This blogpost contains summary points from a course on Udemy titled ‘NFT Fundamentals’, taught by George Levy

NFT(Non-Fungible token)

  • Record stored on Blockchain that certifies that a digital asset is unique and the ownership of that asset. NFTs can be used to represent digital assets such as images, audio, videos, and other types of digital files. Each of those NFTs is unique from all others.
  • NFTs can also be used to track and represent the ownership and authenticity of physical assets including original artwork and creative pieces such as paintings and sculptures
  • Fungibility (bitcoin, litecoin, ether)vs. Non Fungible digital assets(cryptokitties, NBA Top Shot, Cryptopunks)
  • Examples of NFTs
    • Cryptopunks sold for millions of dollars
    • Beeple sold and NFT for $69M at Christie’s
    • Homer Pepe NFT purchased for 320k USD
    • Cryptopop sold 222 editions of $1999 each
    • Video sold as NFT
    • Real estate properties : When you buy digital asset, you get ownership of the physical asset
    • NFT also entails a destruction of art in the physical world
    • Music bands generates $2 Million from NFT sales
    • Grimes, partner of Elon Musk sold $6M as art
    • Jack Dorsey sold his tweet for $2.9M

Brief history of NFTs

  • Colored Coins (2012)
    • Issue and transfer any asset on Blockchain chain
      • Could be stocks, bonds, etc.
      • Ownership was recorded on Blockchain
    • Could be issued on Blockchain for as little as 1 satoshi
    • Technology did not go further
  • Counterparty(2014)
    • Early entrant
    • P2P financial platform built on top of bitcoin Blockchain
    • Enabled people to transfer currencies and assets via the bitcoin Blockchain
    • Famous for trading Rare Pepe memes
  • CryptoKitties and CryptoPunks(2017)
    • Both were developed on Ethereum Blockchain
    • Cryptopunks was the first NFT to be launched on Ethereum
    • Cryptokitties was launched and popularized the ERC721 token standard
    • Majority of the tokens are based on ERC721 token standard
    • Cryptopunks did not use ERC721 token standard
  • Decentraland(2017)
    • VR platform on Ethereum
    • Players can buy land in 3D virtual space
    • $26 Million in ICO in under 1 minute
  • NFT has become mainstream
    • $2B billion in first quarter with twice as many buyers as sellers

Why you should create NFTs ?

  • Protect your creative efforts via verifiable authenticity
  • New commercial product line
  • Easy and affordable set up for creating and selling your work
  • Lifetime royalties
  • Create multiple streams of income
  • Promote your work automatically 24/7

Blockchain Basics

  • An NFT is valuable because Blockchain has enabled digital scarcity
  • Bitcoin is digitally scarce
    • Digital picture email analogy
    • Picture of Monalisa that you take is not valuable
    • Napster almost killed the music industry
  • Music industry and NFTs are match made in heaven
    • Produced live on twitch and then created a single copy NFT for auction. Dance Music approximately sold for 69k USD
  • Popular Blockchain to mint NFTs
    1. Ethereum ERC-721 token standard - Compatible with NFT ecosystem
    2. ERC - 1155 standard - Compatible with NFT ecosystem such OpenSea. These market places work with metamask
    3. Bitcoin Blockchain - Counterparty, RSK
    4. Bitcoin Cash(George Levy has created multiple NFTs on Bitcoin Cash Blockchain)
    5. Cardano
    6. Polkadot
    7. EOS
    8. Tron and many other
  • Best option is to built it using Ethereum

Buy, Create and Sell NFTs

Six Easy Steps to Buying, Creating and Selling an NFT

Buying NFTs

  1. Select and NFT Market place and open an account
    • OpenSea.io
    • Rarible.com
    • Mintable.app
    • SuperRare.co
    • Foundation.app
    • KnownOrigin.io
  2. Connect your metamask wallet to your account
  3. Fund your Metamask wallet with required Ether or other needed cryptocurrency
  4. Explore the NFT options available and select the NFT you wish to buy
  5. Place your bid for the NFT following market place rules
  6. Highest bidder wins

Selling NFTs

  1. Select and NFT Market place and open an account
    • OpenSea.io
    • Rarible.com
    • Mintable.app
  2. Connect your metamask wallet to your account
  3. Prepare the content you wish to “Mint” as an NFT and upload to your account
  4. Pay the required amount to the marketplace to create or mint your NFT
  5. Select the NFT you wish to sell and help promote it via social media
  6. Buyers will bid on your NFT. Once a buyer buys your NFT, you will receive payment to your wallet

