Everything you need to know about NFTs
The sudden explosion of the crypto space and blockchain’s popularity in recent years has given room for Non-fungible tokens or NFTs to take the internet by storm. But what are they, really? Aren’t they just glorified JPEGs that can only be bought or sold by the super rich?
Well, not really. Even you can get yourself an NFT right now! Before everything else though, let me explain what NFTs are and what they do.
Non-fungible tokens (NFTs) are digital or virtual assets that take the form of real-world objects like paintings, music, photos, and more. Each NFT is unique from the others, which in essence, creates digital scarcity. This is in direct contrast to other forms of digital creations which are infinite in supply, like your JPEGs from DeviantArt or PNGs from Tumblr.
NFTs are typically stored on the Ethereum blockchain, a secure digital public ledger where information is guarded by complex computer nodes. In this blockchain, NFTs can be bought, sold, traded, and of course, created or “minted” as the community calls it.
This may be shocking news for some, but NFTs have been around as early as 2014, though they’re only gaining traction now because of the aforementioned crypto space and blockchain boom.
The different types of NFTs and their value
NFTs can literally be anything you can imagine. A meme? That could be an NFT. In-game items? Could be NFTs too. However, what determines their value can vary from NFT to NFT.
In some cases, the value of an NFT is measured by the story behind its creation. This is why most popular and classic memes end up being crazy expensive NFTs, like “Nyan Cat” which sold for roughly $600,000, and “Charlie Bit My Finger” which sold for a staggering $760,999.
Not all NFTs are memes too. Some are real, legit art that credible artists put love and effort to make. Besides memes and art, some are iconic GIFs or videos of the internet like legendary game-winning clips from NBA games.
Generally, an NFT’s value is largely reliant on the amount someone is willing to pay for it. This is why in most NFT marketplaces like OpenSea, sales are done through auctions.
Nice and unique art aside, NFTs have since evolved into a whole slew of unique utility and applications.
1. Creators of NFTs can utilise it as a means to raise money for a business venture.
NFTs can be deployed as a means to generate a sizeable startup capital to launch the brand’s in real world roadmap of activities.
The Attack Tigers NFT Collection on Solana blockchain.
Here we have the team behind ‘Attack Tigers‘, which launched 2999 art pieces in their ‘Attack Tigers’ NFT collection. Their main purpose for the launch was to channel proceeds towards launching their energy drink brand globally.
Holders of the ‘Attack Tigers’ NFT collection would then earn a portion of their sales just by having the NFT in their crypto wallet. What a clever way to earn passive income.
All in all, every piece of their 2999 genesis NFT collection was sold out, and the team raised around USD 400,000 to kickstart their energy drink brand.
2. NFTs as a means to build a brand and a community behind the brand.
NFTs can also be viewed as a ‘badge of honor’, where if you own the NFT, you are seen to belong in an exclusive group. The brand image and identity of the NFT is thus built up along the way with high profile holders keeping it and showing it off.
The Catalina Whale Mixer NFT Collection on Solana blockchain.
The team behind The Catalina Whale Mixer NFT come with deep connections in the music production industry. They know the who’s who in the music scene, and are very connected to big names such as Mike Tyson and Daymond John.
Their goal is to build a solid and globally known brand called the Catalina Whale Mixer, with their whales to become as recognized as Disney’s characters.
Holders of the ‘Catalina Whale Mixer’ NFT collection would be part of this massive brand building journey, and also get exclusive merchandise from time to time. Most importantly, they would be part of a brand that consists of a world renowned and well-connected team which will most likely over deliver on their promises.
3. NFTs as a character in a play-to-earn game (P2E).
NFTs can be deployed as characters in these P2E games, they usually give players a huge benefit in the game as compared to players who don’t own one. This in itself is a large draw as these P2E games usually allow players to earn cryptocurrency – and the NFTs would allow them to earn alot more than the player without.
Aurory Project NFT Collection on Solana blockchain.
Aurory is a P2E game that gets players exploring a diverse universe in Antik and Cryptos – these are 2 different biomes. Players will encounter mystical creatures that can be caught and then traded. These trusty companions will follow the player as they adventure on in this JRPG. Players will earn $AURY tokens, which can be exchanged for fiat currency (non-crypto currency).
Holders of the Aurory Project NFT will get an exclusive in-game skin, with in-game benefits. They also get early access to future game modes, and be the first to earn the tokens. Holders also get free NFT airdrops of future collections, aka free NFTs for them to keep.
