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Unless you live in a cave, you’re almost certainly aware of a new internet phenomenon called non-fungible tokens (NFTs). NFTs have been a cultural phenomenon throughout 2021, constantly making headlines as celebrities dabble in the space. The media hasn’t been able to get enough of this topic since a South Carolina artist sold a digital collage last March for the staggering sum of $69.3 million. Even more mind-boggling is the fact that the creation can be freely copied and posted by anyone.
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Many people are getting rich off NFTs right now. Forward-looking brands are now using NFTs as part of their marketing strategies and the results are impressive. So it’s understandable why you’d want to try your hand at it to get a better feel for it. a
So what exactly are NFTs? And why are they suddenly being sold for millions? knowing the business in NFT and how it all started has become a necessity.
Now let’s dive in.
What is an NFT?
Non-fungible tokens are cryptographic tokens that represent something unique. Unlike bitcoin and other cryptocurrencies, they do not represent a mutually interchangeable commodity (in cryptocurrency’s case, money). This means you cannot part with an NFT and have it be replaced with something of equal value later, as you would be able to a sum of cash
That means they are – by definition – non “fungible”; you cannot exchange them for other cryptocurrencies or goods like you can with money. NFT is simply a digital asset that lives on a blockchain. It can be used in digital rights management to establish ownership and to track changes in ownership over time. Blockchain is a secure, distributed database that enables transactions to be conducted directly between two or more parties with a high degree of fidelity, even if the participants are anonymous. It’s most commonly associated with cryptocurrencies, but there are many other uses.
NFT doesn’t have to be a work of art. It can be a Word document, an audio recording, a PDF, or even a tweet. NFTs are bought and sold online, frequently with cryptocurrency, and are generally encoded with the same underlying software as many cryptocurrencies
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NFTs are also generally one of a kind, or at least one of a very limited run, and have unique identifying codes. “Essentially, NFTs create digital scarcity,” says Arry Yu, chair of the Washington Technology Industry Association Cascadia Blockchain Council and managing director of Yellow Umbrella Ventures.
This stands in stark contrast to most digital creations, which are almost always infinite in supply. Hypothetically, cutting off the supply should raise the value of a given asset, assuming it’s in demand. But many NFTs, at least in these early days, have been digital creations that already exist in some form elsewhere
An NFT allows the buyer to own the original item. Not only that, it contains built-in authentication, which serves as proof of ownership. Collectors value those “digital bragging rights” almost more than the item itself.
When did NFTs start?
The first known “NFT”, Quantum, was created by Kevin McCoy and Anil Dash in May 2014, consisting of a video clip made by McCoy’s wife, Jennifer. McCoy registered the video on the Namecoin blockchain and sold it to Dash for $4, during a live presentation for the Seven on Seven conferences at the New Museum in New York City. McCoy and Dash referred to the technology as “monetized graphics”.
In October 2015, the first NFT project, Etheria, was launched and demonstrated at DEVCON 1 in London, Ethereum’s first developer conference, three months after the launch of the Ethereum blockchain.
The NFT market experienced rapid growth during 2020, with its value tripling to $250 million. In the first three months of 2021, more than $200 million were spent on NFTs. In the early months of 2021, interest in NFTs increased after several high-profile sales and art auctions.
In 2017, American studio Larva Labs developed CryptoPunks, a series of collectible digital characters traded through NFTs, which serve as a good starting point in getting your head around the technology. A staggering £123 million has been spent on NFTs since November 2017.
There are 10,000 unique CryptoPunks to collect. But being digital commodities, the ability to make copies that could be traded freely – thus reducing their value – is easy.
So, CryptoPunks were made digitally scarce through the use of blockchain, a kind of ‘Cloud’ technology for financial assets that keeps track of file ownership through advanced security protocols. This gives proof of ownership to each Punks’ holder, meaning there will only ever be one true copy of each of the 10,000 digital characters in the world.
Where can you buy NFT?
NFT marketplaces are springing up at an increasing rate, reflecting the newfound popularity of NFTs online. There is a lot to choose from, and which one is best for you should only be decided once you’ve done some proper, investigative research into the pros and cons of each.
Nevertheless, we’ve listed a handful of the most popular (and trustworthy) NFT marketplaces to help you get started below.
