If you are at all interested in the new field of digital currency, then you might already have heard of NFTs.
However, if you have done a little digging, then you probably might already be scratching your head wondering what exactly it is they do and why they are of any relevance to you.
Well, you might be interested to know that one NFT was sold for almost $7 million! That’s pricked your ears up, hasn’t it? Well, the chances are that you might not have something that valuable, it’s all about how much worth everyone else puts on it that causes its stock to rise.
NFTs can come in many different forms: music, artwork, digital video clips, collectibles, video game skins, digital trading cards and virtual land. We’ll cover what each one of these means later on in our article.
In much the same way as Bitcoin is tracked, the purchase of an NFT gets archived on the blockchain ledger, which is a place where certain trusted sources can alter based on the amount of ‘work’ that they do (this usually takes the form of a complicated series of maths puzzles).
Just because you have taken a clip of you and your family on holiday and made it into an NFT, that does not necessarily mean that it has inherent value. If you could somehow drum up enough publicity to make this clip seem valuable to enough people, then the price of it will eventually rise.
Let’s think about a more common example of this: if you buy a Pink Floyd CD from your local record store, then you can probably only sell it on for the retail price that you bought it for.
However, if you got Pink Floyd guitarist David Gilmour to sign your CD, then it would automatically increase its value, as a signed copy would be a lot rarer.
The same principle applies to an NFT. Your NFT will have a digital watermark or signature that will identify it as one of those unique items. The uniqueness of the item will increase its value, although there have to be enough people that agree that this item has a certain inherent value.
So how do you go about making an NFT? Is it possible to make an NFT out of an object that you do not own? How much can you be expected to sell an NFT for and how can you increase its value?
How can you take a piece of your own artwork and convert it into an NFT that will potentially increase in value over a period of time?
Well, if you are thinking of dabbling in the world of crypto art, then read on, as we’ll give you all the basic information that you’ll need to know to get started.
We’ll first delve into the insightful history of the NFT, along with how to create one and how to sell it on a digital marketplace such as Rarible.
What Is An NFT?
Non-Fungible Tokens (NFTs) were first created around the same time as Bitcoin was first developed in 2012. It emerged in the aftermath of Colored Bitcoins, which were unique Bitcoins that were marked to represent certain specific real-world assets.
For example, if you had $1000 tied up in Ben and Jerry’s ice cream stocks, then you could represent this as a single red Bitcoin.
This colored Bitcoin is a direct link between the real and digital world, with a mutually agreed-upon value by the owner and a select group of validated individuals.
These coins were used to trade what was then known as ‘digital artwork’ such as the Pepe the Frog meme. These were one of the earliest examples of digital artwork being traded, with many users ironically trading high prices for them.
However, as digital image files, what stops these items from being copied and duplicated?
Well, an early digital artwork would have to be given a digital signature, in much the same way as a real piece of artwork would be validated by the artist’s signature at the bottom. Both digital and real-world artworks are liable to forgery, but that still doesn’t make one system more valid than the other.
The signature represents the object’s uniqueness, although that is not all that makes it valuable.
If we are to stick with the artist signature analogy, if an artwork is suspected of being a forgery, then it requires an expert or group of experts to validate it against real copies of the signature that have already been authenticated.
The same rule applies to these digital artworks. If enough people on the blockchain who have proven their worth by performing digital work don’t validate your NFT, then it is not considered to be of genuine worth.
These digital artworks are only valuable in that they are considered rare or collectible by an approved group of individuals. Potentially, anything can be an NFT, but without this shared agreement, then the artwork itself is not worth anything.
Now some of you might be concerned with how susceptible your digital artwork will be to theft and what measures are in place to stop your artwork from being pilfered and sold on as an NFT to anyone.
Well, there are very strict rules around pirating NFTs and minting, which does help reduce the amount of theft by quite a margin.
An NFT can be something great to purchase that will ultimately increase in value at a later date. A lot of people who want to tie up money in a physical object can do so by purchasing an NFT, although NFTs are not considered tax write-offs in the same way as physical art objects are.
Can You Make An NFT Of Something You Don’t Own?
Now, if you do want to license a piece of digital artwork that is not your own, then there is only one place you can go to for permission, and that is by contacting the artist themselves.
These digital artworks are liable to copyright law just like any other form of intellectual property. If you find that your artwork is being traded by other people, then you can certainly file a lawsuit that will get the artwork removed from the offending website immediately.
However, there are many preventative measures already in place that will stop this from happening.
Many platforms that facilitate the selling of NFTs must have smart contracts detailing the rights of the sale of the object already in place.
It must be stated clearly in these contracts what the agreement is that has been made between the artist and the buyer, including what both parties stand to benefit from the sale of the NFT.
