When asking about NFT coins, you may be asking about one of two different things. While token is the better term, NFTs are sometimes referred to as coins as if they were a cryptocurrency.
This isn’t the case as NFTs can be images, music, in-game collectibles, videos, all sorts of digital material that are stored in the blockchain and are wholly unique.
Non-Fungible Tokens
Unlike most digital media, which can be replicated and distributed infinitely with no difference between the original and the latest copy, NFTs are recognized by the blockchain as being genuine.
This means owning an NFT has value whereas a copy of the digital imagery that an NFT captures doesn’t have value. Buying an NFT secures you as the sole owner of that NFT, authenticated by the blockchain.
They’re digital assets that are incredibly limited, creating scarcity from which value is derived. They’re typically sold for cryptocurrencies, some of which are referred to as coins.
While they’re intimately related to cryptocurrency coins through blockchain and the wider crypto world, NFTs exist as their own technology that is sure to make their mark on data storage solutions in the future.
NFTs are Non-Fungible Tokens while cryptocurrency coins are fungible, one Bitcoin is programmatically the same as another Bitcoin and equal in value, with 21 million available.
ERC-721 & ERC-20
With that all said, there are a few cryptocurrencies that have become tied to NFTs in the last few years.
Modern NFTs are most often created using the Ethereum blockchain, specifically with the ERC-721 standard that enables the smart contracts that are written into every NFT.
This reliance on the Ethereum blockchain means that NFTs are commonly bought with and sold for cryptocurrencies using the ERC-20 standard.
ERC-20 is the fungible token standard for the Ethereum blockchain, so it’s instrumental in many altcoins that trade well in the cryptocurrency market.
This is because the ERC-20 standard makes it much easier to field cryptocurrencies on the Ethereum blockchain. There are 200,000+ different ERC-20 cryptocurrencies in circulation nowadays.
Some examples of popular ERC-20 cryptocurrencies are Tether (USDT), Chain Link (LINK) Maker (MKR), Basic Attention Token (BAT), DAI, or Augur (REP).
Given how the ERC-20 standard uses the Ethereum blockchain, they’re based on and similar to Ethereum’s Ether (ETH) cryptocurrency.
The Top NFT Tokens
As of writing, these are the top NFT tokens (coins) that you can get on the biggest NFT marketplaces.
Theta Network (THETA) – Theta makes use of a new blockchain to establish a decentralized video delivery network. It was originally offered as ERC-20 tokens but has long been swapped for native tokens to a 1:1 ratio.
Their network aims to be a decentralized streaming network, called the DSN, and make use of decentralized apps, called DApps. These could then enable sports, esports, TV/movies, and even business-related conferencing.
The first of these, SLIVER.tv, aims to be the first Theta network application that hopes to find an audience of esports fans.
Theta tokens aim to solve the “last-mile” problem with stream delivery, where quality is reduced because of limitations on the receiver end.
Theta tokens can remove this bottleneck by having a network of users using redundant memory and bandwidth as caching nodes all over the world. This could even be used for peer caching nodes, reducing bandwidth costs.
Through their streaming network, Theta has become one of the foremost NFT tokens by converting emojis and badges used in stream chats into NFTs to be owned and traded.
Decentraland (MANA) – Decentraland is a virtual reality world that’s powered by the Ethereum blockchain. The virtual world allows you to purchase land where you can then build it up or monetize it and become immersed in the applications or content that other users have built.
As the name suggests, a big part of Decentraland’s marketing is the fact that it’s all decentralized, which you don’t get with other VR projects. Ownership of in-game land and currency is transparent thanks to the Ethereum blockchain.
So, what’s MANA? That’s an ERC-20 token that is used in Decentraland to purchase LAND. It can also pay for other things in Decentraland and is offered by many exchanges and swap services in the crypto world.
MANA can be kept safe in any Ethereum-compatible wallet if you’re worried about how secure the cryptocurrency is.
LAND is a parcel of, well, land that exists in the virtual world. It’s also an NFT, as each tile of LAND is unique and tracked through Ethereum’s blockchain.
Any 3D scenes built on the land are owned by the owner of that LAND and they can even be combined to create estates comprising multiple LAND tiles.
Flow (FLOW) – Flow is a blockchain created by Dapper Labs, a leading developer in the NFT space. The network aims to tackle the scalability issues that come with Ethereum (mainly high transaction fees) after their own NFT game, CryptoKitties, blew up.
They want to create a more scalable network where similar games and NFT-based projects can thrive.
The native currency of the Flow network is FLOW. Any apps and transactions in this blockchain will need to use FLOW as a cryptocurrency and so the development and success of NFTs on their Flow network is directly related to this coin.
NBA Top Shot is a beta collectible service that provides NFTs based on memorable NBA moments and the talented athletes who performed them.
Alien Worlds (TLM) – Alien Worlds is a simulated economy where players use NFTs against one another to compete. The crypto is Trilium, a scarce resource that’s supposed to inspire collaboration and competition between players of Alien Worlds.
Players also must compete with Decentralized Autonomous Organizations, called Planet DAOs, to progress through gameplay and accrue more TLM.
NFTs are acquired to mine more TLM, grant benefits in battles, and complete other in-game challenges. NFTs dictate, and are dictated by, the player’s strategy when playing the game.
This takes NFTs from digital art to a useful and meaningful gameplay mechanic that changes how people value them.
What Are NFT Collectibles?