Installing Metamask and Transfer Ether

  • Cryptocurrency gateway - connector between browser and Blockchain
  • Browser extension
    • Mobile wallet not recommended
  • Buy, Store, Send and Swap Tokens
  • Get Ethereum in to metamask
  • Simple and secure way to connect with Blockchain applications
  • Passwords and keys are generated on your device for privacy
  • USD Coins will always be $1
  • Get ether in to an exchange wallet by using a fiat on ramp exchange like coinbase
  • Transfer Ether from coinbase to metamask

How to buy an NFT

  • Use the explore option to look through all the NFTs and buy the relevant NFT
  • There are many types of NFTs that you can buy
    • Art
    • Collectibles
    • Domain names
    • Music
    • Photography
    • Sports
    • Trading cards
    • Utility
  • Mintable,Rarible and OpenSea works with metamask wallet

How to create and sell an NFT from Digital Assets

  • Create a NFT means you need to associate an address with it
  • How to create a art NFT ?
    • Easy to use UI to put in your art on OpenSea
    • OpenSea accesses the metamask wallet and deducts eth to create an NFT ?
    • fee for the first collection and subsequently the items can be added to the collection
    • Select sell method and transfer eth to OpenSea and NFT is minted

Creating an NFT from Physical artwork

  • How does one transform a physical performance to an NFT ?
  • Denominate one of the piece as original and tie it to the authentic copy
  • Physical art - which is unique ? the physical asset or digital asset
    • Option 1 : NFT and physical painting are inseparable
    • Option 2 : Unique Physical piece and a limited number of digital copies that represent the physical piece
    • Option 3: Physical piece is destroyed - NFT is the original piece
      • Banksy artwork burnt

Transforming a physical asset or performance in to NFT

  • NFT can be a video performance, a pic, a piece of art
  • Record a video as a performance art piece
  • Physical and digital component cannot be split

Minting NFT TCB01

  • Get in to OpenSea via metamask
  • Process is similar to minting an NFT for a piece of art such as pixellated image
  • Unlockable content

Growing Your Business

  • List products on OpenSea
  • Pay only once for minting NFT and then create as many NFTs as possible
  • For collectibles, one needs to add properties, supply, unlockable content

Walkthrough - Buying NFT

  • Lazy Minting - NFT gets minted when someone buys the NFT. If you list NFT, the minting is not done, it is merely a concept. One does not pay every single time when you list a NFT
  • Whenever you see an NFT, you will not only pay for NFT but also the minting fees
  • You can buy NFT, mint the NFT, and then sell the NFT on a different exchange or the same marketplace

Hot Storage vs. Cold Storage

  • Hot wallet - Keep cryptocurrency in a wallet that is connected online
  • Cold wallet - Store wallet offline(Trezor, Ledger)
    • Connects with metamask
    • Never buy it from ebay
    • Always buy it from the companies that offer cold wallets

Setting up Royalties

  • NFTs are recorded on Blockchain and hence on can set up royalties everytime the NFT moves across Blockchain
  • OpenSea can be used to set up royalties up to 10%
  • Royalties applies to initial sale and subsequent sales. Royalties ar received 2 to 4 weeks later
  • Set payout wallet address and royalties are sent whenever there is a transaction
  • You can keep track of royalty payout on OpenSea

Growing across multiple market places ?

  • Once you pay the initial fee at OpenSea, you can put a lot more content
  • Rarible uses ERC1155 standard
  • You can also see rarible items on OpenSea
  • Do not spread funds across multiple platforms
  • Get your product in place, understand which product sticks and see what works and what does not work
  • Sports cards are converted to NFTs and are being sold on OpenSea
  • Always be aware of copyrighted content
  • Someone is selling “Yeah” as NFT - Ridiculous

OpenSea Gas-Free Marketplace

  • Polygon is one of the options to create and sell NFTs without paying high gas fees
  • Listing NFT does not have gas fees if you choose Polygon Blockchain
  • Polygon is a Level 2 Blockchain
  • Selling on Polygon means that cryptocurrencies used on polygon Blockchain are used to pay you
    • Quoted in Ether on Polygon
    • You will have to bridge and transfer the ether from Ethereum Blockchain to Polygon Blockchain so that you can use ether on Polygon Blockchain to buy on OpenSea
    • You can list your NFTs on sale and you can choose to get paid using Eth, DAI, USDC, REV on Polygon
    • Process of listing NFT on OpenSea via Polygon
    • Adding NFT to a collection on Polygon Blockchain in OpenSea does not cost gas fees
    • Listing an NFT for Sale on Polygon: Set the sales price, duration of listing, service fee and then complete the listing.

Takeaway

Using NFTs to buy and sell creative art is a new medium for all the artists around the world to monetize their content. They are completely in charge of listing and collecting one time payment and royalties of their artwork. It will be interesting to see how this field evolves over the next few years