What Every Creative Needs to Know About NFTs
Whether you’re an artist or a collector, you can stand to benefit from an NFT, short for non-fungible token. Think of NFTs as digital certificates of authority that speak to the true origin of a specific piece of art, design, or collectible.
Suddenly spiking in popularity in the last couple of months, NFTs are now among the hottest digital and design trends in the world. When something is harder to come by—along with strong demand for it—its value tends to skyrocket. NFTs, therefore, can be game-changers for creatives who seek to create scarcity in their unique artworks.
Read on to figure out exactly what NFTs can do for your career as an artist.
What Is an NFT?
As mentioned above, NFT stands for non-fungible token. In other words, it’s a good or product that cannot be replaced by an identical item.
For something to be fungible in the first place, it implies that there is equal value between two assets of the same kind. Without getting too deep into economic theory, it’s essentially an asset that’s mutually interchangeable with something of the same kind.
Let’s look at an easy-to-understand example:
Take the concept of a dollar bill. How many dollar bills has the federal mint printed throughout the years? Too many to keep track of. They are legion, and any one of them serves its purpose just as well as any other. You can take a dollar bill from 2005 and use it to buy something worth exactly $1, just as well as you can take a dollar bill from 2015 and use that bill to purchase something for exactly $1.
Therefore, these dollar bills are said to be fungible.
Since it’s the unique identifier of a very specific digital good, an NFT is the exact opposite: it serves as the distinct barcode for a digital asset that can’t be replaced.
It’s really a digital token, a form of cryptocurrency—a virtual type of currency where transactions are maintained and recorded by a decentralized system that uses cryptography, instead of being either issued or regulated by a central authority such as a bank. Think of this token as just another form of cryptocurrency, like more well-known ones such as Bitcoin and Ethereum. Of course, its non-fungible nature makes it a cut above your ordinary cryptocurrency.
Since the average NTF stores additional information—the unique identifier mentioned above—the token comes into its own as more than just currency. A broad definition would be that it stands for pretty much anything that can be stored digitally and to which real value can be assigned.
Here are just some examples of various kinds of this non-fungible:
- Digital art
- Digital collectibles (sports collectibles)
- Physical objects
- Music files (MP3s)
- Images (JPEGs)
- Real-world objects (such as art you hang on the wall, shoes, vehicles, etc.)
- Virtual objects within computer and video games (such as skins, currency, weapons, unlockables)
- Virtual land
How They Work
Since any NFT is registered on an open blockchain ledger (read: an immutable and shared ledger for recording transactions and then tracking assets), it can be tracked according to numerous metrics:
- Ownership (who’s really the original owner)
- Previous sales prices
- Quantity in existence
Part of the Ethereum blockchain, this non-fungible holds value thanks to the extra information stored in it. This value makes it possible, thanks to market forces, for an individual NFT to be bought and sold on the free market—just like any other good or product. Said market sets the prices based on supply and demand.
It needs to be emphasized that there can be more than one digital version of a particular non-fungible art token floating around in the marketplace. This can be confusing because you may think that that undermines its uniqueness. On the contrary, more versions of the original NFT are simply copies of it—just like real-world art originals can be replicated. Of course, these subsequent versions of the art token have much less value than the original, though they are still a legitimate part of the blockchain. Because of the blockchain’s record-keeping, the original (and most valuable) NFT will always be identifiable, which should be of interest to digital artists and collectors alike.
How Graphic Designers Can Use NFTs
As a graphic designer, you have an interest in creating scarcity in the digital goods you create because the scarcer something is, the more valuable it is when it sells.
With a token of this type, you can essentially create that much sought-after scarcity in your digital assets since the blockchain will register your art token as the “real” one when you produce it. As a bonus, you’ll also be able to track future sales of your graphic assets and share in future value that’s created. We already have a concept like this: royalties.
However, with a non-fungible, things are automatically maintained and reconciled via the blockchain ledger, independent of any third-party involvement. As a result, you, the artist, will automatically collect royalties on each sale, thanks to the decentralized setup of the blockchain.
Contrast this with real-world art transactions. For instance, when a palpable artwork is sold, the artist usually doesn’t get any additional revenue from future sales.