4. NFTs that grant ownership of a space in the virtual world or metaverse.
NFTs are also deployed as access to a virtual space or world – effectively unlocking access for the player (and their friends) to walk into and chill out in their own private space on the blockchain. It’s essentially the access key that unlocks this premium space access.
Portals NFT Collection on Solana blockchain.
Holders of the Portals NFT collection own a fully customizable space that lets their friends drop in and chill out in the owner’s space. Portals also allows owners to display their NFT collections as portraits around their space. In addition, this NFT project is backed by prominent investors in the Cryptocurrency space – including Binance.
A drag and drop builder allows owners to easily customize their space to their liking. There is also a communications app built in, that allows everyone in the same space to communicate with each another. This is essentially a social space that owners can fully customize without any friction or learning curve.
Other NFT collections that launched as a virtual world space provider also include LUX Real Estate, The Suites, Entrance and Enviro (among many others).
5. NFTs can also be deployed as access to tools on the Solana blockchain.
NFTs can also be deployed as an access key to proprietary software developed to interact with the Solana blockchain – mainly to provide additional capabilities for NFT collectors.
These types of software range from analytics, to faster minting and even sniping (quick and automated purchase) of NFTs at a set price.
Solana Money Boys NFT Collection on Solana Blockchain.
One prime example of a Solana NFT collection designed as a tool is the Solana Money Boys NFT collection.
The primary benefit to users holding this particular collection is that it grants them access to an NFT dashboard. This dashboard allows users to better track and manage their NFTs better, coming complete with all the datapoints and analytics required.
The full slew of benefits include – easy reference to the multi-asset price history of NFTs in the holder’s wallet, to be able to buy & sell NFTs directly from the dashboard and also a custom dashboard to track important metrics.
These tools and datapoints are extremely beneficial to NFT hunters in this space, granting them an analytical advantage over the layman without.
What’s the difference between owning an NFT and saving it as a JPEG?
Here’s a question that most newcomers to the crypto and blockchain space are asking: What’s the point of NFTs if I can just right-click and save them as a photo?
The short answer: saving them as photos just won’t grant you ownership of the actual asset itself that is on the blockchain. Saving the JPEG is thus meaningless as you do not gain access to any of the utilities that comes with the NFT simply because you aren’t the original owner.
The long answer: think of NFTs as a digital collector’s item. Even if you have the JPEG of a $100k NFT, it still won’t have any value because only its current owner has the official and verifiable means to claim it as their own.
Another analogy would be Pokemon cards. Copies, imitations, and fake dummies have been around for years, but nothing will beat the authenticity of original cards because it has the value and authenticity that collectors sought out for.
The same can be said about NFTs. Although there are hundreds of memes doubting its mechanics, saving a photo of it does not and won’t make you its owner, and thus, doesn’t give it any value.
The best & most popular NFTs right now
If you’re looking to invest and get your very own NFT, then it might be worth checking out 6 of the most popular and well-known brands on the two most busiest NFT blockchains, Ethereum and Solana.
The Top 3 NFTs on the Ethereum Blockchain:
1. Karafuru’s 5555 NFT Collection (Ethereum Blockchain)
Topping the list is Karafuru’s generative art with a very respectable average floor prices of 3.5 ETH at the current time of writing.
Born out of a partnership between the Museum of Toys in Jakarta, Indonesia and an Indonesian-based artist, WD. WILLY. The artist behind the art describes his creations as a “magical space where colors shine and everyone can have different personas to have fun with.” The art style takes inspiration from Japanese cartoons though it is not anime-inspired.
The collection has over 1000 trait combinations, and feature 12 main characters – Egao, Mosu, Kiba, Kuyaku, Futo, Uzachi, Otan, Torao, Shi’rai, Ku’roi, Goji and Ikai.
The Karafu NFT collection sold out almost immediately at mint time, and its floor price has been climbing steadily up since its successful mint.
There is a unique take to Karafuru’s utilities – holders get to attend real-life events, get free merchandise (including toys) based off Karafuru characters, and benefit from future growth of the project through partnerships.
Down the road, Karafuru will also look to launch a 3D collection of their NFT called 3D Furus that are designed for the Metaverse.
You can buy or make an offer for a Karafuru NFT over at their OpenSea collections page.
