A Complete Guide to NFTs - Definition, Minting, and Tech Specs

A Complete Guide to NFTs - Definition, Minting, and Tech Specs

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Bobby

Published on Dec 20, 2021

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NFTs, or non-fungible tokens, have taken the world by storm in the past year, appearing at Sotheby auctions and selling for millions.

NFTs have shown the world a new type of ownership that anyone can verify at any time.

The unique properties of NFTs are why we have seen millions of dollars being poured into them.💰

Owning an NFT can mean various things; collectible items, lottery tickets, access pass, concert tickets.

No one can forge ownership of NFT. They can only be bought and sold between people. But what are NFTs?

NFTs are here to stay, and we at Hashnode have created a complete guide to NFTs covering topics such as minting NFTs, NFT history, selling an NFT, and much more!📚

We are aiming to create more web3 education articles similar to this, so leave a comment below if you have any topic recommendations for us.

What is an NFT, and what does NFT stand for?

Each NFT is unique, even if they may look the same.

They possess a key property known as the tokenID which is randomly generated which ensures that each NFT is unique.

NFTs can be some form of digital files - artwork, videography, music.

The digital file is transformed into an NFT and stored on the blockchain, where it lives forever.

No one can remove that NFT now, and because the blockchain is public, you will be able to identify the NFT’s previous and current owner.

The NFT is living on the blockchain and provides proof of ownership.

If someone created a copy of the NFT, we could identify from its tokenID whether it is the true NFT or a fake. We will dive into these technicalities of tokenID later in the article.

When distinguishing between real and fake money, we rely on human skills to identify the difference.

The capabilities of verifying whether something is authentic or counterfeit without a human is what makes an NFT much more valuable.

Code can not be bribed, unlike humans.

gif of facts

What is a fungible token?🪙

Fungible tokens are all the same if they originate from the same smart contract.

A typical example of this is the US dollar.

No matter which dollar you get, it is still worth a dollar.

Even if the mint number of the dollar is different, it still retains the same value.

This is very similar to tokens we see in crypto too. Every bitcoin is identical to another in terms of its value, even if its minting number may be different.

Each bitcoin will be worth the same, whereas NFTs vary in value.

Fungible tokens are interchangeable.

One bitcoin can be swapped with another bitcoin, and we know its value is the same. Whereas NFTs are not interchangeable, each NFT has a different value.

A brief history of NFTs 📜

NFTs were first-created in 2010 on the bitcoin network called Colored Coins.

Following this were a few projects similar to NFTs but not explicitly called NFTs, and for the sake of this article, we will focus mainly on recent NFTs. Here is an article covering a more in-depth history of NFTs

The first NFT project to gain traction and set a standard of 10,000 NFT collections was CryptoPunks in June 2017.

Each CryptoPunk was unique and completely different from another, which is very common to see across most NFT projects now.

They used Python to program layers of artwork on top of each to create each unique piece. However, they did not follow the ERC-721 convention for NFTs because it had not been invented yet.

This project had sparked an interest in creating the ERC-721 standard, which now influences digital art and collectibles.

ERC-721

CryptoPunks are now an essential part of NFT history, and their price reflects that.

These Punks were free for people to mint, along as you covered the minting cost.

Now, these historical NFTs attract outrageous prices. Here are some statistics below on 24/11/2021.

CryptoPunks

Swiftly following CryptoPunks, CryptoKitties was born in October 2017.

CryptoKitties was the first project to follow the new ERC-721 standard, but they aren’t just images like CryptoPunks. 🐱

CryptoKitties had built a blockchain game, and these NFTs could be used within the game for breeding purposes.

It was a straightforward game, but this meant that NFTs within a game could now be sold for real money, whereas before, gamers would invest money into a game, but the money could never be taken out.

NFTs now meant that items within games could be sold or bought for money. People were making a lot of money from CryptoKitties, with some selling up to 6 figures, which attracted a lot of eyes from worldwide news outlets such as CNBC.

Crypto Kitties

(CryptoKitties was born from Axiom Zen, who have gone on to form DapperLabs who make NBATopshot, and other blockchain projects. They focus on bringing high-quality NFTs projects to the blockchain and are worth following.)

NFT Marketplaces 💸

Following the rise of popularity in NFTs, people started to create more NFT projects.

