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.
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 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:
- Myth Market
- Enjin Marketplace
- Async Art
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.
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
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.
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.
The Top 3 Altcoins To Keep An Eye On In 2021
If you’re a crypto enthusiast looking to diversify your portfolio, then these are the top 3 altcoins you should keep an eye on in 2021.
When most people think of cryptocurrency, they automatically think of Bitcoin. Bitcoin has seen a huge surge in popularity over the last five-or-so years, and although the market is now flooded with spinoff coins in hundreds of flavors, many newcomers to cryptocurrency still have no idea that other options exist. In this article, we’re discussing the top 3 altcoins we believe you should keep an eye on this year.
What Are Altcoins?
An “Altcoin” is simply a cryptocurrency that isn’t Bitcoin. All altcoins share common characteristics, and operate in broadly the same way as Bitcoin, but under the hood, they may use a different mechanism to conduct transactions.
Some altcoins are used purely for mining, whereas others are intended to be used as security or utility tokens. Ethereum and Binance Coin are probably the best know Bitcoin alternatives, but as of 2021, there are over 9,000 different cryptocurrencies in existence, and that number will undoubtedly rise in the future.
Should You Invest In Altcoins?
Some altcoins are more stable and mature than others, Ethereum being a prime example. With that being said, you only have to take a look at a recent Bitcoin price chart to see that even the most mature of cryptocurrencies can still be very volatile in nature.
Investing in altcoins then, is something of a gamble. Many of the Bitcoin alternatives are attractive to investors because they’re currently extremely cheap, and have the potential for huge growth. That means it’s relatively easy to build a broad portfolio of coins for relatively little outlay. It’s also perfectly possible to make a very good return if you choose wisely.
Here are some of our top altcoin picks for 2021:
Disclaimer: Any recommendations we give in this article are purely based on our own opinions. We’re certainly not giving you financial advice. Always do your own independent research before investing in cryptocurrency of any kind.
Our 1st Pick: Cardano (ADA)
Out of our “top 3 altcoins”, Cardano is perhaps the most interesting. So-called “meme coins” like Doge are getting a lot of celebrity hype right now, which means that genuinely innovative altcoins like Cardano aren’t always given the attention they deserve. That’s a shame, because Cardano is based around a genuinely useful (and ethical) set of features that could eventually see it becoming a very wise choice for patient investors.
What Is Cardano?
Cardano’s CEO, and former Ethereum founder Charles Hoskinson, describes the altcoin as:
“A collection of protocols and technology that allows you to transform, store, and manage value, identity, and governance.”
Hoskinson has focused his efforts on creating a technology that can help people in the Third World to create verifiable records and better access to bank accounts and loans, as well as a means of storing academic credentials that are recognized worldwide.
In addition to it’s ethical underpinnings, Cardano uses the “Proof of Stake” model to mine new blocks and verify transactions. This means that only a fraction of Cardano holders can mine on the network, which greatly reduces the overall carbon footprint of the blockchain, as it puts restrictions on the number of computers that can mine new coins.
Bitcoin on the other hand, uses a “Proof of Work” model. This puts zero restrictions on mining, meaning that wealthy companies not only have an unfair advantage in the amount of processing power they can bring to mining operations, but there is no ceiling on the amount of energy that can be thrown at mining.
Should You Invest In Cardano?
Obviously all altcoins are volatile in nature, so we can’t be certain that you’ll hit the big time by investing in Cardano. With that being said, the team behind this cryptocurrency has some great experience and credentials, and they’ve already proven the technology as viable. Cardano is also set to launch smart contracts within the next couple of months which experts in the field claim will skyrocket the price.
Think of this one as a slow burner, and not your typical “meme coin”, and you could see healthy returns in the longer term.
2nd Pick: Polkadot (DOT)
Founded by Gavin Wood (another Ethereum co-founder) back in 2016, Polkadot launched in 2020. To date, the cryptocurrency has raised over $200 million from investors and although its growth has been volatile, it’s seen some promising gains in 2021.
What Is Polkadot?
Polkadot is essentially a software that allows users to launch and operate their own blockchains. It features a main network (the so-called Relay Chain) for permanent transactions, as well as user created networks, known as Parachains, that can be customized for any number of uses.
The purpose of Polkadot’s design is to create an ecosystem that allows users to conduct more secure transactions with greater privacy, using blockchains that don’t disclose user data onto the public network itself.
So This Is Basically Like Ethereum?
Since the major Ethereum update known as Ethereum 2.0, it does share many similarities with Polkadot in operation and developers can even use Polkadot’s developer framework to simulate the Ethereum blockchain for use in custom blockchain designs.
Should You Invest In Polkadot?
Polkadot’s value grew rapidly in February 2021, with a huge price hike of 350% from the start of the year. Like many altcoins, there’s been a degree of volatility in Polkadot’s market price, but many experts are bullish about the future value of this coin, with some forecasters suggesting it could break the $100 mark by the end of 2021.
3rd Pick: Shiba Inu (SHIB)
Dogecoin was conceived as a Bitcoin parody way back in 2013, and Shiba Inu Coin takes the absurdity to the next level, using the breed name of the Japanese dog mascot of Dogecoin to create a “a meta parody”.
Although clearly created as something of a joke, Ryoshi, the founder of Shiba Inu, envisaged the coin as a fun experiment to build a token using a 100% decentralized community, and despite clearly being a meme-coin, it does show promise for future investors:
Shiba Inu – Made For Investors
Shiba Inu was created in such a way as to provide its investors with greater investment potential from its inception. The Shiba Inu team created an ERC-20 token that was priced low enough that anyone could own millions of tokens whilst they were still relatively undervalued.
Another decision made by the Shiba Inu team was to hand over half of the pool of coins available at launch to Vitalik Buterin, a co-founder of Ethereum. The team hoped that “burning” a large amount of the currency would prevent the coins being bought up by a few big investors, which could have impacted its future use as genuinely useful coin.
As it turns out, Vitalik Buterin has now given away 10% of his entire portfolio of Shiba Inu to a COVID-19 relief fund in India, and burned the remaining 90% sending prices tumbling after their huge initial surge in early May 2021.
Should You Invest In Shiba Inu Coin?
The market for novelty “meme coins” is huge at the moment. Investors are constantly looking for the next big thing, and Shiba Inu still has decent growth potential, despite the loses suffered b Buterin’s huge coin dump. For that reason, and because it’s so closely tied to the fortunes of Dogecoin, we’d say that Shiba Inu still has a lot of potential left for the rest of 2021.
There are hundreds of promising altcoins making strong gains in 2021, and these are simply the top 3 altcoins we believe will see significant price rises towards the end of the year. It’s important that you go into the world of altcoins with your eyes open, and don’t make any rash investing decisions that you’ll later regret. However, for those of you that keep a level head and invest wisely, you could see some amazing returns from your portfolio!