2. CryptoPunks (10,000 collection on the Ethereum Blockchain)
Next on our list are CryptoPunks, which as of writing, are currently all not listed. That means if you’d like to buy a CryptoPunk, you are not guaranteed one. Instead, you’d have to make an offer to one of its many owners.
That is how exclusive the CryptoPunk collection is, you simply can’t buy any off the shelves. On average, a CryptoPunk transacts for around 80 ETH, equating to around USD240,000 for a single piece of that NFT art.
Deriving from their name, CryptoPunks are a mix of the cyberpunk and 8-bit aesthetic. Each of the 10,000 CryptoPunks are unique in their own way, and no 2 pieces are the same.
A fun fact about the CryptoPunks NFT collection is that it really began as an experiment where the founders of New York-based software company, Larva Labs created a software program that could digitally generate many pixel images that are different from one another.
There are a total of 6039 male Punks, and 3840 female Punks. Each of the Punks come with their own distinctive traits – from lipsticks, to smoking cigarettes, to even pigtails and buck teeth ones.
You can add CryptoPunks to your watchlist at their OpenSea profile.
3. Cool Pets (19,999 collection on the Ethereum Blockchain)
From the creators of the original Cool Cats NFT collection, they now bring you the Cool Pets NFT collection on Ethereum Blockchain. It’s truly a one-of-a-kind work of art that involves fun little (read: baby) creatures that initially arrive in their egg form.
And as they are hatched, the baby pets grow and progress into their adult stages progressively. During the time the eggs hatch and grow into their final hero form, they are largely influenced by what the owners do and how they interact with the eggs.
This interaction takes the form of food – the combination of what their owners feed the eggs will ultimately decide how their Cool Pets turn out. The Cool Pets will come from 1 of each elements of Grass, Fire, Water or Air.
In the realm of Cooltopia, where the Cool Pets live in, owners can take them on various quests (some good ones include Save the Forest, Go Greet the Frogs and Sniff for Danger) to earn $MILK. $MILK can be used to buy mystery Pet Boxes that contains items used to influence the traits of their Cool Pets.
All in all, it’s an innovative NFT that is fully customizable based on how you interact with it. Add Cool Pets to your NFT collection by purchasing 1 on their OpenSea profile.
The Top 3 NFT Collections on the Solana Blockchain:
1. Degenerate Ape Academy NFT Collection
Founded on the principles of friendship making, crayon eating and absolute degenerate behavior, the Degenerate Ape Academy is one of the larger Blue Chip NFT collection on Solana.
As of this time of writing, this Solana NFT collection has seen over 282450 SOL transacted all time, with a very respectable 52.50 SOL as its floor price.
The Degenerate Ape Academy brand takes direct inspiration from other Ape brands like the exclusive Bored Ape Yacht Club. What makes them different are their 3D designs and more aggressive approach to tones and colors.
The NFT collection falls under the ‘Brand Identity & Community’ aspect of NFTs, where owning this exclusive NFT lets you be in the prestigious club of fellow holders. It’s probably also viewed as your ‘badge of honor’ where you can proudly show off to others.
Swing by their Magic Eden collections page to snipe a Degenerate Ape Academy NFT of your liking.
2. Aurory NFT Collection
One of the first projects to revolutionize play-to-earn gaming on the Solana blockchain, the Aurory Project is set in the fantasy universe known as Antik. The Aurorians, as the creators call them, are cute villagers drawn with anime aesthetics in mind, accompanied by light colors that make their faces glow and shine.
Holders of the Aurory NFT bought in hopes of potentially being the NFT holder of a JRPG game project that might become the next Axie Infinity on the Solana blockchain one day. Besides future returns in $AURY, holders gain in-game benefits such as in-game skins, early game access, eligibility for rewards from the Treasury and even the potential to develop effective PvP strategies.
This project minted at a price of 5 SOL, and its floor price as of the time of writing has soared to over 31 SOL. That’s a a neat 6x returns on investments for early believers of this project. In addition, the Aurory NFT project is funded by well-known investors ranging from Solana to Alameda Research. These guys have teams of experts that have years of game development expertise in their belts.
Head over to their Magic Eden collections page to snag 1 of these converted Aurory NFT pieces.
SolPunks are the SOL equivalent of the ETH-exclusive CryptoPunks. Despite their name and art design, SolPunks and their creators are in no way affiliated with CryptoPunks.