However, it was not easy to sell these NFTs, which spawned the creation of different NFT marketplaces.

The most popular marketplace for minting and selling NFTs is OpenSea.

They host a majority of NFTs from blockchain and make it easy to find any collection. OpenSea lets anyone mint an NFT on their website and sell it. We will cover how to mint an NFT later, but websites such as OpenSea make it easy for anyone to mint an NFT onto the blockchain.

There are a variety of NFT marketplaces for minting NFTs, but here are a few with different entry requirements:

OpenSea - They allow anyone to mint NFTs on their website. Rarible - They allow anyone to mint NFTs on their website. MakersPlace - Invite only. Foundation - Invite only. SuperRare - You have to go through an application process .

What is NFT minting?

Minting an NFT involves bringing a digital art file such as an image, gif, or video and bringing it onto the blockchain network.

Once the NFT is brought onto the decentralized network, it will live there forever and can not be removed or modified.

Whoever brought the NFT onto the blockchain will have their crypto wallet address tagged to the NFT.

This means that even if an NFT is bought and sold between 100+ people, it will still be possible to track it back to the original creator and owner, which displays the originality of an NFT.

It sounds pretty complicated, but fortunately, websites like the NFT marketplaces I mentioned above have simplified the process.

Most marketplaces do not charge for minting or listing an NFT. However, there is still a cost to mint your NFT to the network.

Everyone will have to pay a minting cost when they mint an NFT to the network as you are making a change to the network by adding your NFT onto the network.

The cost will depend on the price of gas at the time but can range from $10-100, dependent on how busy the network is.

How do I mint an NFT? ⛏️

There are a few different ways to mint an NFT, some involve using code, but some involve no-code like in marketplaces.

It depends on how many NFTs you are going to sell whether you may want to use code, but for the typical user in minting NFTs, it is generally easier to use the marketplaces to mint your NFT as the process is quite simple to do with no technicalities required by the minter.

You may have come across some NFT 10k collections, such as Bored Ape Yacht Club (BAYC) or Cool Cats , which have similar images but differ in accessories.

These collections, similar to CryptoPunks, have been generated using code and then minted by the user on their respective websites.

This is a more complicated way to mint NFTs compared to OpenSea, but this helps the creator avoid paying a lot more in gas fees. Instead, this requires the users who want the NFTs to pay the gas fees to mint the NFTs and collect them, whereas, on OpenSea, the creator will have to pay gas to list the NFT and for a 10k collection that can be very expensive in gas fees.

Gas fees are how much you pay to interact with the blockchain, and dependent on how busy the chain is, it can be pretty expensive. Here is an article to explain gas fees in more detail.

We will now cover how to mint an NFT using OpenSea as it is currently the widely adopted marketplace. There are some pre-requisites to mint an NFT:

  • Metamask wallet or another compatible wallet ( What is Metamask? )
  • Ethereum to cover gas fees
  • Digital art file (image, gif, videography)

You will need to be logged in to your Metamask wallet and connected to OpenSea.

Then click create on the top-right of the screen and sign the MM notifications if you get them.

They will pop up if it is your first time on the website as they need to get access to your wallet to perform transactions.

You should now be shown a screen similar to the one seen below.

create your NFT

You will upload your digital file in any supported format shown above and below the max limit of 100 MB.

Then you will be required to fill in the rest of the details, such as the name of the NFT, description, and collection name.

You will notice that other fields such as properties, levels, and stats are generally used for NFTs in a collection or a game, so you can distinguish the difference between NFTs and identify how rare an NFT is due to its properties if it is within a collection or game.

An important part when creating an NFT is determining how many you want to mint, as they can never be destroyed.

You can always create more NFTs, but you want to decide how rare you want your NFTs to be. We associate rarity with higher quality or an increased market price, so it is important to know how many of the same NFT you want to mint.

Next, you will click the create button, and this will bring up some notifications from Metamask.

If this is your first time creating an NFT on OpenSea, you will have a transaction to sign to authorize your wallet to interact with OpenSea, followed by another transaction to mint your NFT to the blockchain.

Once you have accepted these transactions on Metamask, you should be able to see your NFT in your profile under the ‘Created’ header after a few minutes.