Anyone selling their NFT must be aware of their rights when it comes to the distribution of their artwork. This will apply differently to intangible objects such as Tweets, as Twitter seems to want to prevent any archived content from being sold on to third parties.
You could buy an NFT of a famous sports clip, for example, and this will have a digital signature that can then be verified by third parties at a later date when the sale has occurred.
Some websites like Foundation have strict rules on who can and can’t join their NFT trading platform.
You can join platforms like this only if you are invited by another member, which is one way of reducing the number of false actors that might be inclined to distribute another person’s artwork as their own.
However, once you have been invited into Foundation, the verification process doesn’t stop there. Users are often required to have a verified Twitter account, as well as an Ethereum wallet, which is the main form of currency that is used in trading NFTs.
By having an Ethereum wallet, you are able to trade your NFT using the Ethereum blockchain, a public ledger that is used by individuals to keep a track of every transaction that is made between you and any other member of the blockchain.
Most of these online trading platforms act as an auction house, allowing individuals to place a bid on a specific NFT before the winning bid then buys the item for the agreed-upon price. This method is a safe, secure and fraud-free method of buying and selling NFTs.
You could easily sell or buy an NFT outside of these legitimized trading platforms, however, there would not be a guarantee that your NFTs won’t be sourced from an artist that has not agreed on permission. This could lead to you being sued and ultimately land yourself in federal prison.
There are a lot of NFTs that have a system whereby an artist will make a profit from each subsequent sale of the original artwork, rather than a one-off fee from the first sale. This is a great way for an artist to keep earning money from a single sale of one artwork.
Each transaction of the artwork from buyer to seller will be kept on the blockchain, which will allow the artist to keep track of each individual sale to make sure that they are getting their cut of that sale.
One of the most secure methods of trading your digital artwork is through an Ethereum wallet, in which you should put a minimum of $50 in Ether (the main form of currency on the Ethereum blockchain).
This way a lot of NFT exchange platforms will allow you to partner your wallet to their system to start verified trading of NFTs.
Ethereum is one of the most NFT-rich platforms that you can currently get on the cryptocurrency exchange, so you’ll definitely want to get involved there if you want to become your very own NFT dealer.
Now, reading all this may certainly have piqued your interest, so now we’ll have a look at what is the best method of minting NFTs, so that you can sell them on for a profit.
Does It Cost Money To Mint An NFT?
So, let’s say that you have a Tweet that has gone viral and you want to start monetizing that popularity straight away. Well, you can start by joining a website such as Foundation, which offers a platform for users to verify their artwork via a process called ‘minting’.
Once that you’ve created a wallet with some Eth in it, then you can start the process of minting your NFTs.
All the NFTs that you mint will be connected to your wallet, which is also connected to your social media profile. This will help to ensure that any prospective buyers can view your profile and assess your legitimacy.
Connecting your NFT trading with your socials will be a great method of showing your personality to the NFT trading community, as well as allowing users to leave comments on your wall that will validate you as a trader and let other users know that you are a trusted source.
Once you have created your Foundation account and paired it up with your wallet, you can click on the ‘create’ button that is in the right-hand corner of the screen. Once you have done this, it will give you 4 options: image, audio, video or a 3D object.
At first, it will only give you the option of creating an image or a video file. For video we would recommend the highest quality, that is, 1080fps or 4k. For an image, we would recommend a similarly high quality.
Once you upload the piece, it will be distributed to an InterPlanetary File system. This is basically a hypermedia protocol that won’t upload your artwork to a third party until it has been transferred to the buyer.
Instead, it keeps it in stasis until the transaction has been authenticated and the money has been received by the protocol.
The beauty of the hypermedia protocol is that it is a piece of programming that is not run by a human being. This severely reduces the risks of corruption and fraud, both funds and NFTs need to be in place before the transaction occurs.
Once you have chosen a title for your NFT and it has been minted, then it cannot be altered. This is because the NFT has entered the blockchain and recorded forever on the public ledger.
You can alter your NFT by a process called burning, but this might damage the profitability of your NFT. Avoid this by being super careful in the minting process.
Click on the minting button and you will be prompted to sign the NFT in much the same way as a painter would be encouraged to sign their canvas. This gives it that additional stamp of uniqueness that anyone can check at a later date.
This will be one method of verification that users will be able to check if any disputes arise in the future.
Then you’ll need to approve a gas fee. This is basically the fee that the blockchain requires to interact with it and change it. This gas is basically the computational power that will be required to make alterations to the ledger - in this case, the information that is required to verify your NFT.
The smart contract then runs a code that will authorize the contract. However, this process usually takes quite a bit of time, as it has to be verified by a number of different people, so you might have to wait for a bit for these computational fees to complete.
