NFT art or non-fungible token artworks have simply skyrocketed in popularity over the last few years. For those who don’t know yet, NFT art is crypto art.
NFT art is nothing short of exciting. It’s an entirely new way for designers and creators to categorise and monetise their work. Now, creators can quickly create and sell their work and investors can quickly buy and make their returns.
Since the explosion of NFT art, digital art has taken a turn for the best. Just think about the artist Beeple who sold an NFT in a Christie’s auction for $69 million or the ever-popular pixelated CryptoPunks character portraits that sell for around $16.9 million each.
These transactions alone prove just how lucrative the NFT art world is and provide more than enough explanation as to why so many artists, collectors, and investors have jumped at the opportunity to invest in cryptocurrencies and other digital assets. The best news is that NFTs have value to artists but also to businesses – it’s a versatile market with something for everyone.
If you’re new to the world of cryptocurrency, NFT art, and digital assets and want to find out more, you’ve come to the right place. This overview explores what NFTs are, how NFTs work, the benefits of NFTs and which NFT marketplaces are the best. It also covers where you can sell NFT art and where to safely and securely store your NFTs once you’ve acquired them.
What is an NFT?
The big question is; what is an NFT, and, of course, what is NFT art? Let’s start with a simple explanation. An NFT is a non-fungible token that can be bought on various platforms, including Christie’s. One of the most popular NFTs is probably from the artist Beeple and, of course, the sale of Jack Dorsey’s first-ever tweet for $2.9 million. CryptoPunks are also rising in popularity.
So what exactly is a non-fungible token? Plainly put, a non-fungible token is a digital file that is not fungible.
To understand what non-fungible means, you first need to know what fungible means. The dictionary defines “fungible” as an adjective that means “(of goods contracted for without an individual specimen being specified) replaceable by another identical item; mutually interchangeable.” This means that one NFT cannot be exchanged for another as no NFT is identical in value.
To illustrate this point, think about cryptocurrencies such as Bitcoin and Ethereum and fiat finance such as traditional money. Both of these are “fungible”, which means they can be exchanged or traded for one another. They are equal in value. For instance, one dollar is equal to one dollar, and one Bitcoin is equal to one bitcoin. On the flip side, one NFT is never equal to one NFT.
NFTs or crypto art can come in the following forms:
- Blockchain trading card
How do NFTs work?
All NFTs exist in a public ledger called the blockchain. The blockchain is a record of every crypto transaction, including Ethereum, Bitcoin and other cryptos. Most NFTs are held on the Ethereum blockchain, but various other blockchains support them as well. When an NFT is created, it is ‘minted’ from a digital object using blockchain technology that represents digital files and tangible items. For instance, an NFT can be digital art, animated GIFS, collectables or even designer sneakers.
A good example of an NFT or crypto art is buying the digital file for a painting instead of having an actual oil painting. Once you have the NFT of that painting, you are the official owner of digital art. NFTs only allow for one owner at a time. Each NFT comes with a unique code attached which is used to verify ownership. The same unique ID is used to transfer tokens to new owners. As the owner or creator of the NFT, you can store unique information within the unique id, such as designer name, previous owners and unique data relating to the piece of art.
When buying the NFT for crypto art, it is important to see what rights you are buying. Some owners of NFT are not allowed to alter the digital file except in the case of Async art, which allows artists to create digital files using blockchain technology which can then be edited and altered by multiple owners. Interestingly enough, Async art has partnered with Christie’s New York for auctions of Bitcoin inspired art.
Benefits of purchasing an NFT
NFTs provide artists and creators with the opportunity to monetise their art. When using NFTs, artists don’t have to rely on auctions and galleries to sell their artworks. Instead, the buyer and artist are directly in touch to exchange an NFT, allowing the artist to make more profit. Some artists program royalties into the unique ID of the NFT, which means they earn a percentage of the sale every time the artwork or digital file is sold to a new owner.
Buying NFTs is beneficial because:
- High growth potential in the NFT marketplace
- Ownership and authenticity can be verified on a blockchain
- No intermediaries or middlemen involved in the process
- Empowers artists, creators and collectors
- NFTs diversify financial investment portfolios
Depending on who the creators are of the NFTs you buy, you may have access to high-end associations, events and groups.
- The blockchain technology behind NFTs is difficult to hack, delete or alter.
- Ownership of physical assets can be easily fractionalised (digital versions of assets can be split amongst multiple owners, more easily, allowing for greater liquidity and higher prices)
The NFT marketplace
To participate in purchasing NFTs, an NFT marketplace is the way to go. NFT marketplaces allow for the sale of digital assets of anything from GIFs to music and everything else in-between. You will find many NFT marketplaces to choose from, most of which have a specific focus or niche that they operate in. When choosing what NFT marketplace to use, spend some time considering what kind of digital asset you wish to buy.
It’s important to note that not all NFT marketplaces support all cryptocurrencies or tokens, so check this before opening your marketplace account. Before trying to buy tokens on a marketplace, make sure that you fund your cryptocurrency wallet with the correct crypto or token.
NFT marketplaces are nothing but a place to store digital assets; you will find many on the market, each with its own unique features and functions.
Where to buy NFT art?
Purchasing NFT art will require you to have a cryptocurrency wallet. There are many options for crypto wallets available. Each NFT marketplace recommends different crypto wallets. Below is a list of the top five NFT marketplaces with their recommended crypto wallets.