As you can see, I have created 16 NFTs.

screenshot of NFT

Congratulations!

You have now created an NFT, and it will forever live on the blockchain.

You can now choose to keep your NFT or if you want to be a budding NFT artist, then try selling your NFT.

To sell your NFT, start by clicking on your newly created NFT, and it should open up to display a new page similar to the one below.

My NFT is just a png file with a bunch of random words for this example.

NFT example

Now click the sell button, which will bring you to a new page and give you options for selling your NFT.

As you can see below, you can either sell your NFT at a fixed price or list it at auction with a starting price and duration.

Most marketplaces on the Ethereum blockchain will list prices in Ethereum, so you will have to choose a price in Ethereum.

Marketplaces on other blockchains such as Tezos or avalanche will instead have prices in their respective tokens.

OpenSea also takes a 2.5% fee per sale, as you can see below.

2.5% fee opensea

There are few fees involved in creating an NFT, so it’s essential to time your interactions with the network when gas fees are low, early in the morning, or at the weekend.

Can you make any changes to minted NFTs?

Once you have minted your NFT, it now lives on the blockchain and can not be edited in a significant way.

If your NFT is solely a piece of artwork, it can no longer be modified once it is on the blockchain. However, there are the properties that we looked at before while creating an NFT, such as levels and stats, which be modified within an NFT if an NFT is used within a game.

The NFT itself won’t change in terms of artwork, but its stats can.

Bored Ape Yacht Club (BAYC) showed another way to make changes to NFTs without actually changing the original, and this was by creating a new NFT based on the original.

BAYC creators gave each BAYC owner a mutant serum, that if used, they would use the original BAYC to create a Mutant Ape Yacht Club , thus spawning a new NFT collection as it is not possible to make changes to the original.

mutant ape yach club NFT The Bored Ape Yacht Club and Mutant Apes Credits: ApeofPoland/Twitter via @ApeofPoland

What are the technical specifications of an NFT?

We previously mentioned the ERC-721 standard that NFTs follow, but in this section, we will dive deeper into the technicalities of an NFT.

The ERC-721 is a set of standards that define an NFT. Once an NFT is put onto the blockchain, this NFT is given a unique property -tokenId.

No two NFTs will share the exact value of tokenid.

Thie‘tokenid’ is a bunch of numbers created from randomness.

Each NFT will have a different tokenid number. That means NFTs can possess a different value even if they come from some origin.

Imagine you bought a concert ticket and got ticket #200 and your friend has ticket #201. If this lived on the blockchain, you’d have an image of ticket #200, and your friend has ticket #201.

However, the tokenid behind these tickets could be something completely different.

Ticket #200 - 263747385792398589238990359065706572382398 Ticket #201 - 888964586577348543728840975784395942090239

Whereas fungible tokens such as a bitcoin or ethreum possess the same tokenID, value, and characteristics. In the case of a fungible token, the tokenID would look like this.

Bitcoin 200 - 1256479329752985928590 Bitcoin 201 -1256479329752985928590

As NFTs can possess a unique identifiable value, this means they will be able to onboard a lot of physical world items onto the blockchain as a sign of ownership.

When you buy a house or car, paperwork is transferred over to you, but if that paperwork gets lost or systems go down, there is no proof of ownership.

In some countries, due to lost paperwork decades or centuries ago, there are pieces of land no longer owned by anyone as the proof of paperwork was lost, and now the land can be claimed by another.

If ownership was on the blockchain, such as ownership of a house, then you could always prove that it is your house, and when you decide to sell it, you will just need to transfer the digital file over to the new owner to show proof that they are the new owner.

It will be a long time before something like this is implemented, but it shows the power of NFTs and how they could be used in the future.

Conclusion

NFTs are still a very recent development in the world but the crypto space moves at a fast pace and there have already been a lot of developments in NFTs so that they provide more utility rather than just images such as providing unique experiences to the owner.

They are also becoming more mainstream as celebrities such as Jimmy Fallon, Post Malone, and Stephen Curry own a BAYC.

Coinbase, with over 68 million users, is also creating its own NFT marketplace and has recently partnered with Adidas too.

Genies are also working with celebrities to create their own NFT avatars in the metaverse and onboard big names such as Sia, Shawn Mendes, Mezut Ozil, and many more!

 
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