NFTs are among the most rapidly growing applications of blockchain technology. In recent years, NFTs have exploded in value, with NFT sales amassing 37 billion dollars in 2021, according to Chainalysis. In this guide, we take a look at NFTs, the process of minting NFT, how they function, and how you can be a part of the NFT revolution. Let’s get started.
What is NFT?
NFTs or non-fungible tokens are digital assets that contain coded information in the form of smart contracts.
This information makes each NFT unique and irreplaceable. Unlike every other digital item, you cannot swap or copy them since there cannot be two similar NFTs.
You can exchange items like currency notes and get another note in return, making them fungible. However, NFTs are non-fungible (as the name suggests)—they are fundamentally unique and cannot be exchanged.
NFTs are stirring up the art world as it allows artists to create truly unique works.
Let’s look at an example to understand what the minting of NFTs is. You take a photograph of your dog on your smartphone. This is a typical image; you can share it on social media and send copies to your friends. You can do this a million times, can’t you?
Enter NFTs. If you create an NFT of your dog’s picture, you store its data on a blockchain.
This changes the whole scenario. Now you have proof that the image is yours; this data is safe on the smart contract. Suppose you decide to sell it; you can still pull the transaction data and find that you are the true owner of this image. The power of NFTs lies in creating uniqueness and owning it in this digital world where no proper ownership exists.
What is NFT Minting?
Minting means something created for the first time ever or announced officially, like a coin mint. In terms of NFT, it is the process of taking a digital asset and storing its digital information on a blockchain. Once you mint an NFT, you can buy and sell them.
A digital file could be any file represented electronically, such as images, videos, articles, or 3d visuals. Turning them into an NFT is called NFT minting. It is when you add the digital asset onto a blockchain such as Ethereum.
A blockchain is a transparent digital ledger where you cannot edit or delete information once added. However, after minting, you can choose to exchange or sell your NFTs, and there are plenty of online spaces that allow you to do so.
If you have a digital art or asset and want to turn it into an NFT, here’s how you can mint them:
Step 1: Buy a compatible cryptocurrency
To create an NFT, you have some expenses to meet, and you need cryptocurrency. Generally, you can use Ethereum, but many other cryptocurrencies serve the purpose.
Choose a trusted exchange to get the cryptocurrencies and set up a wallet to transact in the cryptocurrency.
Step 2: Choose an NFT marketplace to use
NFT marketplaces are online platforms where NFT buyers and sellers trade NFTs. There are many trusted NFT marketplaces like Super rare, Raribles, Opensea, etc. Choose a platform that is user-friendly and has low fees.
Step 3: Connect your wallet
Next, you have to connect your wallet to your selected NFT platform. Based on the wallet you own, you can link it through a QR code scanner or by downloading the wallet on your system.
Once you connect your wallet, you can create a profile in the marketplace. You can add a bit about yourself to add a human touch to your NFTs. Also, you can add links to your social media profile and mention which cryptocurrency you will accept when people buy your NFTs.
Step 4: Mint your NFTs
On the homepage of your NFT marketplace, you can see a ‘mint’ NFT button. Click that, and you must upload your digital file from your computer. Make sure you name it and add a description because these two elements become a part of the NFTs even after you sell them and cannot be modified or deleted.
You can mention how much you will charge as royalties for your piece. This means that you earn a fixed amount each time you sell the NFT.
Finally, you pay the ‘gas’ fee, the transaction fee for conducting the actions. Ensure you keep enough gas fees in your crypto wallet to meet such expenses.
And voila! You have your NFT minted and uploaded on the marketplace, ready to seek a new keeper.
NFT Flipping vs. NFT Minting
NFT Flippling is the process of buying an NFT and selling it for profit. If you are not into creating art and NFTs and don’t want to mint your own NFTs, you can flip NFTs and earn profits. This is less risky than minting your own NFTs.
According to Chainalysis, NFT flipping on the OpenSea marketplace makes a return 65% of the time. However, choosing the right NFT is vital to make the flipping profitable.
More than 2000 collections have a secondary sale on OpenSea, but only 250 contribute to 80% of these trades. Hence it’s easier to participate in a secondary market with a certain level of publicity than to mint a new NFT collection and start from zero again.
Truly profitable flipping needs the best collections and the discipline to recognize them early on.
