Creating an NFT
NFStep 1: Get a crypto wallet. This allows you to store and transfer digital assets.
There are two types of wallets:
Software [hot wallets] – these are downloaded and stored on your device. Convenient and easily accessed, they are connected to the internet which makes them less secure.
Hardware [cold wallets] – a physical device (like a USB stick or larger]. You store your digital assets on this device. These wallets are off-line and are much more secure than software wallets.
For trading NFTs a hot wallet is used, but storage of the assets should be in a cold wallet.
Step 2: Buy cryptocurrency using a trusted trading platform, i.e., Coinbase and purchase your desired crypto with fiat currency.
Some NFT marketplaces, such as Nifty Gateway or MakersPlace let you trade NFTs using traditional payment methods, i.e., credit cards. Others, like Super Rare and OpenSea only accept crypto. Ethereum [ETH] is the preferred crypto for NFT transactions. Other blockchains that support NFT transactions are Solana, Tezos, Flow, and Biance.
Step 3: Connect your wallet to a marketplace.
The largest market for trading NFTS is OpenSea followed by LooksRare and Rariables. If you intend to mint an NFT or a series than platforms like SuperRare, Foundation, and Zona may be good alternatives.
Minting is a procedure of association of a specific set of data [NFT] with a specific asset or object. Minting comes with a cost. You will need to pay a gas fee [transaction fee] to mint. You should also check out the royalty options, if any, on the platform you are minting to.
Step 4: Create, buy, sell NFTs with the cryptocurrency you purchased.
To mint you need to upload a file to be associated with your NFT and fund the transaction with ETH, etc. Once the minting is completed, you’ll have all the relevant information regarding your new NFT, and that NFT will be registered in your wallet. You can keep it, sell it, trade it.
Sub Step 4b: If you see an NFT you want to purchase, you can buy it.
You can purchase it at the going price or bid and wait to see if it’s auctioned off. When the seller accepts your offer, the transaction is completed and ownership transfers to your wallet.
To sell your NFT you need to set up an auction in a marketplace. Study the fees associated and the various auction criteria. Once the sale is made, the NFT will automatically be transferred from your possession and the proceeds transferred to your wallet. Make sure you always look for verified projects on platforms and only follow links from official and verified user accounts on social media.
Rug Pulls: These occur when the project creators take the investment money for the project and disappear. By doing so, the creators leave the collector [buyers] with a valueless asset.
Wash Trades: Driving up the price of an NFT by artificially inflating the bid price until an unsuspecting buyer joins the fray. After the sale, the asset deflates in value. Also termed, ‘pump and dump’, the user controls both sides of the NFT trade, selling the NFT in one wallet and buying it from another, raising the trade volume and price.
The first NFT was minted in 2014, it was called ‘Quantum’. NFTs went mainstream in 2017 with the CryptoPunks series.