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Non-Fungible Tokens: A Beginner’s Guide To Getting Started With NFTs

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non-fungible tokens a beginner's guide to getting started with nfts
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What does a relatively obscure digital artist named “Beeple” have in common with Twitter CEO and founder Jack Dorsey? “Non-Fungible Tokens”, or NFTs for short.

Still confused?

In March 2021, artist Mike Winkelmann (aka “Beeple”) entered the history books when one of his projects sold for over $69 million at famous auction house Chrisite’s. Meanwhile, Twitter CEO Jack Dorsey was auctioning off a part of his own digital legacy: His first ever Tweet from 2006, which eventually sold for an astounding $2.9 million!

The technology that allowed these sales to take place is known as an NFT, or Non-Fungible Token. Put simply, NFTs are cryptographic tokens that use blockchain technology to allow users to define the uniqueness of an individual asset.

If that description still sounds a little mystifying, and you’re having trouble getting your head around Non-Fungible Tokens, NFT art, or any other aspect of this burgeoning technological trend, don’t worry, we’ve put together this easy to understand guide to help get you started.

Non-Fungible Tokens: A Very Simple Definition

If you were lucky enough to be in the market for an original Picasso painting or perhaps the studio master of your favorite Beetles album, how would go about verifying that they were the real deal?

In the case of those two examples, the enormous costs involved would mean that the items would come with certificates of authenticity, and a mound of paperwork from industry experts that verified their “provenance”.

However, when it comes to digital-only items like Beeple’s artwork, how would you ever know that your JPEG file was the original? It could easily have been duplicated thousands of times before you ever got your hands on it!

This in a nutshell, is the purpose of an NFT. It allows someone to create a “digital tag” for an item, using blockchain technology to assign a unique identifier that guarantees authenticity.

NFTs can be used to prove the originality of digital art and even music tracks, but in the future they might also be used to track real-world assets too, such as a house, a car, or even a prize-winning racehorse!

What Does The Non-Fungible Part Mean?

Cryptographic tokens like Bitcoin are designed to replicate money: You could exchange your Bitcoin for a friend’s Bitcoin, as they both have equal value. Likewise, you could also split a Bitcoin between a group of people, much like a $20 bill. This makes Bitcoins “Fungible”.

On the other hand, although a “Non-Fungible” token is sort of like a Bitcoin in the way its technology works, it can’t be divided or distributed, and it can’t be exchanged on a like-for-like basis.

These properties make NFTs ideal for representing individual assets, as they can’t be modified or split. You can’t buy half a painting for example, and although you might be able to swap the painting for something similar, it must always exist as a unique item of its own accord.

How Does The Technology Work?

The technology behind NFTs is very complex, but if you can get your head around how “blockchain” works, you’ll easily understand the basic concept:

A blockchain is a bit like a database. It stores blocks of data in a linked chain. However, unlike a typical database that would be stored on a central server, blockchain is completely decentralized. Every node of the chain is spread around the entire world, and each part holds a full record of the data that’s been stored there since its creation.

The order of the data on the blockchain is important, but each block itself is useless on its own, and tampering with any of the nodes would render the entire chain invalid. Combine that with decentralization, and you have a very solid and secure method for storing data.

Because NFT items are transferred and traded within the infrastructure of the blockchain, ownership is provable and guaranteed, with a complete ledger of transaction history embedded within.

How To Make Money With NFTs

OK, so that’s the technical part explained. Now here’s the part that most readers are probably holding out for: How do you go about buying and selling NFTs, and how difficult is it to create NFT artwork for yourself?

Let’s dive right in:

How To Buy & Sell NFTs

First up, if you’re keen to start buying and selling NFT items, you’ll need to get yourself a digital wallet.

A digital wallet is, as the name suggests, a secure place where you store all of your cryptocurrencies. There are lots of different online exchanges available where you can go to swap your regular (Fiat) money for Cryptocurrencies, and these sites will also come with a digital wallet where you can store your digital currency.

Coinbase is probably the best known of these exchanges, and it’s super easy to join the site via iOS, Android or your web browser.

Choose Your Currency

At this point, the only consideration you’ll need to make is which of the various marketplaces you’ll be using to buy and sell your NFT items.

Not all NFT marketplaces use the same currency (or blockchain) for buying, selling or creating NFTs. As a beginner, you’re probably best sticking to a Coinbase wallet and using Ethereum, as this is the currency that’s used by some of the largest NFT marketplaces (more on those in a moment).

If you’d like to dive in at the deep end with some of the more obscure marketplaces, we’d suggest starting out with something called Metamask.

metamask wallet screenshot

MetaMask Wallet

Metamask is a more flexible option than Coinbase, and comes with a browser extension and mobile app, giving you a secure wallet and a token exchange to manage a broader range of digital assets.