Here are some excellent ways to flip NFTs
Method 1: Floor price flipping
In this method, you look for the lowest priced NFT and then sell it at a much higher rate. In other words, you must quickly spot NFTs with selling potential early on and buy them. And then you can sell them at twice or thrice their price to earn profits.
This method is a short-term method for flipping NFTs and a quick way to make money from NFTs. It is all about finding low-priced NFTs faster than others.
You look for someone selling their NFTs at less than their actual worth. They might be in a rush or might not know the value of their NFT.
Method 2: Rare trait flipping
In this method, you find NFTs with rare traits selling at a lower price than NFTs with similar qualities. So, you have to analyze the properties of NFTs and see if they are rare or not. This way, you decide whether it is valuable or not.
It takes experience to realize which features are more important for other potential NFT collectors. Then you can look for these traits while buying NFTs for flipping.
Method 3: Sold out NFT flipping
Certain NFT projects allow collectors to mint NFTs because they just started out. It means the project is not sold out yet but has at least 33% left to mint. So you can get in and participate in NFT minting, which would come for the lowest price.
You can put these up for sale at the floor price, and even this would be higher than the mint price. So overall, it is highly profitable.
NFT Drops vs. NFT Minting
NFT drop is the release of the NFT, and it is a term to share the exact time and date when the NFT mint will occur. It usually includes the minting price of NFTs as well. NFT drops limit the number of NFTs you can mint in a single transaction. Purchasing NFTs at the drop is a great way to get them at affordable rates.
NFT drops come in different forms. In its most common form, the NFT drops allow artists to mint collections on a first-come, first-serve basis. Once it’s finished, there can be no further mints. Some creators limit the number of NFTs a wallet owner can buy.
In open edition NFT drops, artists, can mint as many NFTs in a collection as they can within a specific period. The final collection will feature the number of NFTs they can mint in the given time.
In English auctions, creators offer NFTs just as in traditional auctions. Such auctions are common on marketplaces like SuperRare and Foundation. Meanwhile, in Dutch auctions, the price of NFTs decreases the longer it stays unsold.
Things to remember while buying NFT drops
Like anything you buy or invest in, there are certain basics you need to remember before digging into NFT drops. Here are some of the essential points to remember:
Only buy NFTs you like and believe in
NFTs are art forms. So just like in the art sphere, buy NFTs if it excites you somehow. While it is true that NFT flipping earns you profits, it still matters whether you enjoy it or not.
While buying an NFT, you essentially offer support to the artist community and the creator. So the question you need to ask is, would you like to purchase and get involved in NFTs if no money was involved? This mindset will save you from making mistakes while buying NFTs.
Do your own research
Just as with any investment you make, don’t just blindly follow anyone’s advice. Instead, you must research yourself and see if the NFT drop is worth buying.
See the creators behind the NFT and their beliefs. What is the purpose of the NFT collection? What other artworks have they created? What is their reputation?
Asking these questions will help you avoid scams and help you collect NFTs that are valuable. You will quickly understand that they are scammers if you find incomplete information about the creators or if you can’t find much about them. Or you may find the artist and their collection not so exciting.
Never end up paying more than the NFT’s worth
Always ensure that you spend what you can afford to lose. This applies even if you love the project and have researched enough about it. Having a dedicated investment account for NFTs is a great way to approach this.
How to find out about NFT drops?
While finding NFT drops is easy, finding ones you like or the ones that excite you is difficult. You can find NFT drops on social media, NFT marketplaces, through word of mouth, etc. Stay aware of flashy direct messages landing in your inbox because most of them are scams.
Social media is a reliable source because it has the backing of a community. Besides, you can find all types of projects on social media platforms. Major NFT marketplaces also have daily drops. Further, metaverse platforms like Sandbox and Decentraland offer regular NFT drops.
An NFT marketplace is an online platform that allows you to save and sell NFTs. NFTs are available for purchase or at auction with specified prices. If you want to use an NFT marketplace, you need a crypto wallet to secure and transact your NFTs.
Out of the different types of marketplaces, the ones that specialize in certain niches are more popular due to their advanced features. For instance, they allow online promotion to select niche audiences and help creators establish authority in their respective domains, which leads to better NFT trade opportunities.
How do NFT marketplaces work?
Let’s take a look at how NFT marketplaces work.