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NFT as a Business
NFTs are having a moment among artists, gamers, and brands across all kinds of sectors. It seems every day brings a new player to the NFT marketplace. For artists, stepping into the NFT space adds another possibility for selling art, and provides fans with a way to support it. NFT art ranges from small, quick-to-make GIFs to more ambitious works. Celebrities are also getting involved, either as investing as collectors or creating their own NFTs (or having them created for them by artists).
It would be expected that work by well-known artists would fetch big bucks as NFTs, something an anonymous group of ‘art enthusiasts’ relied upon when they burned an original Banksy to increase the value of an NFT. However, some sales are still eye-popping for the prices they reach. When Pak’s NFT Artwork ‘The Merge’ sold for $91.8 million in December 2021 (he sold shares in the artwork), it was the third-highest price ever fetched by the work of a living artist.
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Meanwhile, NFTs are shaking up the concept of in-game purchases in video games. Up until now, any digital assets bought inside a game still belonged to the game company – with gamers buying them to temporarily use while playing the game. But NFTs means that the ownership of assets has shifted to the actual buyer. That means that they can be bought and sold across the gaming platform with extra value applied based on who has owned them along the way. Whole games are now being made based entirely around NFTs.
NFTs are becoming an attractive income stream for brands, and we’ve seen all kinds of companies jumping on the bandwagon.
Even the US basketball league NBA has got involved. NBA Top Shot is a way of selling digital collectibles in the form of trading cards embedded with iconic basketball moments. With a plan to add virtual jewelry, accessories, and clothing that can be used across social media, the NBA is aiming to expand this revenue stream as far as it can go.
It also turns out that even tweets can hold value. Twitter co-founder Jack Dorsey sold the first-ever tweet (sent by him to announce he was setting up his account) for a staggering $2,915,835.47. Musicians are also selling the rights and originals of their work, as well as short videos to clips of their music, and you can even buy digital real estate and 3D assets like furniture as NFTs.
What’s important about NFTs is that they establish ownership in an immutable fashion, and that’s where it gets interesting for businesses.
Consider this scenario: You work for a company that produces electronics, and you’ve just come up with a revolutionary new design for a smart TV. You’re worried that someone else could get hold of your idea and commercialize it before your company does. By registering your design as an NFT, you can establish beyond a doubt that your design came first. The date and time stamp on the digital token, which is the smart contract that governs the use of your asset, proves that.
Or suppose you buy computer chips from a factory in China. You want to create a secure chain of custody so you can be sure chips haven’t been tampered with on their journey. You can create an NFT for the shipping record, “so each time it changes hands, it creates an immutable timestamp that can be queried and tracked,” Donarski said. “By doing that in a single system you no longer have documents on a shelf. It all becomes seamless across the life of the business.”
NFTs Costs vary according to scarcity but can range from as low as one dollar to as much as several hundred dollars. You can specify how many copies of the digital asset can be created and any royalties to be charged. You can also track ownership of NFTs you create if they change hands. “There will always be the risk of pirated versions, but you will always know who is authorized to own the asset,” Donarski said.
Can you create an NFT for Sale?
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.
Anyone, from artists to entrepreneurs, art advocates, corporations, authors, videographers, social media personalities, and even average Joes and Joannas, can create an NFT. No experience is necessary, and as long as you can prove you created or legally own the content, you can mint an NFT.
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.
Can you Purchase NFTs?
Anyone and everyone. When you purchase an NFT, you gain the rights to the unique token on the blockchain, connecting your name with the creator’s art. The benefit of collecting specifically on Portion compared to other platforms is that it automatically provides the collector with 500 $PRT for each new purchase. Not only are you acquiring a digital asset, but you will also receive compensation for being a Portion collector. In the long run, collectors and creators who buy and hold larger quantities of $PRT will then reap the benefits: surprise airdrops, exclusive giveaways, priority access, just to name a few.
How to create an NFT
You don’t need extensive crypto knowledge. Here’s how to create NFT:
Decide what you want to create and your business goal
If you don’t know where to start, you can begin by creating an NFT loyalty card or even a promotional code for your customers. You can also borrow a few NFT art ideas for inspiration.