Make sure that you avoid minting your product multiple times. It can take a long time to process the payment, so be wary of being impatient.
Pressing the button once has already actioned the payment, so pressing it multiple times will action multiple payments will create a backlog in your Ethereum wallet.
This process of actioning multiple payments on the same NFT is what is called ‘double-minting’. You want to avoid this, as it will cause you extortionate fees on what is essentially the same thing.
Once you have minted this NFT, then you will be able to see it on your dashboard as a ‘minted’ object. This will give you the option to sell it on the digital marketplace as a unique object.
If you are using a website like OpenSea to trade your NFTs, then you can have options to give your NFT unique characteristics and traits that will increase its rarity and therefore its value.
For example, you can include unlockable content that can only be viewed by the buyer once it has been purchased.
Unique content on your NFT can include anything from passwords and discounts to special artworks within artworks. Many people are attracted to this Russian doll effect and purchase artworks from their favorite NFT creators for this very reason.
When you are selling your NFT, you will have to pay a gas price. The price of this gas will all depend on how many other people are looking to convert NFTs by uploading them onto the blockchain. The level of traffic is known as the ‘congestion rate’.
The higher the congestion rate, then the higher the congestion fees that you have to pay will be. For example, the fees will be a lot higher on the weekend when more people are using the blockchain.
How Do I Sell My Digital Art As An NFT?
If you are looking to sell your digital art as an NFT, then all you have to do is convert it into an NFT in the manner that we have stated above. Make sure that you have a crypto wallet handy and are ready to pay a small fee for gas.
Once you have build up a collection of NFTs on your Creator page (assuming you are using a program such as OpenSea or Foundation) then you can start selling them for a decent level of cash.
In the seller tab, you can choose the terms for which you can sell your NFT. You have the option either to sell it at auction, where the highest bidder wins, or you can set a fixed price. However, some of these NFTs will only sell for the currency of the blockchain that they are exchanged on.
For example, if you are selling on an Ethereum Classic blockchain, the chances are that your NFT will only be able to sell for Eth. The most common form of currency that an NFT is sold for is ERC-20.
If you are trading on OpenSea, you can set the royalties that you can claim for every sale of your NFT. This we mentioned earlier - you can gain a small amount of profit for each sale of your NFT.
This is a great way to earn continuous revenue for the same piece of artwork. If you are a very popular artist, then this could earn you a potential lifetime’s worth of income.
Sometimes there will be a small fee that comes with listing your artwork on a marketplace, so you might have to check, as listing more NFTs will result in a higher hosting fee.
Certain NFTs are often manufactured exclusively by companies. For example, the NBA offer NFT packages for people at certain times of the year.
These transactions are often kept very in-house, with people having to buy Dapper wallets and other NBA authorized coins in order to purchase limited-edition sporting clips and trading cards.
However, these websites do encourage you to always top up your wallet, so that you can make the most of these opportunities when they are dropped by the company.
These transactions usually occur within seconds, so you’ll have to make sure that your wallet is topped up and ready to go.
How Do I Convert Art To An NFT?
Converting art to an NFT is very simple, one method being the main one we have highlighted above. All you need is a decent Bitcoin wallet, along with the right Bitcoin ledger to trade it on.
Let’s break down the costs that might go into each step of authenticating your piece of digital art right the way through to hosting it on a digital marketplace website and then selling it on, hopefully for a tidy sum of money.
Looking at the standard unit price for Ether - that is $1.740 per unit - then we can try and figure out the cost of authenticating your NFT. If you are using a website such as Rarible, then you can mint your NFT for just 0.050421 Ether, which translates to roughly $88.
This is just the first step in terms of costs. Next up, you’ll have to pay to host your artwork on the website’s marketplace. If you are hosting on Foundation, then you’ll be looking to pay around 0.035822 Ethereum, which equates to roughly $62.
So far you will have paid around $150 to mint and host your NFT on a digital trading website. Once it is one there, then it will be open to auction, which begins once the first person has placed their bid.
Hopefully, once your object is up for auction, then you’ll be able to sell it for upwards of $200 to make the whole process worthwhile.
Now, it will obviously help if you have already established your artwork through traditional means such as galleries or even through online auctions. Having your name out there will verify that your artwork has value and it will be able to increase the chances of it selling at a profit.
Once you have sold your artwork, do not forget the commission. Places such as Foundation take around 15% commission for all the artworks that are sold.
After the commission fee, then there’s the transaction fee. This is the cost that you’ll have to pay to transfer your money through the blockchain. The average cost of transferring the money from the buyer through the blockchain ledger and into your wallet is around $31.
However, sadly the fees don’t stop there. You’ll still have to pay money to transfer this money from your Bitcoin wallet to your real bank account. This fee will have to be negotiated with your bank.