Different NFT Marketplaces

Once you have some digital currency loaded up, you can begin to browse the various NFT marketplaces. Once you’ve joined one, you can make as many purchases (or sales) as you’d like.

At the time of writing, we managed to find dozens of different platforms where you can buy and sell NFTs.

Here are the most popular:

Out of that list, the top four entries make up the lion’s share of the current market, with OpenSea being by far the largest.

opensea nft marketplace

OpenSea Homepage

If you’ve made it this far, you’ll have no trouble buying and selling NFTs on a site like OpenSea. It’s as easy as making a bid on eBay!

So What Kind Of Items Are For Sale?

For the most part we’re talking digital art, but there’s a thriving economy for all sorts of digital assets. Here’s a non-exhaustive list:

  • Trading cards like CryptoKitties (think Pokemon Go).
  • Digital sports memorabilia, from NBA to F1.
  • Censorship-resistant domain names.
  • Virtual worlds and collectable Minecraft-style builds.
  • Virtual clothing and wearables for avatars.
  • Rare in-game items such as weapons and armor.

At this point, it’s important for us to make a bit of a disclaimer: Whilst the sites we’ve mentioned are completely legit, we’re not offering any investment or financial advice here. If you decide to start trading in digital artwork or collectables, you’re certainly not guaranteed to make money!

How To Create Your Own NFT Artwork

Buying and selling other people’s NFTs is one thing, but how do you go about making your own NFT art and publishing it on one of the marketplaces?

Surprisingly, it’s actually a pretty easy process and requires almost zero technical knowhow: If you’re signed up to one of the big marketplaces like Opensea or Rarible, all you need to do is make sure you have a crypto wallet attached to your account, then head over to the “Create” section of the site.

A few clicks later, you’ll be the proud owner of your very first piece of NFT art!

Is It Really That Simple?

Yes! Once you’ve uploaded your artwork and filled out some details (your name, description of the file, that kind of thing..), you’ll then go ahead and pay a small fee to “Mint” your creation (more on that below).

“Minting” is the process of adding a block onto the Ethereum blockchain, where your artwork’s unique identifier will live forever.

What Will Your Art Be Worth?

Your guess is as good as ours!

We’d wager that you probably won’t be breaking Beeple’s $69.3 million record anytime soon, but if you’re a talented artist, sites like OpenSea and Rarible could eventually help you to launch a full time career.

Bring Gas Money With You
nft gas station gas fees

NFT Gas Station

Minting your own NFT requires the creation of a unique new entry on the blockchain, which ultimately requires a significant amount of processing power to get done. As Ethereum is the most commonly used network used to mint NFTs, this comes with what is known as a “gas fee” for the effort and energy used in computation. Optimist provides a helpful tool called NFT Gas Station which gives you an estimate of the gas fees on all major NFT marketplaces.

Some Real World Applications

So at this point, you probably fall into one of two camps: You’re either a digital creator trying to figure out how NFTs could help get your passion off of the ground, or you’re someone with an entrepreneurial spirit looking to make their fortune.

So the big question then: Are NFTs just hype, or do they have tangible uses in the future?

It’s still too early to tell, but we’re already seeing some interesting applications:

Digital Artists & Photographers: NFTs are fantastic news for anyone who makes a living with digital art. The NFT marketplaces allow you to show off your work to the entire world, and then trade it digitally without fear of it being copied.

The nature of blockchain also means that every time your piece gets traded online, you’ll get a fair commission from each and every sale, without having to employ a middleman like an agent or a gallery.

Musicians: Kings of Leon look set to be the first band to release an album using NFT technology. The release will be a little bit like a limited edition vinyl, with special perks like unique album art and access to front row concert seats.

NFTs are a natural fit for modern musicians, as they enable artists to release tracks or albums digitally in limited numbers, without the fear of piracy or duplication. NFTs enable an artist to retain the copyright for a track, but sell it on the open market as either a limited edition, or a one-off studio master.

Physical Items: It’s important to note that NFTs aren’t in any way restricted to digital items. The great thing about blockchain technology is that it not only keeps a paper-trail of every transaction the item has ever gone through, but it can also hold encrypted information or history.

  • NFTs could prove the authenticity of art and antiques.
  • Classic car owners could use NFTs to trace a vehicles history and originality.
  • Real estate sales could be managed and tracked using NFT tokens.

Licensing & Record Keeping: In the future, it’s highly likely that a form of NFT technology will be used for sensitive information, such as medical records and even passports, whilst NFTs could also prove valuable for issuing patents and licenses for all manner of activities.

Summing Up

NFT technology and marketplaces like OpenSea are still very much in their infancy. However, the technology behind this new trend is sound, and could easily signal the start of a revolution for digital artists, musicians and other online creators, as well as offering practical solutions for offline applications as well.