Signing up on marketplaces
The signing-up process might be different for different websites. However, it involves basic steps like linking your account to a digital wallet. This usually appears on your NFT marketplace home page and requires you to enter your wallet’s password to complete the linking process.
You can buy NFTs through a direct purchase or through auctions. In some marketplaces, you have the option to submit offers to the owner and negotiate a lower price.
Selling NFTs is harder than buying them from a technical perspective, and this is especially true if the NFT belongs to you.
If you want to sell your own NFT, first, you have to mint your NFT. Follow the process above to mint your NFT. Next, upload the digital file on the marketplace and enter a fixed price or choose the pathway of auction.
Once the platform verifies your NFT, it will be up for sale. When you, the owner, accept a buyer’s bid, the platform executes the transfer.
Things to look for in NFT marketplaces
Here are some of the crucial features of NFT marketplaces you have to look for before using them:
A digital shopfront
The digital shopfront is a basic interface or the front look of the NFT marketplace. It should contain basic information such as asset details, owner, price, title, description, payment modes, etc.
Users should be able to find what they are looking for. For this, advanced search tools should be available, and this should help search for the right NFTs effortlessly. For instance, marketplaces should be able to search based on artform like music, image, video, audio, etc. Users find it easier when they can find their required NFTs faster.
Filters make it easy to move around on a website. Besides, you can view them based on their listing, payment method, pricing, and type using filters.
A responsive support system is essential for every NFT marketplace. Whenever users confront difficulties, the system shall deliver prompt solutions if the users are to come back in the future. Customer service representatives or chatbots are feasible options as a support mechanism.
How to find a good NFT project
You may have watched people make millions out of an NFT flipping and wondered how they do it. While there is undoubtedly a factor of luck involved, it is unfair to ignore the effort it takes to spot a good NFT project and turn it into monetary gain. So here are some great ways to look for great NFT projects so that you get your money’s worth.
Twitter is a great place to learn about new NFT drops and research existing projects. Many artists use Twitter to market their projects and spread the word about upcoming drops. So following these artists would be step one. Besides, several Twitter accounts bring the latest NFT news and exciting projects in real time.
Discord is a prominent app NFT communities use to interact, market, and engage in productive online discussions. It is invite-only, so you need to get invited by someone from an NFT community or group.
Once you create an account and join the Discord server of a group, you can have fruitful discussions within the community and grow your connections. This way, you will also learn about the new NFT drops.
With YouTube’s latest announcement that it will incorporate NFTs into its video collections, the platform has opened doors of opportunities for NFT creators and collectors alike.
Many channels come up with fresh perspectives from the NFT world, such as Champ Crypto, Kosher Plug, Ryan D Crypto, etc.
Crypto.com is an application built on its native blockchain and provides news and offers from the NFT world. You can use its ‘Drops’ page to look for upcoming NFT projects. Plus, you can subscribe to their newsletter to get the latest updates to your inbox.
OpenSea is the most frequently visited NFT marketplace out there, and it has a monthly trading volume that crosses billions of dollars in NFT trades alone. The platform charges a 2.5% transaction fee.
Once you sign up and create an account, you can head to the ‘Éxplore’ page to research the best upcoming projects.
Binance is one of the top cryptocurrency exchanges in the world and contributes to a huge chunk of global transaction volume in crypto.
The platform charges a 1% transaction fee, and you must sign up on the website to own an account. After that, you have to get a wallet and look for projects that suit your interests.
Rarible is a great place to find new NFT projects, and it is a web-based platform. It charges you 2.5% transaction fees on purchases. To set up an account, you have to link your wallet so that you can store your assets after you make the purchase.
SuperRare is a reputed NFT marketplace with well-curated collections of NFTs created by famous artists worldwide. Once you have signed up for SuperRare, you can link your digital wallet and look for projects that fit you.
NFT Whitelisting is a process in which NFT projects offer their native communities to mint NFT sales before it opens for the public.
All NFT projects have their active communities looking to benefit from their native NFT drops. So it becomes vital for NFT projects to make their own NFTs democratic and give access to their team. This is why whitelisting becomes important.
Why is NFT whitelisting applied?
The main reasons behind NFT whitelisting are:
To reward supporters
NFT whitelisting is a great way to access the native NFTs for its native community. For instance, some projects release free NFTs and unique content for whitelisted users. Meanwhile, some users get access to the pre-sale at discounted rates. The whitelist offers change from project to project.