In essence, an NFT provides you with control over your digital creations and smart contracts, which are self-executing contracts where the terms of the deal are straightaway written into the lines of code, with everything contained therein “living” on the blockchain network.
For your customers, on the other hand, there are also benefits. The blockchain system does away with collectors having to hire expensive experts who verify the legitimacy of a specific piece of art they’re interested in. Blockchain serves as a decentralized verification system of artworks, too, since each art token on the blockchain possesses that unique identifier—its digital barcode, if you will—that guarantees that it’s the original.
Therefore, interested buyers and collectors may quickly track a non-fungible token right back to its origin. And since it establishes digital scarcity in this way, such a token succeeds in whetting a buyer’s appetite to collect, which is something that was up until recently unavailable in the digital realm.
We hope we’ve stimulated your entrepreneurial spirit to make an NFT work for you and your digital selling aspirations. Here’s how to do that.
How to Create and Sell Your Own NFTs
Since the concept of digital non-fungibles is relatively new and spreading like wildfire right now, it may seem a bit intimidating to figure out how to capitalize (or at least explore) on this new trend. Just follow these steps to start your foray into the world of selling these art tokens.
The good news is that the process is quite straightforward, and the learning curve isn’t that steep.
Choosing Your Blockchain Network
It all starts with deciding on which specific blockchain network you’d like to issue your NFT. While Ethereum is currently the leader in art token issuance, there are other competitors like:
- Binance Smart Chain
Do your own research to see which one’s the best fit for you, though it makes sense to issue your token on the leading platform.
The other thing to keep top of mind from the beginning is that your options for selling NFTs become limited depending on your choice of blockchain service. For instance, Tron is compatible with Ethereum, but the Binance Smart Chain is not, so you’d be able to sell your Tron token on Ethereum marketplaces, but you wouldn’t be able to sell your Binance Smart Chain token on an Ethereum exchange. Ethereum is currently the biggest NFT platform around.
You’ll first have to turn your artwork (or music file or video) into an actual non-fungible token through the procedure known as minting.
Get yourself an Ethereum wallet, which supports the Ethereum-based token standard known as ERC-721. Examples include:
- Trust Wallet
- Coinbase Wallet
To start, purchase up to $100 in the ether currency (ETH) from one of the available cryptocurrency exchanges. Some of the most popular ones for ether are:
Choosing Your Marketplace
Congrats! Now that you have your first purchase of ether completed, you are free to check out various NFT-centric platforms. Here, you’ll be able to connect your Ethereum wallet to upload your created artwork, which you’ll want to convert into a dedicated non-fungible token.
The big players in the Ethereum marketplace are:
Each marketplace may have a slightly different approach to signing up, registering, and finally letting you sell your art tokens.
In general, the process goes something like this.
On the marketplace of your choice, there’s usually a “Create” button or icon on the horizontal navigation on the top of your screen, which starts things out. The next step will be for you to connect your Ethereum wallet to the marketplace. Verification requirements may mean you’ll have to actually write a message in your wallet to prove that it’s yours.
Now that you’re verified, you can start to upload your digital artworks onto the platform. Create a folder, which serves as your hub for your collection of tokens; this is where all of your future NFTs will live. Title your digital pieces of art and add any descriptions that you see fit, which should clearly help your customers understand what they’re buying and why they should buy it (read: why it’s a hot collector’s item).
Be sure to also add an image for your entire collection, giving potential customers an easy and quick, visual reference to go by. Depending on the marketplace, you may also be asked to add a banner image to your collection page, again, for easy reference and to make it stand out.
As you can see, the process and branding aspect of selling NFTs is very similar to setting up a social media profile or even a shop account on any marketplace that sells digital assets.
Now, you’re all set to upload your first art token to your collection, which can be an image, a GIF, a 3D model, a music file, or a video. Look for a button, such as “add new item.” Many of these marketplaces will also give you the chance to apply the marketing concept of scarcity to your NFT during the uploading process. For instance, you can apply special attributes to your art token, as well as unlockable content that your buyer only sees after they complete the purchase. To finalize the addition of your latest non-fungible to your collection, you’ll usually have to click on “create” again and sign another message in your Ethereum wallet for authentication.
