By Hanniz Lam
“Hanniz, what are NFTs?” a friend who seems to think I’ve all the answers to technology-based questions asked me one day. I wish I could pull the answer of my headscarf just like that but I’ve to admit, I replied with a simple “Non-fungible tokens that exist on a blockchain so like if you sell digital art, the buyer knows it’s authentic as it’s unique to him so it’s not a cut and paste thing la. He actually owns your art. You know?”
Not a very good explanation so I did more reading and here’s what I found.
According toNFT (Non-Fungible Token) refers to a crypto asset that cannot be reproduced or altered. Most people view these digital tokens as the digital equivalent of artwork in a private collection, where each piece of art in the collection is unique and has its own value.”
All the NFTs are tied to a digital asset (or sometimes a physical asset) of the original owner. Technically, anything that can exist in digital form can be turned into an NFT, including pictures, famous Twitter tweets, Facebook posts, and so much more can be turned into NFTs and sold by anyone.
For instance, Twitter co-founder Jack Dorsey sold his first-ever tweet as an NFT for more than USD$2.9 million.
The longevity of NFTs is still being debated, but they are still selling like hot teh tarik online. Many are convinced that NFTs are here to stay and with the rise of Facebook’s metaverse now seems like as good a time as any to brush up on all things digital.
You might be wondering what gives an NFT value. Exactly what gives a unique art piece value? It is consumer interest that drives the value of NFTs. We could also compare NFTs with trading cards, where the rarity and base of interested consumers influence their value.
Imagine an artwork that you have made yourself and now wish to sell. One way is to auction it. But for that, you need to be physically present at an auction site and the physical copy then goes out of your hand. But is there a better way to sell that art in such a way that, for instance, every time it exchanges hands, you earn a little royalty?
One way to do is to take a photocopy and sell it. But that will not be the original copy, and hence can be of little value. Here’s where an NFT or Non-Fungle Token comes in. Once the digitized art is tokenized, it becomes a certified original copy.
In simple words, using an NFT, you could also earn a royalty every time this token (your digitized artwork) exchanges hands.
NFT has unique properties, so these digital assets cannot be easily exchanged. For instance, it could be a painting of Mona Lisa. You can download and print the photo from the website or take a photo of the painting while visiting the Louvre Museum in Paris, but there will be only one original painting.
Similarly, you have your unique music creation and one of its kind in the world. You can list your music as an NFT on the exchange and can earn good value by selling it. Any asset that is unique and can be made non-fungible can be certified by an NFT and sold.
Blockchain technology and NFTs afford artists and content creators a unique opportunity to monetize their wares. For example, artists no longer have to rely on galleries or auction houses to sell their art.
Instead, the artist can sell it directly to the consumer as an NFT, which also lets them keep more of the profits. In addition, artists can program in royalties so they’ll receive a percentage of sales whenever their art is sold to a new owner. This is an attractive feature as artists generally do not receive future proceeds after their art is first sold.
Art isn’t the only way to make money with NFTs. Brands like Charmin and Taco Bell have auctioned off themed NFT art to raise funds for charity. Charmin dubbed its offering “NFTP” (non-fungible toilet paper), and Taco Bell’s NFT art sold out in minutes, with the highest bids coming in at 1.5 wrapped ether (WETH)—equal to $3,723.83 at time of writing.
What’s the size of the NFT market?
The market exceeded $10 billion in transaction volume in the third quarter of 2021, according to DappRadar, a company that tracks data on crypto-based applications.
How Is an NFT Different from Cryptocurrency?
NFT stands for non-fungible token. It’s generally built using the same kind of programming as cryptocurrency, like Bitcoin or Ethereum, but that’s where the similarity ends.
Physical money and cryptocurrencies are “fungible,” meaning they can be traded or exchanged for one another. They’re also equal in value—one dollar is always worth another dollar; one Bitcoin is always equal to another Bitcoin. Crypto’s fungibility makes it a trusted means of conducting transactions on the blockchain.
NFTs are different. Each has a digital signature that makes it impossible for NFTs to be exchanged for or equal to one another (hence, non-fungible). One NBA Top Shot clip, for example, is not equal to EVERYDAYS simply because they’re both NFTs. (One NBA Top Shot clip isn’t even necessarily equal to another NBA Top Shot clip, for that matter.)
Creating and Selling NFTs
Do you see yourself as a creator? Do you think you can create something that you would be able to monetize? You can earn money by selling your works as NFTs. You could create anything digital and sell that as NFTs. From original digital art, videos, memes, to music, audio clips and so much more.
In fact, someone in New York City sold a recording of his farts as an NFT! There are countless opportunities out there in the digital world. However, if you’re really thinking this is the best way for you to make money with NFTs, we would recommend that you get in touch with someone that can promote your NFTs or crypto projects, like pentas.io.
Top NFT Marketplaces for Creators to Sell NFT
- 1. OpenSea
- 2. Rarible
- 3. SuperRare
- 4. Foundation
- 5. AtomicMarket
- 6. Myth Market
- 7. BakerySwap
- 8. KnownOrigin
- 9. Enjin Marketplace
- 10. Portion
How do you start selling NFTs?
Much like when buying NFTs, you need to have a wallet set up, and it needs to be stuffed full of cryptocurrency. It’s this requirement for money upfront that causes the complications.
The hidden fees can be prohibitively astronomical, with sites charging a ‘gas’ fee for every sale (the price for the energy it takes to complete the transaction), alongside a fee for selling and buying. You also need to take into account conversion fees and fluctuations in price depending on the time of day. All this means that the fees can often add up to a lot more than the price you get for selling the NFT.
What about taxes?
NFTs are also subject to capital gains taxes—just like when you sell stocks at a profit.
Since they’re considered collectibles, however, they may not receive the preferential long-term capital gains rates stocks do and may even be taxed at a higher collectibles tax rate, though the IRS has not yet ruled what NFTs are considered for tax purposes.
Bear in mind, the cryptocurrencies used to purchase the NFT may also be taxed if they’ve increased in value since you bought them, meaning you may want to check in with a tax professional when considering adding NFTs to your portfolio.
That said, approach NFTs just like you would any investment: Do your research, understand the risks—including that you might lose all of your investing dollars—and if you decide to take the plunge, proceed with a healthy dose of caution.
So what do you think? Ready to sell your artwork as NFTs?