Some traders have claimed that they can use upwards of 78% of their total profits on commission fees, which is obviously a massive amount to pay to get very little profit at the end of it.
The fees to mint, list on the auction website and transfer the money to your wallet are all that are considered to be gas fees. This is because it requires computational power, electricity and processing power that it takes to convert all the digital items to real items and vice versa.
As we mentioned before, every time that you come into contact with the blockchain, you’ll find yourself paying a lot of Bitcoin on altering the ledger. This is because there are real people that take time and effort to verify your purchase.
All of these people are also using computational power and electricity and will want to be paid for this.
One of the best places to cut costs by not having any hosting fees. Some of these websites do not take a commission either, which will be very useful for driving down the overall cost of minting and distributing an NFT.
This is why it makes sense to only sell art if you have established a reputation first. This way you’ll be able to list your artwork for a substantial price and not have too much eaten away by the various gas fees that we’ve listed above.
How Much Does It Cost To Convert An NFT On Rarible?
Rarible is one of the most popular places to sell your non-fungibles. It has a very simple-to-use website, giving you everything that you need for a secure and stable minting and transaction of NFTs.
Here is a step-by-step guide on how you should mint your NFT, upload it to an online auction and then collect the maximum amount of profit, dealing with gas and commission fees along the way:
- Connect Your Wallet To Your Rarible Account
We would recommend selecting a Coinbase wallet, as it comes in a very easy-to-use app and can be charged with a very popular form of currency for NFTs - Ethereum. You can buy Ether either with your bank credit or debit card, or you can deposit more Ether using BigPanda.
You’ll need to prove that you have a wallet filled up with enough Ether to pay for the transaction fees that will pop up later on your account. Once you have done this you’ll be able to move on to the next stage of the NFT minting process.
- Create Your NFT
Once you have connected your Coinbase wallet with your NFT, then you can start by creating your NFT.
Once you are logged in, press the create button in the top right-hand corner. This will give you more options: you can either create a single edition or multiple editions. By creating multiple editions, means you can make a few different NFTs with the same piece of artwork.
However, remember that it will cost you extra to mint and sell multiple editions of the same artwork, so beware of the number of funds that you have.
If you are new to the NFT game, then we would suggest that you click the option of making a single edition.
Once you have uploaded your file, then you can choose between audio (mp3), video (mp4), image (png), a web picture of a gif. We would recommend that you pick the png option if you are going to sell your artwork in the traditional image form.
- The IPFS
Once you have clicked one of these options, your artwork will be uploaded to the InterPlanetary File System. This means that it is not stored on the Blockchain and no third parties will have access to your artwork.
Once it has been uploaded, you will be provided with a very unique sort of link that is directed only to the file itself, usually stored on your GoogleDrive or other cloud storage.
This way only you have access to the link and you can share it with a prospective buyer to show them a high-quality sample of what they’ll be buying.
Once you have the link to your file, you should copy and paste it into the Rarible website in the box marked ‘Unlock Once Purchased’. Once you have done this Rarible will encourage you to enter an Instant Sale Price.
This will be the basic price you’ll want to sell your NFT for. However, bear in mind that Rarible will take a 2% commission on this sale, so make sure that you set your price correctly.
- Make Your Own Token
This will be where you can enter the kind of token that you will accept for purchase. We would recommend that you use the Rarible token, as you can convert it into many other different kinds of tokens once you have exchanged it.
You can also select the ‘royalties’ tab, which will determine how much of a percentage you can make from each subsequent sale of your artwork. This is the best way of making a lifetime profit from a single artwork.
On your first sale, you will take 100% of the profit (not including the commission fee) then 10% of the profit of every subsequent sale of that artwork. This is a great way of making a stable living.
Once you have decided on all these various pricing structures and tokens, then you can set your token off for minting.
When uploading your file for minting, Rarible will automatically bring up your Coinbase wallet, as you will be interacting with the blockchain and this will incur gas fees. As mentioned above, this is the amount of gas and electricity third parties will charge to verify your item.
Rarible will give you the option of lowering your gas fees. Simply go to the edit tab and set your transaction speed. You can set it to slow, so that it will take longer to authenticate, but will cost much lower in gas fees.
However, if you set your own gas price too low, then the likelihood is that your transaction will not go through at all.
Once your NFT has gone through, then it will be available in your wallet under the ‘collectibles’ tab. Your NFT will also appear as ‘On Sale’ in your tab too, which means that any prospective buyers can get in touch with you to purchase your NFT.
Our Final Say
We hope that this guide has helped you understand the often complicated but exciting world of NFTs, how to sell them and how you can best go about making a profit from them. Happy selling!