1 SolPunk currently costs you 6.78 SOL, and it’s one of the cheapest OG Solana NFT collection out there currently. And just like CryptoPunks, SolPunks are inspired by the cyberpunk and 8-bit aesthetic that give it its retro vibe and look.
However, every SolPunks (as of right now) have the same exact background as opposed to CryptoPunks’ healthy roster of NFTs with different backgrounds and wallpapers.
There is no tangible utility to the SolPunks collection, and it’s currently only known for its uniqueness and exclusivity.
You can buy or make an offer for a SolPunk over at their Solanart profile.
How to buy NFTs on Ethereum & Solana blockchains?
Okay, so you’ve decided on which NFTs to buy, but don’t know how to buy them?
Don’t worry, I’ll run you through the steps. Just follow through and you should be up and running with your very own NFTs!
As there are numerous blockchains that support NFTs, I will be only focusing on two of the most popular right now: Ethereum and Solana.
Buying NFTs on the Ethereum blockchain
1. Download the Coinbase wallet
Coinbase Wallet is one of the most trusted and popular crypto exchanges around, thus, it will be my pick for our crypto wallet in this guide.
To install Coinbase Wallet, head over to coinbase.com/wallet, click the blue Download Coinbase Wallet button on the top right corner where you’ll be redirected to the chrome web store page of the Coinbase Wallet Extension.
To confirm the installation, click on the Add to Chrome button and Add extension on the following popup.
I recommend using Google Chrome or Microsoft Edge as your browser for stability and easier installation.
2. Create a Coinbase Wallet account
After installing the Coinbase Wallet extension, you will need to create an account first before doing anything else. This would be where your cryptocurrency gets stored at, and it’s where you use them to purchase NFTs.
During this step, I advise that you use a username that you aren’t using in any of your other accounts (especially social media ones) for the sake of security. And of course, a unique and solid password.
3. Purchase Ethereum (ETH) from your Coinbase Wallet
Now that you’ve got your account all set up, it’s time to buy some Ethereum (ETH).
To purchase ETH via your Coinbase Wallet, you must first add a payment method. This can be accomplished using a bank account, a debit/credit card, or a wire transfer.
After you’ve set up your payment method, you may start a transaction by tapping the trade button and then selecting “Buy.” Then, in the search bar, type “Ethereum” to find Ethereum (ETH). When Ethereum appears, click on it to get to the purchasing screen.
You will now be prompted to input the precise amount of ETH you wish to purchase. Don’t worry about currency conversions and transaction fees; Coinbase Wallet will take care of it for you and the fees are one of the lowest in the market.
Finally, by pressing the “Preview buy” button, you can complete your purchase. The details of your purchase will be displayed in Coinbase Wallet, and if everything seems good, you can confirm your buy and receive ETH in your wallet.
4. Install MetaMask
Besides Coinbase Wallet, you’ll also need an Ethereum wallet to store your ETH in. This is where MetaMask comes in, a popular and highly secure crypto wallet.
To install MetaMask, head over to metamask.io, click on the blue Download Now button, and follow the instructions as displayed to create a MetaMask account.
Remember your uniquely generated seed phrase and store it in a secure location. This is used to regain access to your MetaMask account when you log in from a different device/browser. That said, anyone with your seed phrase can access your MetaMask account and its funds. Be careful with who you share this information with.
5. Connect MetaMask to your OpenSea account
As OpenSea is the most popular ETH marketplaces currently, I’ll now cover how to connect your MetaMask account to it and purchase your first NFT piece.
To connect your MetaMask account, head over to Opensea.io and click on Profile icon at the top-right.
Then, select the MetaMask option when choosing an Ethereum wallet to connect to OpenSea. Then, link your MetaMask and click next – that’s all there is to it. A pop up will then show from your MetaMask browser extension, and once you approve it, your wallet is linked to OpenSea.
You can now transact via funds in your MetaMask wallet on the OpenSea marketplace.
6. Transfer funds from your CoinBase account to your MetaMask Wallet
Now, back to CoinBase. Remember that your Ethereum was bought on CoinBase, but MetaMask is used to purchase on OpenSea.
So then, how do we get the funds from CoinBase over to MetaMask? The answer is simple – we transfer our ETH funds over using our wallet IDs.
