Figment’s Guide to NFTs

Mainstream news outlets have ramped up reporting about Non-Fungible Tokens (NFTs), a sign that the crypto revolution is well underway. While NFTs are still in their very early days, they have the potential to have a huge impact on the world.

At the moment, however, they are still not very well understood. Even for those who have already taken a stab at buying an NFT or two, the full potential of the concept is still fuzzy, which makes sense as the world is only just starting to explore the dizzying array of possibilities that NFTS could offer.

Non-Fungible Tokens have the potential to have a huge impact on the world.

What are NFTs?

NFTs, or Non-Fungible Tokens, are data units or digital certificates that exist on a blockchain. A blockchain functions as a digital ledger and can record transactions like purchases and sales. Thus, NFTs can be treated like a digital asset and bought and sold on the blockchain.

What sets NFTs apart from other assets on the blockchain, like cryptocurrencies, is that they are non-fungible, which is another way of saying they are one-of-a-kind. The owner of an NFT has ownership rights in a digital asset linked to the NFT. This could be, for instance, a work of digital art, like the unique version of Nyan Cat sold by its creator via Foundation, a marketplace for digital goods.

As mentioned earlier, NFTs exist as bits of code or data stored on a blockchain. Each NFT has a Token ID, which functions as its very own identifier, unique in the world. The NFT also includes an identifier indicating the location of the digital asset associated with it. Ownership of the NFT is recorded on the blockchain in the form of the owner’s blockchain wallet address.

While the potential of crypto and NFTs to revolutionise creation and consumption are enormous, one of the biggest drawbacks is their carbon footprint due to the huge amount of energy involved in mining, a process by which transactions take place through a computer network. It is thus important to find out more about the background of any NFT creators you buy from, and whether they are doing anything to offset or compensate for the environmental impact.

When looking in to NFT creators, be sure to examine environmental impact offsetting

Fungible vs Non-Fungible

So, we now know that non-fungibility is equivalent to uniqueness. By contrast, fungibility denotes interchangeability. Some examples of fungible goods you might already be familiar with include precious metals like gold, silver and the fiat currencies that the majority of the world uses to exchange for goods and services in commercial transactions.

On a blockchain, cryptocurrencies are fungible and thus not unique. If both you and I have 10 BTC each, there is absolutely no difference between the value, economic or otherwise, of what each of us has. Exchanging our BTC will result in each person having exactly the same thing they had before.

Uses of NFTs

NFTs are most commonly used to sell digital media, although technically they can be associated with any kind of asset, even physical. Because of their uniqueness, they are now frequently used to sell one-of-a-kind art or collectibles.

But this guarantee of uniqueness can also potentially be deployed in other transactions where authenticity must be assured, or where the identity of the owner is important.

Here are some ways NFTs can be used:

Digital artwork – This is currently the most well-known use of NFTs. In future, NFTs could offer a new way for creators to make money from their work, replacing outdated notions of copyright and ownership. The most expensive piece of digital artwork, a piece by artist Beeple, was sold for over 60 million USD at a Christie’s auction.

Real estate transactions – NFTs are already used to indicate ownership in properties in the metaverse, as their uniqueness makes them suited to recording an owner’s identity, just like a title deed. In the future, we could see NFTs being extended to physical property in the real world.

Collectibles – The uniqueness and scarcity of rare collectibles makes them an ideal commodity to be distributed in NFT format. This can be done both for digitised collectibles, such as digitised trading cards, or extended to physical collectibles, which purchasers have the option of owning with or without taking physical possession of. Figment’s collection of Citizenship NFTs is limited to 10,000 divided into 3 categories: Citizen, Patron and Angel. 

Gaming – In gaming universes, players can amass products and currency just like they would in the real world. Some gaming companies, eager to leverage the sale of NFTs as a new revenue stream, have already tried to introduce them in certain games, enabling players’ avatars to wield unique digital assets.

Digital identities  – The Metaverse is accelerating the development of digital identities, and NFTs will be central to authenticating and verifying these identities and the assets that they own. Every Figment Citizen will have a unique Citizenship ID authenticated by their NFT.

Other physical and digital goods and services – Although digital art has been the most prominent emerging use of NFTs, the concept can potentially be extended to a wide variety of digital and non-digital assets. What constitutes an asset is up to interpretation—last year, an NFT version of Twitter CEO Jack Dorsey’s very first tweet was sold for 2.9 million USD. The sky is the limit, and in the coming years we are likely to see NFTs being used in more transactions involving limited edition fashion items, luxury goods and virtual services.

As you can see, NFTs have the potential to be used not just in the digital but also in the physical world. While they could potentially be adopted in almost any transaction, in practice they are likely to be most relevant to those in which uniqueness and identity authentication are key.

The above examples are just the tip of the iceberg. The world is scrambling to find new ways to use NFTs, and we could soon see them being used for ticketing of physical events, as collateral in real estate transactions, for the sale of music, or even for healthcare records.

How to invest in NFT Tokens – sign up for a crypto wallet and buy Ethereum

How to invest in NFT tokens

1. Sign up for a crypto wallet and crypto exchange platform

To buy NFTs, you will need to have a crypto wallet that supports them. Some of the most popular ones include MetaMask, Coinbase Wallet, Walletconnect and Formatic. You will also need access to a crypto exchange platform such as Gemini, Coinbase or Crypto.com, to mention a few.