Note that some platforms may charge you a fee for creating your non-fungible piece of art. Known as a so-called “gas” fee on Ethereum networks, this refers to the quantity of ether that it takes to act on the blockchain of your choice. In our example here, that would be how much ether it takes to add your new token to the marketplace. Network congestion will ultimately decide how much your gas fee will be. In other words, the more people there are on the marketplace at any given time performing transactions, the higher your gas fee.
Pro Tip: This gas cost is usually lower on the weekends due to fewer persons performing transactions at this time.
Selling Your Non-Fungible Token
To actually sell your NFT on any marketplace, go into your collection and select the one you’d like to put up for sale. There’s typically a “sell” button. Once you click on that, you’ll be brought to the marketplace’s pricing page, where you can choose to sell it for a set price or, instead, put it up for auction.
The most common cryptocurrencies you can sell your non-fungible artworks for are ether, as well as ERC-20 tokens. Of course, some platforms will just support native tokens of the blockchains on which they were built. As always, thoroughly check the marketplace you have in mind before you start the sales process, so you don’t get caught up in any surprises.
Some marketplaces will also allow you to earn royalties from any future sales of your particular NFT. Essentially, you’ll earn a commission each time your art token is sold to a new collector. The upside to this is the potential lifetime, passive income source for you.
Finally, some marketplaces will charge you a listing fee when you put your asset up for sale.
High-Profile Examples of NFTs in the Marketplace (So Far)
Though we’re still in the infancy of this design trend and digital phenomenon, there have already been numerous high-profile case studies of non-fungible tokens being big business. On top of that, the state of the market is on fire. From February to March 2021, the NFT market exploded in value. Whereas February only saw a weekly volume of approximately $8.2 million in sales, March saw $350 million in sales, a staggering increase.
A Beeple (Aka, Mike Winkelmann) piece—Everydays – The First 5000 Days—sold for almost $70 million a few weeks ago. The digitized artwork is represented in one JPG file. Famed auction house Christie’s, which is expanding its operations to be a marketplace for non-fungible tokens, took in more than 180 bids for the piece, proving yet again that there’s a market for almost everything.
In another shocking case study, Rainbow Cat (essentially a GIF of a flying cat leaving behind it a continuous rainbow trail) sold for almost $700,000. The creation of Nyan Cat, it’s an ideal example of a digital piece of art that took only a short time to produce, but netted a huge sum of money, thanks to the NFT marketplace.
Sports-themed marketplaces are doing well, too, especially ones backed by huge, professional leagues like the NBA. The league’s NBA Top Shots is a marketplace that sells digital collectibles in the form of video cards, which are short highlights of some of the NBA’s most memorable games. Its packs of moments are in such high demand that they’ve been known to sell out in just minutes.
With such a large demand for NFTs from sports fans, it’s understandable that another huge promotion, the UFC, is also joining the action. Its upcoming UFC Digital Collectibles works in the same model as NBA Top Shots. Only, instead of basketball stars’ highlights, you’ll have non-fungibles that showcase the most high-impact moments from the history of the UFC.
Rounding out this list of noteworthy mentions is the Sex on Fire band, Kings of Leon. The band is trying something new and making history by releasing an album as a non-fungible token. You’ll get their music; you’ll also receive access to exclusive artwork (an example of an unlockable and a form of scarcity to make the purchase more enticing) and a real-world vinyl copy of the album.
Potential Royalties Through Scarcity
As a graphic designer and digital artist, you want the design that you mint into an art token to be the next big thing in the fungibles world. However, you’ll likely not net the whopping almost $70 million sale of the Beeple piece mentioned above. Nonetheless, the implications for your bottom line due to the indelible impact of an NFT is something not to underestimate.
At the very least, these art tokens solve the problem of creating scarcity, and therefore demand, for artworks that you produce, which can be infinitely reproduced. Thanks to the emerging popularity of NFT marketplaces, you have the potential to mint your digital creation, sell it, and keep track of it from owner to owner. This is a big game-changer in the design world since it empowers creatives to keep making money off of their resales.
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