Just when everyone thought the crypto space couldn’t get any more exciting, along came NFTs to take the world by storm. Digital collectibles and NFT art in particular amazed the world through how much they’re worth.
In March, Christie’s auction house sold Beeple, an NFT piece of art by Mike Winkelmann, for a whopping $69 million, making Mike the third most expensive living artist at auction. If this isn’t enough, as of August 2021, people were buying EtherRocks, which are digital rock paintings, for more than $200,000 with a floor price of more than $100,000.
Considering all these assets are just stored as code, it might seem impractical. This article helps you understand how these NFTs are created and some of the factors considered in the development process and for the budding enthusiast how to create an NFT on one of the many NFT platforms that exist.
What do you understand about NFTs?
According to Investopedia, the term fungible describes anything that can easily be exchanged for another without changing value. A banknote, coin, stock in a company, or Bitcoin are all fungible tokens.
Non-fungible tokens, on the other hand, represent anything with unique properties that cannot be swapped for another. Take the Mona Lisa painting, for instance. It cannot be swapped for the Starry Nights painting. While other copies of both paintings might exist, there is only one copy of the original.
Take any of these non-fungible assets, represent them as cryptographic tokens, and store them on the blockchain, and you’ll get non-fungible tokens, commonly known as NFTs and this is a very high-level summary of how to create an NFT. NFTs represent ownership of the asset because the blockchain is immutable, and no one can alter the ownership data without the authority of the owner or creator.
Should you create an NFT?
Most people have their doubts about whether NFTs are truly valuable. For example, take the art sector: in art galleries, people pay millions for a single piece of art. But in the real sense, only a countable artist can make a living from their art. Even then, the artists have to share the revenue with the art galleries and other parties involved in the sale. This logic also applies to other sectors like real estate, the music industry, and the entertainment sector, to mention a few.
With NFTs, the creators, or the owner of a tokenized piece of asset, are in complete control of their assets. NFT marketplaces are global platforms that connect NFT owners directly to buyers. They also provide P2P transactions that allow NFT owners to sell their assets without any intermediaries. Additionally, NFT marketplaces keep the owners in the loop on the current state and progress of their asset sales. Also, through smart contracts, NFTs allow owners to deploy royalty or commission models to receive continuous payments upon each sale of their NFT.
Overall, the NFT ecosystem provides users with a more P2P and democratic landscape for those buying or selling. So being a creator or owner of NFTs gives you control over the whole creation process and any revenue generated.
How to get started with creating your NFT
Before starting the development process, you first need to pick the asset class you’ll represent as an NFT. NFTs can be used to represent any tangible, intangible, virtual, or physical asset. These might be:
- Photography work
- Virtual land
- Collectible like sports moments, digital cards, CryptoKitties
- Domain names
- Virtual items in video games
- Tokenized real-world assets
Step 1: Choosing a Marketplace
After deciding on the asset class, you need to choose a marketplace to create and list your NFT. There are a few popular platforms like Rarible, Mintable, and OpenSea. Some NFT marketplaces like OpenSea are free to use, have no moderation on the listed NFTs, and support NFTs on the Ethereum blockchain. Others like Rarible charge cryptocurrency as gas fees and sale service fees to execute and process transactions.
Step 2: Choosing a Suitable Blockchain
Due to the rapid growth of the NFT market, myriad blockchains now support NFT creation. Therefore, it is crucial to understand the blockchain’s features before making a selection. Here are a few key considerations:
- Marketplace size: As an NFT creator, a user needs to figure out which blockchain has the most NFT buyers and sellers. More sellers and buyers mean a more liquid and a more secure marketplace.
- Secondary market: How many other marketplaces support the blockchain NFT protocol? Users need to understand if various marketplaces support a particular blockchain.
- Additional DApps and services: To sell your NFT, you need a digital wallet to store the ownership rights and make transactions. What wallets are supported by a particular blockchain? It would be best if you always considered DApps, as they are popular in the NFT space.
- Mining fees: While some blockchains like Binance smart chain are free or charge lower fees, some blockchains like Ethereum charge higher fees to create and mint NFTs. Ensure you choose a blockchain that fits your budget.
- Environmental impact: while this might be subjective, it’s crucial to consider the carbon emissions of the blockchain you wish to use.
