Okay so with all the hype about NFTs, I would like to discuss a bit of window of opportunity for creators, without being too technical in this post. I am no expert in the space, but I’ve been reading for the past couple of weeks, trying my best to understand it. With this post, I’ll try to relay that understanding onto you as simplest as I could, the same way I’ve been telling this about my friends. I’ll try touch base with the usual concerns from the what to the how to where, even the why. However, if you like to get a bit more technical and understand the fundamentals of the logic and tech behind this, you may easily search “WHAT IS NON-FUNGIBLE,” “WHAT IS AN NFT,” and “ERC721, ERC-1155, ERC-20“.
So what is an NFT, basically? Non-fungible tokens are assets created on the crypto blockchain. Now WTF does “non-fungible” even mean? Sounds like a mushroom. Fungible is an adjective used to describe the interchangeable value of a good. That sounded stupid but let’s go into a more concrete example.
If you had 100USD and I had 100USD, no matter how we play with denomination, we can exchange both our 100USD hands, and we’d both still have 100USD. Our money is fungible. Now if by any chance your 100USD was signed by your favorite celebrity, and we decide to exchange, you might think twice because that 100USD isn’t just 100USD anymore, is it? Your 100USD has become non-fungible wherein its value is now different and not directly interchangeable with another. It could easily be 150USD, or even 1000USD, and that’s subjective to an agreement between the two parties involved in the exchange. We can look at an NFT like a uniquely made digital “Certificate of Authenticity” asset with a unique serial number, and other metadata pertaining to the creator and creation date. Now why does this matter to us designers and artists? Because it simply gives a great opportunity for us to be credited appropriately for what we do.
In the world of the internet, where everything gets used up, reposted, and even stolen, it’s tough to be credited and recognized. Case in point is Nyan Cat. Do you even know where it came from or who made it? 99% probably don’t. The creator of “the cat who poops a rainbow that propels itself in space” is named Chris Torres, and before this NFT boom, his creation has become part of pop culture enjoyed by millions of people worldwide. Now, as the creator of it, he has auctioned the GIF and garnered a $600,000.00 price point for it. Why? Because of the same reason people would buy a piece by Picasso or Banksy for millions of dollars. It’s art integrated into the culture and nobody could ever really put a price on that, and there will always be buyers and collectors of such pieces.
But it’s digital. Why can’t you just re-use the gif on Facebook or Gfycat, or use Youtube to watch the cat? You can. The same way you can download the picture of the Mona Lisa online, print it as big as the actual, have it framed, and display it in your home. Is it the same though? No it’s not. And what further strengthens its authenticity is the metadata integrated into the token upon creation on the blockchain pointing it back to its creator. Why do people even both flying hours to France, then lining up just for a glimpse of it, when Google Images can easily serve the visual purpose?
Where does it go? An NFT, upon creation or purchase, will go into an account you can create that we refer to in the blockchain as a “wallet”. All NFTs acquired by you will be there. If you bought that Nyan Cat NFT, you will have bought the one-of-a-kind asset, minted on the blockchain by the creator himself, meaning all metadata will be saved and accredited into the details of the created asset. And it’s there in your wallet, you own it.
What will you get? Apart from the NFT token in your wallet, which can be all that it is, you will most likely get a digital representation of that asset if deemed necessary by the creator, which is downloadable upon purchase, bundled with that NFT. In the case of the Nyan Cat NFT, Chris Torres remastered the gif, which was probably bundled ready for download by the buyer upon purchase. If you decide to sell your artwork, you can decide to include a wallpaper for desktop and mobile there. If you create music, you can include snippets. It really depends on you, as the creator, as to what you want to put as inclusive in the NFT.
Sometimes, creators go the route of pairing the NFT with an actual physical item. But the overall ‘redeemable’ aspect that comes with the NFT is still half-baked. In an AMA with Nifty Gateway founders Duncan and Griffin Cock Foster via Discord, this is the exact concern I raised, and they mentioned saying that is one aspect of the tech they plan to somewhat integrate into the platform seamlessly. Until then, creators can opt to manually create a means for buyers to redeem upon initial purchase.
What do buyers do with this? At this point, buyers of these digital artworks generally just buy them as they are – artworks, memorabilia, and collectibles. They have the option to own an actual and original piece of digital art “autographed” by an artist they admire, and the license that comes with this purchase usually gives the buyer the right to display it for personal use. As the creator, you have the option to transfer rights to the purchaser, meaning they can do whatever, but by default, that option is ticked off.