Also, different projects have different registration requirements for whitelisting. In some projects, users may have to complete tasks or hold a certain number of native tokens or assets. There are no fixed rules for getting whitelisted. Sometimes, you may get whitelisted if you are an active participant in community discussions and events. Hence no registration might be needed.
To stop gas wars
When NFTs are released publicly, a large number of users may interact with the smart contracts at the same time. This may cause the transaction fee to rise beyond control because users compete with each other to get their transactions approved. As a result, the gas fee rises and this is termed a gas war.
In whitelisting, registration is open to a selected number of users, which means there would be no competition, and the gas fee would remain low.
Whitelist avoids gas fees by selecting time frames when there is a low number of transactions. When the blockchain receives high traffic, the gas fee will likely rise. So, with a selected window of time, the whitelist sale avoids high gas fee,
Further, if there is a competition to join the whitelist, it naturally creates hype around the project, which is good for its publicity. Hence, more users will become aware of the NFT project and release.
To keep spam away
By including whitelisted users, projects keep away possible maps for non-whitelisted users. Besides, whitelisting prevents mass registrations, thus preventing spam accounts from creating multiple accounts. This keeps the gas fee affordable for genuine users.
How to check if an NFT is valuable
Usually, NFTs made by famous artists or creators and NFTs linked to tangible assets may carry a high value. However, there is no specific way to ensure an NFT’s value. Here are some basic parameters which you can use to decide the value of an NFT:
The demand for an NFT is directly related to how scarce it is. In other words, an NFT’s rarity decides its value. For instance, unique pieces by famous artists are rare, and they gain immense value when up for sale. Jack Dorsey’s first tweet NFT and The First 5000 Days by Beeple are perfect examples of NFTs with high rarity. These NFTs sold for millions of dollars.
The utility an NFT brings to the table becomes an important factor in evaluating it. An NFT has to have a real-world application to be valuable. For example, NFTs can act as tokens for real estate or precious metals. Sometimes, NFTs are used to tokenize security or represent virtual or in-game assets. Such NFTs are bound to carry value. Since NFTs are still in their infancy, more use cases are emerging.
NFTs linked to real-world assets or objects immediately rise in value. Combined with the fact that blockchains cannot be modified, these NFTs become more precious. For example, NFTs can help to highlight ownership and to prevent scams. Also, NFTs representing real estate can rise with time.
NFTs become more valuable when they are interoperable if they have applications in multiple places on the web. For instance, if an in-game asset works in various games, it suddenly becomes valuable for players of both games. Hence, its value rises naturally. The ability of NFTs to function on blockchains also makes things easier.
Although this is a great application, it is challenging to implement. For the same NFT to be useful in multiple applications, they should have a compatible network, requiring collaboration between their developers. This sector is still maturing, and we can wait to witness more such applications being developed soon.
Social proof is a crucial factor in determining the value of an NFT. For instance, an NFT with a massive following on Twitter or Instagram says a lot about its popularity. It means they have succeeded in gaining acceptance among the people and hence will have definite value in the future. This is influential when people make decisions, so keep that in mind when deciding the value of an NFT.
Who owned the NFT previously certainly affects the value of an NFT, and if a celebrity owned an NFT previously, it significantly pushes up that asset’s value. So, if you want to raise the value of your NFTs, working with reputed brands with a proven history will work in your favor.
A simple tracker interface will give you a history of the previous owners of the NFT. Simply highlighting the previous high-profile owner of an NFT may raise its value manifold.
Speculation can play a big role in deciding the value of an NFT. A classic example is the rise of Cryptokitty #18 from 9 ETH to 253 ETH in just 3 days. Speculation is a natural tendency of human beings, and hence it will always play a part in determining the NFT’s value.
How to stay away from scammers
While NFTs are a great investment option, numerous scammers are trying to make easy money from new users. You better remember the following points to prevent NFT scams:
Secure your key
Do not share your private crypto wallet details with anyone for any reason whatsoever. Your keys should be yours alone. Make sure you secure your keys and recovery phrases.
Do thorough research on the seller of NFT
Don’t forget to conduct deep research on the seller’s NFT marketplace credentials and ensure they have the blue tick mark for verification. Also, check their social media accounts and see if the seller has any previous online reviews.
