art and at the same time give credit to the creator. Not only that, every artist will receive money whenever their NFT is sold in the market.  

Creating NFT is Called Minting and its Easy 

Minting is the process of generating an NFT on the blockchain. Many of us have learned about the word minting by watching ‘Money Heist’. Yes, you might remember the ‘Royal Mint of Spain’ from which the professor and his notorious gang stole millions and millions of Euros. 

Minting is the process of producing something for the very first time. For example, a mint produces ‘fiat currency’ (like Dollar), which people use to buy and sell goods. Similarly, NFT minting is the process of transforming your digital artwork into a Non-Fungible Token. But for minting an NFT, you do not have to breach into a royal mint of your country. Instead, you can use any of these platforms for minting purposes: 

OpenSea

 OpenSea is founded upon the Ethereum blockchain. It is one of the most popular NFT platforms amongst celebrities. At the time of writing, OpenSea has already broken all the past records in terms of its Trade Volume per Month – a colossal $3.42 billion. Every day of January, OpenSea has surpassed $169 million in sales.  

In January 2022, OpenSea imposed a 50-item limit on its free minting tool that it provided to its visitors. But it changed its decision to appease the fans of the platform, who weren’t happy. However, we would like you to know that bots and scammers exploited the free minting tool called Lazy tool. And, many NFTs created by this tool can be fake. So, it is likely that OpenSea will ultimately impose a specific limit to prevent unauthorized platform use.   

Binance Smart Chain 

Binance is primarily renowned for trading in cryptocurrency. But of late, it has become the go-to destination for minting NFTs. The prestigious track record of Binance Smart Chain makes it a safe place for minting NFTs using a variety of Dapps.

Dapps are decentralized apps that operate via smart contracts. It is possible to use Dapps to mint NFTs. Binance and other minting platforms allow you to use Dapps by charging a certain fee. 

Rarible 

Rarible is a considerably old NFT marketplace, and it is well-known for the efficacy and efficiency of its minting process. Founded upon Ethereum Blockchain, Rarible also has quite a large fan following. This NFT minting platform has already partnered with prestigious brands like Adobe and Taco Bell. It is worth remembering that the Rarible platform charges a 2.5% fee to both the customer and seller for each transaction. 

Decentraland 

Decentraland understands that NFTs and metaverse have interlinked fortunes. For instance, we will see the NFTs already sold appear in the metaverse at some time. For example, people will be flaunting the NFTs bought from their real-life stars in the metaverse to make a point to their peers. Decentraland even allows you to buy virtual real estate in the metaverse. Do you know a Snoop Dogg follower who bought $450K real estate to become a neighbor of the hip-hop star?

Proton Mint 

Proton Mint is an up-and-coming platform for minting NFTs. The great thing about this platform is that it does not charge you a single penny in terms of gas fees. Yes, there are other associated costs, but no gas fee. However, your first NFT is absolutely free. In addition, Proton Mint is a versatile platform with a diverse collection of digital art and memorabilia.   

The Dual Advantage of NFTs

After you have minted an NFT, you are the sole owner of the work. So, you can sell the NFT and keep all the profit you made from the sale. Moreover, there is no need to share the profit with a mediator. 

For instance, if you had digital artwork in the past, you needed to go through many middlemen and intermediary platforms to reach your buyer. And once you sold the artwork, you no longer gained from any subsequent sales. 

But in the case of NFTs, you can sell directly to your customer. You can either put a single piece of collection on sale or sell the entire collection at a single time. There is no need to share the profits with intermediaries. Moreover, if you put a clause in the contract about royalties, you can gain from any subsequent sale of NFTs. For example, if you buy Snoop Dogg’s NFT and sell it, the hip-hop star will get some money from your trade in the form of a fixed royalty. Therefore, NFTs provide you a double advantage: 

  • Eliminates middlemen
  • Gives you long-lasting returns from your sale 

Sometimes, when an artist creates an NFT, he doesn’t know its true worth. And, it is possible that he might sell the NFT for a low price. But with royalties, the artist can make up for the initial loss through subsequent returns from future sales. 

Different Types of Assets you can Convert into NFTs

NFTs are not limited to a fixed category or quantity. You can digitalize almost any asset you can think of, mint it and finally sell it. 

Conversion of Digital Art into NFTs

Digital artists are already benefitting from the revolution brought about by NFTs. Many artists have taken to the Internet and created NFTs and gotten rich by transforming their digital art into saleable commodities. 

Ask Victor Langlois if you are curious about the power of NFTs to make an artist rich. Victor wanted to be a digital artist despite his parent’s reservations. But he continued with his passion and now sits on an NFT pile that is already worth $26 million.  

We can say that digital artists are the primary beneficiary of the NFT revolution, and it’s only going better for the creators of other digital commodities. When it comes to the most expensive NFTs sold to date, “Every day’s: The First 5000 Days” by Beeple is at the top of the list at US $69 million.  

Seeing the boom of NFTs, digital artists are motivated to work even harder. Because now they know that their work will be appreciated, and they will be able to sell their NFTs without needing any middleman.

Conversion of Music NFTs

Piracy has plagued the music industry for a long time. And, it is expected that the culture of NFTs will help the music artists get some respite from piracy. In addition, the rarity and elusiveness brought about by NFTs will help generate revenues. The conversion of music records into NFTs has been hugely profitable for the artists. 

Musicians are already benefitting from the NFT revolution greatly. For example, Grimes – a famous Tik Tok artist and the wife of Elon Musk – has released original artworks that have earned her $7 million.  

Even not-so-popular artists like RAC have earned well through Non-Fungible Token. The American-Portuguese artist is already richer by $708,000 because of his NFT sales.

Conversion of Video Game Assets into NFTs

Video games provide you with a lot of Downloadable Content (DLC). And, there is a lot of stuff you create on your own, e.g., game mods, customized guns, clothes, etc.  

NFTs have made it possible for both game companies and individual gamers to sell game assets as digital assets. For instance, how cool it will be to buy a limited-edition gun in Call of Duty and then win an eSports tournament using that. Once you do that and get famous, you can sell your limited-edition gun as NFT and earn big money.

Conversion of Important and Historical Events into NFTs

Have you heard about NBA Top Shot? It is the best way to take a slice of history in Basketball and lock it in your personal collection. Top basketball stars like Kevin Durant are supporting Top Shot, and the money coming in is enormous. 

On similar lines, many other NFT platforms are selling historical moments in time as NFTs. So, if you are a history buff and want to be the owner of your favorite moment in the past, buying an NFT is the closest you can get. 

Conclusion

Our move into the digital world simplified our lives. But it made the lives of digital artists difficult. Unlike a real-life painter or musician, their work was easy to steal and lost value rapidly. But with NFTs, it won’t be the case anymore.  

NFTs allow artists to sell their work securely and without any middleman. Currently, NFTs have become a rage because celebrities promote them. But we also see success stories like Victor Langlois, who has become a millionaire by selling his digital art online. 

The key here is: just about anyone can use platforms such as OpenSea to mint their artwork and sell it online for a profit. And that’s where the true power of NFT lies, and that’s why they are such a big deal in today’s rapidly progressing digital world.

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