- OpenSea (MetaMask and CoinBase Wallet)
- Rarible (MyEther Wallet, MetaMask and CoinBase Wallet)
- SuperRare (CoinBase Wallet, MetaMask, WalletConnect)
- CoinBase (CoinBase Wallet)
- KnownOrigin (CoinBase Wallet, MetaMask, Fortmatic, Portis, WalletConnect)
While each marketplace has its own system, the steps to buying NFT art are similar from one platform to the next. Follow the basic steps to buy your first NFT.
- Fund the cryptocurrency wallet of your choice.
- Visit the NFT marketplace of your choice and connect your wallet (some NFT marketplaces will require you to open an account first, but others don’t).
- Click on explore/marketplace/collect to browse through possible NFT collections.
- Follow the prompts to purchase the NFT digital file you’re interested in. The value of the NFT will be deducted from your cryptocurrency wallet balance.
- You will be sent the unique ID of your NFT, and the onus is on you to ensure your NFT is safely and securely stored.
Cryptocurrency such as Bitcoin and Ethereum can be used to purchase non-fungible tokens – most platforms advertise this on each piece of art.
Where to sell NFT art?
If you are a creator, digital artist or owner of NFT art, you may want to sell your digital files at some point. You can sell NFT art on various online platforms, including, OpenSea, SuperRare, Rarible, Nifty Gateway, Axie Marketplace and Foundation, to name a few.
Follow these steps to sell NFT art online:
- Fund your cryptocurrency wallet.
All NFT marketplace platforms will require you to pay in advance to ‘mint’ your NFT. This is the process that creates a non-fungible token from digital artwork. Most platforms require cryptocurrency for this, so your wallet must be funded to pay the fees. Ethereum is the most accepted cryptocurrency to mint NFTs, but some platforms do accept other cryptocurrencies. The quickest way to fund your crypto wallet is by using your credit card or debit card. You can buy cryptocurrency on various platforms such as Binance, Gemini, CoinBase and eToro.
- Connect your cryptocurrency wallet to an NFT platform.
Each NFT platform works with several types of crypto wallets, with ETH being the most accepted cryptocurrency by auction houses and cryptocurrency exchanges. It’s best to investigate which cryptocurrency wallets are accepted by the platform before opening a marketplace account.
- Upload your digital file to the NFT marketplace.
Once your wallet is funded and connected to the NFT marketplace, you are ready to start selling your curation of artwork. Click on ‘create’ (each platform will have something similar) and follow the prompts to mint a once-off or multiple items. You will be given the option to upload digital file formats ranging from PNG to GIF, MP4, MP3, WEBP, and various other formats depending on the platform. At this point, you can include a smart contract with the terms and conditions of your sale.
- Click upload and preview.
The platform will ask you to preview and ask you to confirm that you are happy with the upload. Confirm that you are happy to proceed.
- Activate an auction for your NFT art.
While every NFT platform is different, most will offer you different selling options such as NFT projects fixed price, unlimited auction and timed auction. Make sure you set a minimum price you are happy with and follow the prompts to finalise your upload.
- Pay the NFT minting fees.
Before the marketplace lists your item, you will need to pay the fees. Be aware the listing fee may seem low, but the actual fee may be quite a lot higher. When someone buys your NFT art, you may have to pay a commission fee and transaction fee for the transfer of funds.
How will this affect artists and collectors?
NFTs, offer digital artists greater control and distribution of their artwork. It also helps to cut out the middleman, which means they don’t have to rely on galleries and dealers to make sales. Non-fungible tokens also offer digital artists the opportunity to earn on future sales.
For the collector, NFT art makes access to art ownership easier and provides the opportunity to make a better return on this investment (if they choose to sell the NFT). For the owner of an NFT, ownership and authenticity can be verified by the blockchain.
What is the best way to store your NFT?
Once you have invested in digital collectables, you will undoubtedly want to keep your NFT collection safe and secure. You should store your non-fungible tokens in a secure location with high security.
There are three main ways investors choose to store their NFTs:
- Software Wallet – this offers standard security, such as in the case of MetaMask.
- InterPlanetary File System – this offers added security, such as in the case of Pinata.
- Cold Storage Hardware Wallets – these offer the highest possible security, such as Trezor and Ledger.
Most opt for a software crypto wallet, offering protection for your digital art collection through a password, touch authentication and a twelve-word seed phrase. Cold storage hardware wallets are, however, the best security you can get for your NFT digital assets. If you have large amounts of cryptocurrency or NFTs or plan to store your digital assets for a long period of time, cold storage hardware wallets are the most viable option.
Benefits of cold storage hardware wallets:
- All data is stored offline and therefore near un-hackable and less vulnerable to scams, which is not the case with hot storage wallets such as MetaMask.
- Data protected by the device password
- Device content can be restored if lost, stolen, or malfunctions
Reputable cold storage hardware digital wallets include:
- Ledger Nano X – this wallet supports BTC, ETH, BCH, LTC, DOT, XRP, TRX, XLM, ADA, and EOS.
- Keystone Pro – this wallet supports BCH, XRP, ETH, BTC, Tether, Kucoin, LTC, and Polkot.
- KeepKey – this wallet supports BTC, ETH, LTC, DASH, and DOGE.
- CoolWallet Pro – this wallet supports ETC, LTC, ETH, XLM, USDT, BNB, TRX, XRP, Tezos, and ERC20 tokens.
NFTs, which are non-fungible tokens, are a safe investment when using the right NFT marketplace and safe and secure cryptocurrency wallets. Blockchain technology protects your transaction and provides much-needed transparency.
The obvious benefits for both digital artists and collectors when buying and selling fine art. You can buy digital artwork on several marketplaces, including OpenSea, Rarible, SuperRare, CoinBase and KnownOrigin. Consider using a cold storage hardware wallet to safely store your NFT artwork after investment.