Focus on providing real benefits to your audience. A good example is giving those who own your NFT access rights to an exclusive club or a premium service.
Choose a blockchain for your NFT
The most common Blockchain for NFTs is Ethereum. Other popular blockchains that hold NFTs are Binance Smart Chain, Tron, Tezos, Polkadot, EOS, Litecoin, and Cosmos.
Some factors you should consider before choosing a blockchain are:
Transaction fees on a blockchain
The types of cryptocurrencies your audience own since they’re your target buyers
Sign up for a crypto wallet
Each blockchain comes with a different NFT token standard which determines which wallet will be compatible. The Ethereum NFT token standard is ETH-721, while Binance Smart Chain’s is BEP-721.
With ETH-721, you can sign up for several wallets, including Coinbase, MetaMask, and Trust Wallets. For Binance Smart Chain, you can use wallets such as MetaMask and Binance Chain Wallet.
Top up your crypto wallet
When you’re creating an NFT, you may have to pay transaction fees, commonly known as ‘gas’ on the Ethereum blockchain. Load your wallet with supported crypto to cover these fees.
If you are using the Coinbase wallet, you can buy crypto on Coinbase. Otherwise, purchase crypto on exchange platforms such as Binance.US, Kraken, and Gemini.
At OpenSea, one of the biggest NFT marketplaces, you’ll pay one-time registration and contract approval fees. The platform doesn’t charge you to create an NFT collection and lists it for sale.
Transaction costs will depend on your NFT blockchain. Fees on the Ethereum blockchain are usually high due to the number of people making transactions. Transact during weekends or choose a less-congested blockchain like Polkadot to save on gas.
Choose an appropriate NFT marketplace
There are various marketplaces where you can upload your art and create an NFT.
Polkadot, for instance, powers the Xeno NFT hub marketplace.
Tezos works on different marketplaces, including Rarible, Bazaar market, and one of.
Ethereum NFT marketplaces include OpenSea, Mintable, and Raible.
Connect your wallet on your NFT marketplace and upload your art
How to Start Using NFTs for Your Business
From luxury clothiers (Gucci) and sportswear makers (Nike), there’s no shortage of brands using NFTs for different things. While the valuation of these companies allows them to experiment with different things, smaller businesses should be cautious.
Are you confused about how to use NFTs in business? Here’s a little tip on using NFTs for your small business:
Create NFTs tied to Physical Products
With virtual products getting the hype, it’s a good idea to create one for customers, and even better, to tie it to a physical product.
For example, an electronic business can ask buyers to purchase a Tv and an NFT version. Nike is doing something similar with CryptoKicks, where customers receive a digital pair of kicks after buying the real thing.
For eCommerce businesses, this represents an opportunity to drive profits. Since NFTs cost little to make, the returns can be mind-blowing. Plus, the smart-contract mechanism can allow NFT creators to benefit from future item sales. If you wish, you can stake a claim on a percentage of future profits and program the functionality into the NFT.
Sell NFTs to Virtual Audiences
In the Metaverse, people can buy virtual real estate and clothe their avatars in fancy clothing. You can take advantage and commission branded NFT items to sell them for use in virtual worlds like Decentraland.
Again, Nike is ahead of the curve here, filing patents to produce virtual sneakers for in-game audiences and virtual world residents. Coca-Cola also sold an NFT bubble jacket, which buyers could wear virtually, to celebrate its 200th anniversary; another example of excellent business use cases for NFTs.
Branded sneakers, clothing, devices—the possibilities of NFTs for business are endless. As a business owner, you only need to mint an NFT version of a real-life product and sell it to people through Raible, OpenSea, or any NFT marketplaces. Indeed tokens-as-virtual-products are among the best business uses for NFTs.
Drive Brand Loyalty with Limited-Edition Merchandise
Brands have rewarded loyal customers and achieved higher recognition with limited-edition merchandise. Now, small businesses can do the same, but with NFTs. Coca-Cola sold a digital “loot box” comprising various NFT products, including a redesigned Coca-Cola logo and a virtual jacket
Reduce Counterfeiting of Products
Businesses have unsuccessfully tried to combat sales of counterfeited products for years. However, new research shows NFTs may help turn the tide against counterfeiters. As explained earlier, NFTs live on blockchain’s open, immutable, permissionless, and trustless ledger. That’s why verifying ownership and validity is easy.