Buyers can also opt to relist it in the marketplace and this is where it gets interesting. As the creator, you can set a resell commission on the secondary market, which normally runs around 5-10% initially. That percentage can be set higher, fully up to you. This basically means if you sold an item for 100USD, as the creator, you get 100USD. However, if your buyer decides to sell your artwork later on for 500USD, at 10% commission setting, you receive 50USD. If the second buyer decides to sell it, you again get the 10% from the sale. That doesn’t happen with the secondary market of NBA cards, which is why NBA Topshots is such a smart move for the basketball franchise. And yes, this royalty goes on FOREVER. Getting interested yet?
You’re probably wondering what’s the real use of this other than bragging rights of owning a piece of digital art. You’d probably have to put yourself in the shoes of people who collect artwork, buy Pokemon and NBA cards, or even more simply, ask yourself why you decided to buy your brand from the official branded store instead of “Ken’s Rare Finds”.
The thing is, I personally believe we’re on the very tip of an iceberg. Right now, people are creating, buying, and selling: digital art NFTs, real estate NFTs, cat NFTs, collectible card NFTs, and NBA Moment NFTs to name a few types. These NFTs all reside in their own respective blockchain economies, but imagine a world where all these assets become readily available and interoperable for use in a virtual world we will all eventually use. It’s a tough subject to get into, but whether we like it or not, we’re entering a “Ready Player One”-esque phase of our world. So imagine in that future, you enter this VR society, where you purchased your real estate NFT, built your own house, wore fashionable NFTs, and used Lebron’s NBA Topshots moment as a wallpaper of your home.
How can you take advantage of the situation? Be in the space. Try it whether you make artworks, songs, videos – anything digital. I would have to say support from your existing audience plays a good part in this, but it doesn’t mean you can’t sell your creations coming from relatively nowhere. The beauty of this is how NFT technology opened up the space in creating a marketplace for digital creations. With the growing interest in this space, people who simply like your work can easily support you and buy your creations online, opening up your reach to broader and more global audience.
If you want to start testing the waters, I would have to say Mintable is the best place to start being the platform which has “gasless minting” process. Minting is basically the imprint process of creating your asset into an NFT on the blockchain. Normally the creation of an NFT requires the payment of gas fees for minting upfront. The way I understand it, what Mintable does is let users create the NFT in a way that the buyer pays for the gas fees upon purchase. If you’re confused as to what a “gas fee” is, it’s equivalent to a “processing fee” in the Ethereum blockchain. Hold in there, you’re understanding it bit by bit, nobody gets it all at once!
Other established NFT platforms are Rarible, SuperRare, OpenSea, Known Origin, Nifty Gateway, and Foundation. Some are “invite only,” while others require specific wallets.
What about faking or plagiarism? People could easily buy your NFT and sell it as their own, correct? That’s all the more reason why people should value creations from actual creators. So crawling back to our Mona Lisa scenario, let’s say the Louvre Museum decides to create a Mona Lisa NFT and you decided to buy one. Your friend can equivalently buy a Mona Lisa NFT that points to a creator named “Username907” who saved one from Google and sold it. Is it the same as the NFT you have which says its creator was the verified account of “The Louvre”?
A tricky part of this is how cryptocurrency is used in the equation, which is normally ETH (Ethereum), if not another digital asset which is based on the Ethereum blockchain. This means people are trading using the current value of ETH at that time, and given the volatility of all crypto, a purchase 1 ETH today, would definitely be of different value to 1 ETH in a month. It could help if you dabble a bit into cryptocurrency trading, but given the nature of the trade, I’d say study it for a while first.
Here are 3 examples of notable NFT sales which can make you think:
Nyan Cat (gif) – USD600K
3LAU (music) – USD11.6M
Beeple (digital art) – USD6.6M
Everything probably sounds very imaginative at the moment, and it’s understandable to get confused, but it’ll only be a matter of time until we get introduced to platforms that utilize NFTs, which make everything more streamlined and acceptable. Is it unrealistic? I don’t think so. If you go back in the year 2000, did you ever think you’d be talking to people across the world on different timezones easily while seeing their face in realtime? Did you ever think online dating would be a thing by having people swipe left and right on a daily basis now to match up? Did you ever think you’d be stuck on the internet in more times of the day and just see and interact with the world by clicking on a couple inches of screen area while you’re on the road?
Things are evolving in terms of technology, which affects the way we socialize day by day. Nothing seems different today, but in perspective, we’ve come so far from how people lived in the 90’s.
I did my best explaining the concept of NFTs and I hope you learned a lot. Should you decide to get into the space, I wish you the best of luck minting your first ever NFT!