NFTs And Everything You Need to Know About Them [Ultimate Guide For Dummies]

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If you’ve ever wanted to know what all the buzz about NFTs is about, you’ve come to the right place. We’ll help you learn everything you need to know about NFTs and hopefully by the end of this guide, you’ll be an expert or something close to one. Let’s get right into it!

What is an NFT?

NFT stands for Non-Fungible Token. It’s a unique digital asset in that it is stored on the blockchain as a unique string. As a non-fungible item, it cannot be moved, and there can be no copies of it made. As such, it is in a way the best proof of ownership of an asset in the digital space.

As far as what the asset itself is stretches as far as your imagination can take you. The obvious application of it is in artwork, but in the metaverse, this can extend to buildings, weapons, clothes, etc. Keep in mind that the digital asset itself, such as the JPEG or GIF is not stored on the blockchain, as that would be too resource intensive.

What is a PFP NFT?

PFP NFT stands for Profile Pic Non-Fungible Token. The utility of NFTs as profile pics came about through CryptoPunks original free-to-mint avatar NFTs. CryptoPunks had created an extensive collection of 10,000 NFT avatars, and as luck had it, these NFT avatars started becoming widely used on social media, specifically on Twitter and Discord. Since then, there have been an abundance of companies following suit, but charging for their limited run NFTs.

The Bored Ape Yacht Club is a prime example of having had massive success with this. They created 10,000 NFTs and sold them each for about $200 worth in Ethereum for a cool $2M. The worth of these NFTs have skyrocketed from their original purchase prices. Kevin Hart, Eminem, and Post Malone have purchased some of these BAYC NFTs, to name a few celebrities.

What does minting an NFT mean?

Basically, minting an NFT means that you’re bringing the digital asset to life through a formal process that allows the asset to be officially recorded on the blockchain. By doing so, you are rendering it as a unique digital token that can be transacted on the block chain.

How to mint NFTs

The following outlines the process of minting NFTs:

  1. Select your NFT marketplace. When selecting a marketplace, one ought to consider the following factors: token standards, wallet compatibility, user verification, token fractionalization, and the incentives provided by the specific marketplace such as bonuses.
  2. Set up your wallet. Based on the marketplace selected, you proceed to create an Ethereum wallet that’s compatible with it to keep newly minted tokens safe before minting an NFT.
  3. Fund your NFT wallet. Once a wallet is created, you’ll have to fund it so as to be able to carry out transactions.
  4. Convert your digital item into an NFT. Each marketplace will have its own clear set of instructions on how exactly to do so.
  5. Congrats! You’ve just minted yourself an NFT.
  6. As a bonus, feel free to list your NFT for sale if you’d like the chance to make some money off of it.

What is lazy minting?

Lazy minting occurs when an NFT is available off-chain and it can only be minted once a sale has taken place. The artists pay the gas fees only after the token is purchased. Lazy minting can be advantageous because it mutes the impact of gas fees, reduces the barriers to minting NFTs, and encourages liquidity as the NFTs are only officially minted once they are sold.

How much does it cost to mint an NFT?

The costs of minting NFTs vary depending on the marketplace chosen. For instance, OpenSea charges costs for initializing your account. This can range from approximately $70 to $300. Furthermore, there is a fee chargeable to grant access to your account which is approximately $10 to $30. The person also must pay gas fees.

Another marketplace is Rarible, which has no minting fees or charges. You only pay gas fees. However, for every NFT buy and sell transaction, Rarible charges a 2.5% fee.

Where can I mint an NFT?

NFTs have continuously gained popularity in digital evolution. There are various platforms that can be used to mint NFTs. Here are some examples of them:

  • OpenSea
  • Axie Infinity
  • Binance
  • Rarible
  • SupeRare
  • Nifty gateway

Can you sell multiple copies of an NFT?

Artists can sell multiple copies of an NFT. They can do this by either making one copy and selling it at a high price or making a specific number of the NFTs and call them a limited edition run for the specific number of copies.

How do I purchase an NFT?

Note that OpenSea users need an Ethereum wallet such as MetaMask to purchase their NFTs.  MetaMask is a crypto wallet that allows you to purchase your NFTs quickly and easily, and it’s one that OpenSea recommends to its users.

Create an Ethereum wallet on OpenSea

  1. Create an account on the OpenSea website.
  2. Once you’ve done so, click on Create on the top right navigation bar.
  3. Choose your Ethereum wallet of choice to install. We’ll go with MetaMask.
  4. Proceed to download the necessary extension for your browser.
  5. Once you have installed MetaMask, you can go ahead and create your wallet. Set a strong password for your wallet. You will also choose a secret phrase for recovery of your wallet in case. Once security measures have been set up, your wallet should be ready to go.

Buy some Ethereum to fund your wallet

  1. On your MetaMask profile, you can select to either directly deposit Ethereum if you have some already, and if not, you’ll have the option to purchase some.
  2. Enter the amount you wish to purchase. You will be required to pay the transaction and network fee associated with the purchase.
  3. Select your preferred mode of payment.
  4. Once you are done, authorize the transfer.
  5. Your MetaMask wallet balance should be updated within a few minutes.

Connect your Ethereum wallet to OpenSea to purchase NFTs

  1. Login to your OpenSea account.
  2. Feel free to browse NFTs, and find one you’d like to purchase.
  3. Click on the ‘Buy Now’ button.
  4. Go through the terms of the marketplace and proceed to checkout. The purchase price will be shown together with the gas fee. If you’re okay with it, go ahead and finalize the transaction.
  5. Congrats! You now own an NFT. Feel free to enjoy it or list it up for resale.

How do NFT marketplaces make money?

NFT marketplaces are platforms for buying and selling NFTs. The platforms make their money through ancillary fees and methods such as the following:

  • Transaction fees. NFT marketplaces charge transaction fees at approximately 2% to 2.5% of the price of each sale. Some marketplaces charge gas fees in addition to the gas fees already paid to miners who facilitate the transactions.
  • Listing fees. Marketplaces may charge fees for listing, minting, selling, exchanging, or removing the NFT from a marketplace. This fee is usually in addition to the gas fee paid.
  • Tokens. These are often sold or used as rewards for users who transact on the marketplace or who hold NFTs. These tokens can generate additional revenue for the marketplace when sold.

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