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Applied to the world of commerce, NFT tied to a physical product can help limit counterfeiting cases. Customers could scan the NFT barcode on an item to confirm its originality. This is already happening in the luxury goods industry, with Ackerwines, a specialty winemaker, selling wines with companion NFTs.
This technology can also protect other items businesses would rather be not counterfeited. That includes event tickets, discount coupons, ownership certificates, licenses, and many more.
Raise Funds for Social Causes
While people are generous, many would feel better if they got something in return for their charitable donations. And what better way to reward donors than allowing them to own a hyper-rare NFT? Businesses can follow this example and sell company memorabilia as NFTs, with proceeds going to charity.
Beyond creating buzz for a business, this tactic may help raise your business profile and improve public perception.
Improve Supply Chain Management
One of the best business use cases for NFTs is in supply chain management. Stamping NFT-enabled tags on physical commodities makes it easier for businesses to track items across the supply chain. Each NFT can be updated with relevant information at different points of the production process.
For example, product-linked NFTs on the blockchain may contain data about the origin of raw materials and techniques used in production. Companies can quickly detect if a defective product is introduced into the supply chain. Since blockchain information is visible to everyone, your customers can confirm your good’s manufacturing details. This is an excellent way to assure buyers of the quality and authenticity of products.
NFTs for your Business: Potential Risks to Consider?
Although the business potential of NFTs is undeniable, as a business owner you should be careful with investments. Brands using NFTs must conduct extensive research to find and evaluate risks associated with NFTs in business, some of which are explained below:
NFTs rely on blockchain technology, which has had a fair share of hack attacks. In a recent high-profile case, around $2.2 million worth of Bored Ape NFTs were stolen from the OpenSea platform. As a new technology, blockchain has a few kinks to work out. This is normal for every emerging technology, but it’s worth considering, nonetheless.
Declining Economic Value
Many believe NFTs are going through a hype phase, evidenced by their high prices. Will their prices crash when the bubble bursts? Depends on who you ask. However, you want to remember that NFTs may well become commonplace with time, such that they won’t command extreme value anymore
The best NFTs have some social value attached. Remember: you’re selling a product people can’t touch, so what matters is how people perceive it. If customers think owning an NFT from your brand is cool, nothing can stop them from paying good money for one. But if your brand has little social value, your NFTs may find no buyers.
It helps to measure demand for branded NFTs among your customers. Once you’ve established that there’s a market for NFTs, the rest is easy.
A major stumbling block to adopting blockchain technologies is their high electricity consumption. This has led many, including prominent climate change activists, to protest against their usage.
Businesses may be wary of associating with a controversial technology for fear of public backlash. This is even more important as consumers pressure corporations to promote eco-friendly practices…
Skepticism about NFT
Many investors buy NFTs as a speculative investment in the hope that they’ll be able to flip them at a much higher price than what they originally paid. But a growing number of people are also holding them long-term as collectibles.
Like any technological hype cycle, we’re starting with the speculative activity, and usually, that gives way to more fundamental value,” Nadya Ivanova, chief operating officer of L’Atelier, told CNBC.
“NFTs started in 2017. A lot of it was about speculation. What we saw in 2020 is the market maturing.” NFTs have lured in celebrities while major brands are also getting involved. And people are finding other use cases for NFTs, such as virtual real estate and gaming. Nevertheless, the NFT space has been met with skepticism from some artists and investors. Critics view it as another crypto fad that will eventually drift into irrelevance.
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.
Where To Next?
While the history of NFTs is intriguing, the future of NFTs has endless opportunities as the new space transitions from raw and experimental to exceedingly more useful and mainstream. Through tokenization, programmability, collaboration, royalties, and more direct connections between artists and collectors, NFTs may soon be a technology vital to everyday life. Concepts like DAOs, token-based Metaverses, community-owned financial protocols, and NFT art were small-scale experiments just a few years ago. Now they represent multi-billion-dollar communities that combine protocol-driven design, economics, and governance as global collectives on the internet. It may be challenging to predict the future, but for digital art collecting, it’s safe to say we have yet to imagine the extent of what will emerge in decades to come.