Exciting times lie ahead that’s for sure, and there are certainly fortunes to be made for early adopters that do their research.

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How-To

How To Start An Online Business In Dubai (2021 Guide)

From choosing a business name, to applying for your visa, this guide takes you through everything you need to know about starting an online business in Dubai.

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There has never been a better time to start an online business in Dubai than now.

Experts anticipate retail e-commerce sales to reach a new high by 2022, growing from $4.28 trillion in 2020 to $5.4 trillion. This massive growth is fueled by the always improving availability of electronic devices, new generations of mobile network technology, and more accessible online payment methods, just to name a few factors.

When choosing the best place to start an online business, Dubai should be high on your list. Not only does the United Arab Emirates (UAE) have the most advanced e-commerce market in the whole MENA region, but businesses that decide to incorporate in Dubai can look forward to many benefits, such as:

  • Minimal bureaucracy
  • 0% tax rate
  • 100% business ownership
  • Low operating expenses
  • No import/export duties

Best of all, starting an online business in Dubai is much easier than you might think, and we explain everything you need to know in this article.

Starting An Online Business In Dubai In A Few Simple Steps

The process of starting an online business in Dubai is deliberately straightforward to attract as much business activity as possible. Essentially, it involves filing an application for an e-commerce license, which then allows your online business to operate and sell products or services specified in the license.

Before you go ahead and file your online business application, there are some decisions that you need to make.

1- Choose Your Jurisdiction

The UAE consists of two main economic zones, or jurisdictions:

  • Mainland: Businesses incorporated in the UAE mainland are free to operate anywhere in the UAE market, meaning they can do business both inside and outside the UAE. They can also take on government contracts.
  • Free Zone: On the other hand, businesses incorporated in the UAE free zone are now allowed to conduct their operation in non-free zone without the support of a local agent. However, such businesses get to enjoy a special tax, customs, and imports regime.
2- Pick A Name For Your Company

If you haven’t done so already, now is the right time to pick a name for your online business. While this may seem like an easy decision, you need to keep in mind that the UAE has strict naming conventions, and you definitely want to avoid names that include:

  • Offensive language
  • References to Allah
  • Sectarian or political groups
  • Initials and abbreviations
  • Politically charged terms

If you’re having trouble picking a suitable name for your online business, then you may want to consider hiring a consulting firm with a deep understanding of the UAE, its culture, and customs.

3- Prepare Your Business License Application

You can now submit your business license application. The application process will take far less time if you have all basic documentation in order, including:

  • Properly filled out application form
  • Passport copy of the proposed owner or owners
  • Two-color passport photos

Again, any inaccuracies in the application form can lead to unnecessary delays and complications, so we highly recommend you double-check everything before you submit your business license application. If everything goes right, your application should be approved in a week or so.

You can, of course, let a company formation expert take care of this step for you, but you need to be ready to pay a rather steep fee for the service.

4- Apply For Your Visa

Although your online business may not need physical premises like a brick-and-mortar store, you are required to have a legal address. In order to move to a Dubai-based office, you and your employees will need a valid visa.

All entrepreneurs who have set up a business of their own at some point in the past can apply for a business visa, which is part of the Golden Visa system under which foreigners can obtain a long-term visa for themselves and their dependents.

5- Open A Bank Account In Dubai

As a Dubai-based online business, you need a local bank account. The good news is that non-residents don’t have to jump through too many hoops to open a bank account in Dubai. As long as you have a password, your UAE identification card, a copy of your visa, and your business license, you should be good to go.

The largest banks in Dubai include:

While some banks cater specifically to online businesses, other banks are less accommodating, so make sure to do your research so that you get the best service possible.

Top 3 Online Business Ideas To Start In Dubai

If you’re reading this article because you’re just thinking about starting an online business in Dubai, then we have a few business ideas for you to consider:

  • Online Store: E-commerce has been booming in the UAE for years, and the COVID-19 pandemic has only accelerated its already rapid growth. If you have a product that people will want to purchase, then there’s nothing easier than setting up an online store and making it available to the entire world.
  • Online Teaching: Traditional learning, which can be defined as teacher-centered delivery of instruction to classes of students, doesn’t reflect our rapidly changing world. If you have any skill that’s in demand, you should consider starting an online teaching business or publishing video courses on the internet.
  • App Development: The number of smartphone users worldwide is expected to reach 3 billion by 2023, so there’s a huge opportunity to start an app development online business and publish mobile apps on major app marketplaces, such as the Google Play Store and the Apple App Store.

Regardless of which business opportunity you decide to pursue, we hope the information provided in this article will help you achieve your business goals and grab your share of the e-commerce market.

Bonus: If you do happen to make it to Dubai, consider getting yourself a Nol card. This card gives you simple access to all public transportation options available in the city.

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