Although other currencies such as Bitcoin (BTC), solana (SOL) and dai (DAI) are used as well, Ethereum (ETH) is still the main currency for NFT transactions, so make sure your crypto wallet supports it.

2. Buy Ethereum

Once you’ve got your crypto wallet all set up, you need to buy ETH (or another currency) using your crypto exchange platform. If this is your first crypto transaction, you can simply buy your cryptocurrencies using your fiat currency like SGD, USD or EUR.

Once you have bought your ETH, transfer it to your crypto wallet and you’re ready to spend it on NFTs.

3. Sign in to an NFT marketplace

Next, it’s time to head to an NFT marketplace and start shopping! Some of the more well-known ones include OpenSea, Rarible and SuperRare. OpenSea deserves a special mention, since it is currently the world’s largest NFT marketplace. If you are serious about investing in NFTs, make sure your crypto wallet is compatible with OpenSea.

To enter the marketplace, you should sign up for an account via the website and then connect your crypto wallet. This is usually a fairly simple procedure—just look for the “log in” or “connect” button, sign up, and then select “import wallet” to connect your wallet.

4. Search for NFTs

Once you are logged in to the platform, you’ll be able to browse and search for NFTs. You can click on them to find out more information about the NFT, price, creator and ownership history.

5. Purchase your NFT of choice

Buying an NFT is often as simple as making an online purchase—just click the “buy” button and proceed to checkout.

Some NFTs are sold to the highest bidder, rather than at a fixed price. In that case, you’ll have to bid for it eBay-style, and monitor the progress of the auction in case someone outbids you.

The price of the NFT will not be your only cost–you must also pay a gas fee. Gas fees are paid on blockchain transactions and go to miners, whose computer power is what keeps the transactions moving and the network functioning. Gas fees rise during high traffic periods, so you might want to time your transactions for less busy moments.

6. Enjoy your NFT

When the transaction has been successfully completed, the NFT will appear in your crypto wallet, and you can enjoy any underlying assets or perks to which you now have the rights.

What NFTs to buy

The NFT landscape is in rapid evolution, so what is a hot new token today might quickly become passé tomorrow. That said, it’s always nice to have a browse and see what’s out there in the world of blockchain.

So, if you’re eager to get your feet wet, which NFTs should you buy? Here are some of the most exciting NFTs to know about:

CryptoPunks – Launched way back in 2017, CryptoPunks was the first Ethereum-based NFT and is a crypto art project featuring punk-inspired characters randomly generated by an algorithm. Each character is unique, although some have rarer traits than others.

Doodles – As its name suggests, Doodles is a collection of exactly that—doodles, all in a cute, candy-coloured style, part of a project helmed by Burnt Toast, the alias of Canadian illustrator, Scott Martin.

Bored Ape Yacht Club – Bored Ape NFTs are unique, ape-like characters that give owners access to a “swamp club for apes”, which is an online community, some features of which include a collaborative graffiti board.

Decentraland – Celebrities have been snapping up metaverse real estate en masse, with Decentraland leading the pack as one of the most in-demand virtual worlds in which to buy land. Decentraland parcels can be furnished and decorated by purchasing other NFTs and populated by NFT avatars.

Axie Infinity – This is an NFT-based video game in which players collect and raise Axies, fictional characters which take on the form of NFTs. To start playing the game, players must first purchase axies and then try to breed and trade them.

The Bored Ape Yacht Club is a collection of 10000 unique NFTs— unique digital collectibles living on the Ethereum blockchain.

How to create NFTs

NFTs have turned some lucky people into overnight millionaires. They are also an exciting new way for artists, musicians, writers and other creators to get their work out there and be compensated fairly for it.

So, want to give it a go? Here’s a quick NFT tutorial to help you get the basics down.

1. Pick an NFT marketplace

The very first thing you should do is decide which NFT marketplace would be most appropriate to your project. You might choose to go with the big boys like OpenSea and SuperRare, or a more niche one like Artprie for digital artwork or WordPool for literary works.

2. Sign up for a cryptocurrency wallet and crypto exchange platform

Your next step is to set up a crypto wallet that is supported by your chosen NFT marketplace and its currency, which is likely to be ETH.

3. Buy some cryptocurrency

Although listing an NFT is usually free, you will incur some costs such as gas fees. If this is your first foray into crypto, you’ll need to buy enough ETH or other relevant currency to cover gas fees for setting up your wallet and listing your NFT.

4. Create your NFT’s content

Whether you’re selling graphics, writing, music or some other form of media, now is the time to create it if you haven’t already.

5. Mint your NFT

Minting is the process in which your work is turned into an NFT by assigning a unique digital certificate to it.

You do this by first signing into your NFT marketplace of choice using your crypto wallet. Most marketplaces let you mint NFTs by filling in a form, uploading any relevant media and then clicking submit to get your digital certificate.

6. List it for sale

Once an NFT has been created, you can edit it, tweak it or make copies before putting it up for sale.

Depending on the marketplace, you will likely have to pay certain charges, including gas fees. These are collected when you list the NFT or at another point in the transaction.

Finally, set your price or indicate if you want it to be auctioned to the highest bidder.

You can check out Figment’s Citizenship NFT page here.

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