The hype of novelty has died down. The Nyan Cat meme was sold for $580,000. Enthusiasts continue to believe, and haters keep hating.
In the meantime, even Instagram is considering opening an NFT marketplace. Is this a signal that everything was not in vain and the world is changing? After all, if earlier a conditional photographer, posting his work on Instagram, helped the social network to attract traffic for free, now he will finally receive a fair payment for his work?
This can only be answered by following the path of NFT from the very beginning.
What is NFT and why is it needed?
Let’s start with the basics. NFT stands for non-fungible token, “non-fungible token”. This is a unique link pointing to a digital asset, which can be either a photo or a document.
It is understood that NFT is a way to own something on the Internet — in an environment where information is available and reproducible so that the conventional photographer may not even be aware that his photographs have been borrowed by someone. Perhaps his pictures are used for profit — while the photographer himself does not receive anything from this.
How does NFT solve this photographer’s problem? Makes his work unique, one-of-a-kind, genuine.
The one who purchased the token thus secures his right to ownership. Information about this, as well as the history of operations associated with the token, is publicly stored on the blockchain (think of this as a record inside a database). The author of NFT is also noted there.
NFTs are sold for “ethers” — coins of the Ethereum cryptocurrency. Ethereum was conceived as a blockchain platform for decentralized applications and was launched on July 30, 2015 by Canadian-Russian billionaire programmer Vitalik Buterin.
Blockchain is a system that stores information about all previous transactions within the chain in blocks. It is impossible to remove a separate block from such a system and erase any information.
When a user makes a transaction—for example, buying a photo they like—a new block is created on the chain to represent that transaction. Then it communicates with the rest of the blocks.
Pitfalls of NFTs
The meaning of NFT is non-interchangeability. If you have, for example, bitcoin, you can exchange it for another bitcoin. NFT tokens are unique and cannot be replaced.
However, when buying NFT, the user does not necessarily buy the photo itself, recorded in one of the blockchain blocks, and to which no one else has access. The NFT can only be a link to the purchased work, and the link leads outside of the blockchain to somewhere on the outside internet. Therefore, no one prevents an attacker from creating another NFT with the same job. The system does not prevent this — the token will also be considered unique.
NFT platforms already have precedents for selling other people’s work. Vice writes that digital artists, visiting these platforms, found that their work was already for sale — they had to prove copyright with a scratch.
Started releasing his selection of 100 “Twin Flames” photos at the Natively Digital auction. The selection features photos of 100 pairs of twins on Valentine’s Day in 2021. Since then, the collection has totaled about $17 million in sales.
The popular street photographer released the “DRIVE” collection on the OpenSea marketplace, where it continues to be one of the top selling photographic NFTs. The collection includes 111 photographs of cars collected over ten years of work.
The master of fashion photography released his first NFT collection in early 2021. It was called “Four reimagined cult portraits” and featured such stars as Kate Moss and Gisele Bündchen.
Created a series of “Foodmasku” in which he makes face masks out of his food, photographs himself in them, and then eats. He made his NFT debut with a collection of 100 photos on the Known Origin marketplace.
Algorithm on how to create your own NFT
The algorithm for creating your own NFT is as follows:
- A wallet is created on Metamask or Ledge — these are crypto-wallets that allow you to receive, store and send cryptocurrency assets.
- Register on an NFT platform that suits your topic.
- The wallet is linked to the account.
- The work is laid out, a price tag is put on it.
Disclaimer: In order to create an NFT of their work, a photographer must pay a few hundred dollars of blockchain transaction fees (we won’t go into details, we’ll take it for granted that now, in order to sell yourself, you first need to pay).
You can sell and purchase NFT objects on special platforms. Some work as marketplaces with many categories, and some specialize, for example, in art or games.
We collected the most popular sites:
1. OpenSea is the largest NFT trading platform. On OpenSea, you don’t have to pay all commissions — the artist pays a one-time rental fee, and all fees associated with transactions are covered by the buyer’s payment.
2. Rarible is a Russian development, an important difference of which is the opportunity for authors to receive remuneration every time their works are resold. Registration on the site is free. For the placement of each new token, you will need to pay a commission from the Ethereum network — $ 30–100.
3. SuperRare — curatorial selection takes place on this site, and to confirm their authorship, artists develop a specialized certificate and an interview with the owners of the site. You can post your work for free, but on the first sale, SuperRare withholds 15% of the transaction. Also, the platform takes 3% commission from each successful NFT sale.
4. KnownOrigin carefully selects entries. Particular attention is paid to digital art on the site.
5. Foundation — only invited users can become an author on this site. Nyan Cat meme NFTs, Edward Snowden’s first NFT, and an audiovisual digital collection created by renowned musician Aphex Twin were sold at the Foundation.
How to sell NFTs
Once the NFT is placed, it’s time to move forward. That is, to fill your work with a price. Some artists (after all, we are talking about digital art in general) even write to collectors, begging them to buy their work.
Another common way to raise the price and convince a potential buyer that the work is worth buying is to resell the NFT to yourself. So a potential buyer will see that someone is already ready to pay a certain amount for the work, and, perhaps, will buy it more expensive — the difference goes into the pocket of the speculator.
Some publications attribute the growth of the NFT market to speculation. A Reuters study shows that users bought NFTs in order to sell them later at a higher price.
In general, statistics show that more than 50% of token sales took place at a price below $300 dollars. Perhaps their authors did not even recapture the commission for the creation of the NFT. And those who sold dearly were successful and had their own audience without that.
Why you won’t make money on NFTs, or JPEGs per million
What will happen next?
Experts believe that now the main problem in the development of the NFT market is the lack of a legal framework. Because of this, there are no guarantees in NFT transactions and there are many blind spots: the author can change one pixel and sell the result as a new work.
However, most likely, the legal framework is not far off, the prices for NFTs will become more reasonable, and after that the scope of NFTs will expand. They can even be used to represent real world assets as digital documents.
So, for example, when buying real estate, the main task is to transfer ownership rights. The use of blockchain would avoid many difficulties. There was an example when investor Ivan Malpika issued an NFT tied to a 50% stake in a residential building in the US city of St. Louis, Missouri. It was assumed that an agreement on joint ownership of real estate would be drawn up with the buyer. The deal, however, did not go through for unknown reasons.