Check the transaction history of NFTs
Examine the NFT’s transaction history before buying it. Make sure there are no other transactions on the same day you receive the NFT offer. If there are, it could be suspicious.
Stay away from unknown links and attachments
When someone sends you a link or attachment online, do not go ahead and click on it. Some scammers use this method to infiltrate your private information. Visit websites directly instead of falling for click baits.
Build strong passwords
Strong passwords are difficult to break into, so use one for your NFT trading platforms. Another way to secure your account is by using two-factor authentication. Besides, there are many security options, such as face recognition and fingerprint detection, which you can employ.
Use reputed NFT marketplaces
Never fall for offers that are too good to be true. While new marketplaces are mushrooming worldwide, the safe and secure ones are few. For security reasons, it is better to use reputed marketplaces like Rarible, OpenSea, Foundation, Mintable, etc.
Double-check NFT prices on other platforms
When buying an NFT, visit multiple trading platforms and marketplaces like Mintable and OpenSea marketplace to see if the price is the same as the offer you received. If you find the price lower or higher than the expected average, then it is probably a scam.
Secure your NFT
Once you purchase your NFT, it is safer to move them out of the marketplace wallet to your cold wallet or hardware like Ledger or Trezor. This way, there would be no chance for scammers to reach your NFTs.
Another alternative is to store them on online wallets like Metamask or Trustwallet. However, these wallets’ information is saved online, which is easier to break into than hardware storage.
How to mint an NFT – Step-by-step instructions with the image using OpenSea
If you want to create your own collection of NFTs, you need to know how to do the NFT minting yourself. You can find all the details below.
OpenSea is one of the world’s top NFT marketplaces. It seems more than a million transactions every month, so it is the right place to be regarding NFTs. It guarantees visibility for your artwork and has affordable transaction fees.
The first step to NFT minting on OpenSea is buying Ethereum tokens, as you need them to pay transaction fees and gas fees.
The gas fee is the amount of Ethereum you need to pay the cryptocurrency miners. It varies depending on the traffic at the time of minting and many other factors.
The average gas fee includes two components—one for creating your account and the second for giving access to your collection.
Creating a crypto wallet to link to OpenSea
You need to use this wallet to pay for the NFT minting and to sell on OpenSea. Metamask is a great option to use for this purpose as well as for personal use. You can download its app and have it as a browser plugin regardless of your operating system.
After you install it, you can store your Ethereum and Ethereum-based assets like NFTs on it.
Here are the further steps to follow for minting your NFT.
How to sell your NFT – Step-by-step instructions with the image using OpenSea
Once you have minted your NFTs, you can sell them if you want. Follow these steps to sell your NFT on OpenSea
Step 1: Head to OpenSea and sign in to your account
Step 2: Click ‘Profile’ on the home page
Step 3: Go into your NFT collection and select the NFT you wish to sell
Step 4: After you have found the NFT to sell, click ‘Sell’ on the top right, and this will open the listing page
Step 5: Next you choose how you sell the NFT by picking the type of auction, pricing, period of sale and who you’re selling to.
In auctions, a fixed price means the price will be unchanged. You can set the sale duration to how long you want it to go on.
You also have the option to reserve your NFT sale for a specific buyer by adding their address to the field.
You can choose to make a royalty fee each time your NFT sells. Also, there is a service fee charged for the actions performed for you. Additionally, there might be other fees depending on how busy the blockchain is at any given time.
Step 6: Once you pay the fee, your NFT listing will be ready to go.
On your first time selling on OpenSea, you have to pay two charges-se
- To execute your selling orders
- To let OpenSea access your collection during the sale
Just like that, you have successfully posted your NFT for sale on OpenSea!
Users can view the transaction history of your NFT on your blockchain anytime.
The NFT craze is increasing by the day and more and more brands and companies worldwide adopt NFTs. If you’re looking to get into the NFT space, this is a great time. Use this article as a reference to understand the basics of NFTs. Also, stay tuned to Coinfantasy for more information about NFTs and the latest news from the NFT space.
Frequently Asked Questions
The gas fee is the fee you must pay when you want to include your transaction in a blockchain network. You have to pay the gas fee as a part of minting NFTs. The gas fee fluctuates from time to time depending on factors like demand for transactions in the blockchain.
Smart contracts are protocols that automatically execute transactions on a blockchain when its conditions are met based on an agreement. While minting NFTs smart contracts manage the transferability of NFTs.