Currently, the Ethereum blockchain is the most popular blockchain service for creating NFTs due to its large market and immense liquidity. However, there are a few other popular blockchains like Binance smart chain, Flow, Tron, EOS, Tezos, Cosmos, and WAX, to mention a few.
A Closer Look at the Non-fungible Token Development process
Blockchain technology has diverse use cases. As such, there are various standards developed to handle each. For example, on the Ethereum blockchain, the ERC-20 standard is used to create fungible tokens like Chainlink and MarkerDAO. In contrast, the ERC-721 creates non-fungible tokens like Cryptokitties and the famous Lebron James NFT top shot.
Using the example above, an NFT standard (ERC-721) is a set of essential rules defining how to identify something as unique on the blockchain. It is crucial to note that NFT standards get their names from their respective blockchain, for instance, Binance smart chain – BEP-721, Tezos – TZIP-12, and Tron – TRC-721. While these standards are developed for NFTs only, some blockchains like the Ethereum blockchain also have standards that support both fungible and NFTs, the ERC-1155.
With this in mind, let’s look at some key features of NFTs.
Step 3: How to Choose Desirable Features for your Non-fungible Tokens
Since the ERC-721 is the most popular NFT standard, let us have a look at some of the salient features that should be enabled when creating NFT Tokens (ERC-721):
- High compliance with respective NFT standard
- A unique identity (ID)
- Multiple product management tools
- Admin tools
- Efficient subscriptions and newsletters for real-time upgrades or modifications
- An embedded Web3 (decentralized internet) checkout button with the respective digital wallet support e.g., Metamask
- East asset transfers
- A digital wallet DApp for web browsers, Android, and IOS devices
- Role-based permission
- High-end security measures
Step 4: What are Some of the Functions used when Developing an NFT?
With blockchain technology, code is law, and the law is enforced through smart contracts. The rules, rights, governance, and transaction processes are written as code on the smart contract. If a single step is skipped or invalid, the contract terminates, and the transaction is deemed invalid.
NFTs standards are not any different. They are composed of functions (instructions bundled together to achieve a specific outcome) on a particular type of token contract that governs NFTs. Here are the significant functions of NFT standards:
1. Functions that are similar to that of Fungible Tokens
- Name: This field specifies the token’s name, which other contracts and DApps can use to identify it.
- Symbol: Used for a shorthand name or logo for the NFT
- TotalSupply: Specifies the total supply of the NFTs. While some creators only create a single version of their NFT, others like CyberPunk have a limited supply of 10,000 unique collectibles NFTs.
- Balanceof: returns the number of NFTs an address owns
2. Ownership Responsibilities
- OwnerOf: returns the owner of a token’s address. Other contracts, DApps, or users can use this function to determine the owner of an NFT.
- Approve: approves a third-party user or entity to transfer the ownership of an NFT on behalf of the owner.
- TakeOwnership: it’s an optional function that enables the withdrawal of NFTs from the previous owner’s address to the current owner’s address.
- Transfer: enables token owners to transfer ownership of an NFT to another user.
3. The Metadata Function
- TokenMetadata: provides a way to get the data associated with and NFT.
4. Events functions
- Transfer: triggered when the ownership of an NFT changes. It provides the transactional data for both user accounts by the transferred token ID.
- Approve: executes when an owner grants another user ownership of the token.
Step 5: Creating your Non-fungible Token
When considering how to create an NFT it’s important to understand that most blockchain systems are open-source software platforms and act as a public blockchain. Therefore, creating NFTs is not as tedious as you might think. There are two possible ways to create NFTs.
- The first method is for experienced developers who can code the token and implement the functions mentioned above.
- But if you are not conversant with blockchain programming, you can connect with NFT development platforms like OpenSea, where you can easily upload your asset and list it on the platform. Platforms like OpenSea provide a simple user interface for the technical development of an NFT. Additionally, if you need a more personalized NFT, you can collaborate with experienced NFT developers. However, understanding the technical functions behind NFT creation is very crucial.
Presently, NFTs revolve around digital art and collectibles. However, in the future, they could tokenize anything unique. This means tokenizing anything from property and art to rare assets. The promising potential of NFTs will be more beneficial for start-ups and entrepreneurs due to the P2P and decentralized nature of non-fungible tokens. As of now, the demand for NFTs is continuously increasing, and various businesses are looking into ways of leveraging this new technology. Therefore, it would be a good time for entrepreneurs, artists, and creators to get on board with NFTs.