Source: larvalabs.com

Have you got into the cryptocurrency craze yet?

I decided to fill in the gaps in my knowledge to have at least a general idea of what it is and the value of the digital currency. To do so, I chose a short guide — “The NFT Handbook: How to Create, Sell and Buy Non-Fungible Tokens” by Matt Fortnow, QuHarrison Terry and Zac Aleman.

What are tokens and NFT?

Source: artguide.com |Beeple’s Everydays: The First 5000 Days

A token is the equivalent of security in the digital world. Many tokens are interchangeable, like $100 notes. They can be used as currency.

There are also half-interchangeable tokens. They are similar to each other but have their own unique feature. An example is cinema tickets. Their price is the same, but the seats in the cinema are indicated differently.

Another type of token is non-interchangeable tokens or NFTs.

In broader terms, NFT is a technology that allows you to secure ownership of any digital art object: digital art, a music album, a tweet with good jokes, virtual cats, animated stickers, your own game universes, domains, digital land and real estate for huge sums of money. That said, each NFT token is unique. It cannot be reproduced.

By the way, the last record sale of NFT tokens was in March 2021. At that time, the NFT-linked JPG file of artist Mike Winkelmann, Beeple’s Everyday: The First 5000 Days, sold for 69.3 million.

How did it all begin?

In 2014, the world’s first non-interchangeable token was created by artist Kevin McCoy together with programmer Anil Dash. It was a unique and indivisible coin that could not be replicated.

Source: mccoyspace.com | Quantum, 2014

Kevin McCoy tied his animated Quantum art to NFT and sold it in 2021 for $1.4m at a Sotheby’s auction.

In 2017, the CryptoPunks project emerged.

CryptoPunks are one of the first examples of ‘non-interchangeable tokens’ in Ethereum. CryptoPunks was the inspiration for the ERC-721 standard. It is the one that supports most digital artwork and collectables.

Source: larvalabs.com

In fact, each graphic image of a face was linked to a piece of computer code in the blockchain platform. That is, it had a unique token where information about the owner of the image was stored. And while anyone could download the picture, the owner was the person whose Ethereum wallet was listed in the picture NFT.

You may ask: what is the point of owning an image that anyone can download from the Internet, print or send to anyone? You can understand this by looking at artworks in museums.

Let’s take a trip to the Louvre in Paris, one of the most visited museums in the world. When I was in Paris, I visited it too.

Source: photo from my personal archive

Let’s take a look at the “Mona Lisa” by Leonardo da Vinci.

Anyone can buy a reproduction of “Gioconda” and hang it in their room. But there is an original which is kept in the Louvre. It has an owner. And the more popular the painting, the more of its replicas are created, the more often it is replicated, and the higher the price of the original. And the more the owner wins.

Source: photo from my personal archive

By the way, the value of this particular picture ranges from 850 to 2.5 billion U.S. dollars. In this case, the insured value, according to records in the registers of the Louvre, is 100 million euros. Not a lot?

The situation is similar to NFT tokens. Digital and virtual objects can also be valuable, rare and trendy. They may well become a collector’s item and a great investment. The same applies to gaming: gamers can collect virtual artefacts from different games and trade them for something valuable, too.

Who sells and buys NFTs?

Anyone can sell and buy digital art and other objects. But when the hype started, and the demand for NFT tokens increased, big players — world-famous galleries, auction houses, production companies and individual museums — stepped in to buy and sell.

So, if you follow the world news, you will be interested to know that the first NFT war museum with the works of artists from Ukraine and all over the world has appeared in Ukraine. Everyone can buy something for their collection in the virtual museum. Money from the sales will go to help the victims. There is also a project called “Mom, I see war”. A collage of children’s drawings about the war will be collected and sold at an NFT auction. The proceeds from the auction will go to help children who have been affected by war.

Source: metahistory.gallery

As you can see, NFT tokens are constantly attracting new players to the market: sellers and buyers.

All in all, anyone can monetize their creativity. Plus, in some cases, it is profitable to invest in little-known authors to sell their work at a higher price over time. But to do so, you need to become an expert and understand the trends.

How do I buy someone else’s work with NFT or tokenize my own?

First, you need to register a wallet with ETN (Ethereum) currency on any of the crypto exchanges Binance, Coinbase, BitPanda and others. They allow you to exchange regular money for cryptocurrency. Newcomers are usually advised to use the Coinbase wallet for security reasons. Once it’s set up with two-step verification, you can exchange local money for Ethereum and make purchases.

To tokenize the work, you can use the major marketplaces Rarible or OpenSea, NiftyGateway or Foundation. Each of the marketplaces has detailed instructions on how to put an NFT token up for sale or purchase ownership. By the way, you can’t do without registering a wallet here as well because the marketplaces charge a commission on sales.

NFT trends in 2022

Source: fishpondsvoice.co.uk || A STREET art dealer is offering people ‘digital shares’ in a mural by Banksy which was removed from a building in Fishponds Road.

I’ve realized for myself: if you’re dealing with NTF tokens, you have to watch the trends as well.

I have collected a few trends for this year. You may be interested to read them as well:

1. The value of art is increasing. It’s becoming so popular that even the auction house Sotheby’s has launched an NFT trading platform, Sotheby’s Metaverse. In 2022, it is profitable to buy and sell fractional NFTs of real works of art by famous artists, such as a fractional NFT mural by street artist Banksy called Gorilla in a Pink Mask.

2. The development of NFT gaming, where players receive rewards in the form of NFT gaming assets. Examples include the blockchain games Thunder Lands, Idle Cyber, Sipher and MetaWars.

3. It is obtaining credits using NFTs. So, it is possible to use your NFT collections as collateral to obtain credits. In 2021, there are even sites where you can get credit with NFT collateral, such as Arcade.

4. Watching NFT on TV (an announcement from Samsung) and even buying the rights to an as-yet-unreleased film.

Source: Samsung

The pitfalls and risks

It seems that investing in or earning money from NFT tokens is quite lucrative. But the risks should not be overlooked.

One of the main problems with NTFS is related to copyright. A user can tokenize someone else’s work and take possession of someone else’s object or piece of art. Such cases have already happened because, at the time of creating NFT, authorship is not verified in any way.

Source: twitter.com

Also, if you have invested money in an object in the form of an NFT, you do not get any exclusive and legal rights to it. For example, you can buy Elon Musk’s tweet, but you cannot print it on something and sell it. So you can’t use it for commercial purposes.

“Any NFT is simply a piece of digital memorabilia, nothing more, nothing less,” notes Wired.

Another problem has to do with the valuation of NFT tokens. Many of them are simply a piece of digital noise. Only a few very rare works are in high demand and can grow in value and be valuable.

“The real winners of the NFT craze, in fact, may not be the people speculating in NFTs, but the companies and technologies enabling them to speculate,” Marker.

What do you think of NFTs?

Do you sell tokens or invest in them? Share your experiences and thoughts.

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