This transfer process might sound daunting, but it’s really very simple. Here are the steps:
1. From your CoinBase dashboard, click into Ethereum.
2. On the top right corner, click on Send/Receive.
3. A pop up will show, with a ‘To’ field for you to input an address.
4. Go to your MetaMask browser wallet, and make sure you are on the Ethereum Mainnet.
5. Copy the wallet address below your Account.
6. Paste the wallet address into the Coinbase address field.
7. Click on continue and approve the transaction.
8. Give it a couple of minutes, and your Ethereum will appear in your MetaMask wallet.
9. There will be a block hash ID provided – this block hash contains more details about your ongoing Ethereum transaction. You can track and verify that your funds are sent through publicly.
Buying your Ethereum NFT on OpenSea
To finally buy your NFT, head over to OpenSea’s homepage, click on Explore, then “All NFTs” to browse every available NFT on the website.
Once you’ve got your pick, click the blue Buy Now button, and proceed to confirm the transaction on your MetaMask wallet. Once you approve the transaction pop up, the transaction will go through and you can now view your NFT in your OpenSea dashboard.
The NFT will now sit in your MetaMask wallet address. Currently, MetaMask is not set up to display NFTs in the wallet. However, you can view them when you connect to OpenSea.
How to view your Ethereum NFTs in your MetaMask wallet?
1. Connect your MetaMask wallet to OpenSea by going to ‘Profile’ on the top right side.
2. Click on MetaMask and approve the transaction on the MetaMask pop up.
3. The website should reload with your Profile, and the NFTs sitting under your Profile account. These NFTs are linked to the same MetaMask wallet ID that you logged into OpenSea with.
Buying NFTs on the Solana Blockchain:
Phantom wallet serves as the MetaMask wallet equivalent, but for the Solana blockchain. To install Phantom, head over to phantom.app, click on the blue Download button, and choose your respective browser or platform.
1. Create a new account with Phantom – Note down your wallet’s seed phrase. Just like MetaMask, the seed phrase is your access key into your wallet. It also gives anyone access to your wallet if they know your seed phrase.
2. Fund your Phantom wallet. With your Phantom wallet created and ready for use, you now need to get Solana coins into it.
3. Head back to Coinbase, and purchase Solana this time. Repeat the entire process of transferring funds, but this time copying your Phantom wallet address from the Phantom wallet browser extension:
4. Head over to a Solana NFT marketplace – the biggest ones are Magic Eden and Solanart.
5. Click on ‘Select Wallet’ on the top right of the marketplace website and select ‘Phantom’.
6. Approve the transaction via the pop up on your Phantom browser extension.
7. Head back to Solanart’s or Magic Eden’s home page and browse for an NFT collection that you fancy. Magic Eden also displays NFT collections based on themes – this helps the buyer decide which NFT collection to purchase.
Are NFTs worth the hype? Should I get 1?
There’s no denying that NFTs are one of the hottest trends right now. From an unknown investment back in 2014 to a now multi-billion-dollar art industry, it’s an understatement to call them “popular”. This is again thanks to the boom of cryptocurrencies like Bitcoin and Dogecoin as well as the recent exposure of NFT games like Axie Infinity and The Sandbox Metaverse.
However, the question remains: are NFTs worth it and should you get one right now?
The harsh reality is that NFTs are very much a volatile and unstable type of investment. Just like with anything to do in the cryptocurrency and blockchain space, NFTs face an uncertain future because of emerging trends and fading fads.
Nevertheless, it’s still worth noting that they’re relatively new, and just to test the waters, investing small amounts in them should be harmless.
Just know that for US citizens, capital gains taxes apply to NFTs, just like they do when you sell stocks at a profit. As NFTs are considered collectibles, they may not qualify for the lower long-term capital gains rates that stocks do, and they may even be taxed at a higher collectibles rate.
Keep in mind that the cryptocurrencies you used to buy the NFT may be taxed if their value has increased since you bought them, so it’s always best to consult with a tax specialist or an accountant before adding NFTs to your portfolio.
With that being said, only you can answer the question “Should I invest in NFTs” for yourself. It’s always important to do the research behind the investment, understand the risks associated with that investment, and gauge how much money you’re willing to invest (and potentially lose if things don’t go your way).
After all, an NFT’s value is still largely dependent on how much an individual is willing to pay for it. Even if the NFT you created or bought matches the quality of paintings like the Mona Lisa, it’s still a huge loss if no one’s out there to buy it.
Disclaimer: This article is not at all financial advice. Cryptocurrency and NFTs involve real-world financial investment at the user’s risk. This article is provided for informational purposes only.