NFTs are often referred to as collectibles and for good reason since that was where they found their start. The first big NFTs were CryptoKitties, which weren’t just one of the first attempts at using blockchain technology for fun but they exploded in popularity and introduced NFTs to the wider world.
In December 2017, an all-time-high in CryptoKitty transactions caused the Ethereum network to slow down, and so everybody took notice of how this game worked.
CryptoKitties
CryptoKitties is a game created by Dapper Labs, a Canadian studio that wanted to use blockchain technology to make something fun. In the game, you own CryptoKitties by buying or breeding them, where you can then sell them.
Each CryptoKitty is a digital asset whose ownership is earmarked on the blockchain, making every single one unique. They are NFTs but, instead of a tweet or a gif, the art contained within is the sprite of a kitty with certain properties.
You own these kitty collectibles because the blockchain designates the holder of its private key as the owner, which happens to be you. Nobody else can own the same CryptoKitty, which is an aspect that got people’s attention when they became popular in the crypto world.
By exchanging your private key with somebody else, you can transfer ownership of your CryptoKitty to somebody else, typically for payment in crypto, fiat currency, or even another CryptoKitty. It’s even possible to accept payment to breed your CryptoKitty with another.
When trying to explain NFTs, many people reach for the term collectible because of how unique NFTs are and how they can be traded.
Whether favorable or unfavorable, they’re often compared to trading cards like baseball cards or Pokémon or Magic: The Gathering cards, some of which can go for six figures if you have the genuine article.
Like those collectibles, an original NFT that is valuable to others can fetch a high price with collectors.
In the digital landscape, collectors can gather NFTs as collectibles instead of physical items, especially in the case where the NFT is purely digital and isn’t a representation of something existing in the real world, like a CryptoKitty. The uniqueness of NFTs allows them to be acquired as digital collectibles.
CryptoPunks
Another seminal example of NFTs is CryptoPunks, which work in a similar way to CryptoKitties. They were made as an art project by Larva Labs, two developers who were inspired by cyberpunk media and the emergence of crypto art.
They left their mark on crypto art history when the CryptoPunk project inspired the ERC-721 standard, the process by which most NFTs are made today. Because of this, CryptoPunks is often regarded as the first NFTs or the origin of all modern NFTs.
As for details of the project, 10,000 unique CryptoPunks were created. 6,039 of these were males while 3,840 of them were female and, through blockchain, all of them are unique and scarce.
Since they’re generated by an algorithm, all 10,000 characters are unique. They were offered for free by anybody in possession of an Ethereum wallet but since then, they have been sold and traded as collectors’ items.
As with any collectible, the fact they’re unique makes some of them more valuable than others. Many of the CryptoPunks are modeled after humans except for 121, which are split between zombies, apes, and aliens in descending order of abundance.
These tend to be the most valued, with the pipe-smoking alien CryptoPunk selling for $7.5 million in early 2021. The goofy sprite image has been referred to as the digital Mona Lisa.
How Digital Collectibles Have Value
Those trying to understand NFTs may struggle in understanding how digital collectibles can have value, even significant value for wealthy collectors.
After all, baseball cards have been distributed since the late 1800s and became a staple of American culture in the 1950s, so most of the collectible cards aren’t just collectibles, they’re antiques. That’s especially when they’re signed by baseball players who are dead now.
With Pokémon or Magic: The Gathering, the age, and rarity of the printed card also dictate its value. The rarity element of these collectibles also factors in when the cards have an alternate print style or even valuable misprints.
The same factors come into play with coin or stamp collecting too, deviations from the norm on older specimens tend to be very valuable once a collector base has developed for it.
NFTs are a relatively new concept, so they can’t be regarded as antiques. Why have collectors paid so much for them, then? First, you need to understand that they’re worth whatever somebody is willing to pay for it.
If there’s a collector community with money to hand, they will spend that money to acquire collectibles that interest them or seem like a good investment that can be sold later.
Then, you need to understand that NFTs are even more unique. Consider one of the most expensive baseball cards – the Honus Wagner 1909 card. This was the most expensive card for a long time until recently because it’s one of the rarest.
It was one of the first produced by the American Tobacco Company as part of their marketing campaign but Honus objected before widespread distribution, so the cards weren’t released and approximately 200 were thought to exist.
Today, that number is estimated at 50. Each one can sell for $3.3 million.
This so-called holy grail of baseball cards is the perfect combination of rarity, antiquity, and man-made scarcity due to historical circumstances. At worst, there are still 50 of them out there.
With NFTs, there can be only one. NFTs can be unique in a way that most collectibles have never been unique before. Even with the scarcest of collectibles, more than one exists.
This can be the case with NFTs too but there can also be an NFT portraying a single piece of data that exists nowhere else in the universe.
Twitter CEO Jack Dorsey’s first-ever tweet sold for $2.9 million. You can find the tweet and view it on your desktop right now but as an NFT, it is now owned by one person.
The person who bought it, an early crypto investor and Bridge Oracle CEO Hakan Estavi, clearly saw value in the uniqueness and investment potential of the tweet.
It was akin to a tweet signed by Dorsey himself and, whether Twitter thrives or fails in the future, it’s likely to only appreciate in value because it is wholly one-of-a-kind.
What Are NFT Sales?
So NFTs have been making waves recently with news article after news article about the prices that certain digital assets have sold for.
Some call it a bubble, others say it’s proof-of-concept experimentation for a technology that does have a place in the future of our economy.
Whichever camp you're in, understanding how NFTs are bought and sold is fundamental to understanding them as a whole.
What we’re seeing right now are influencers laundering their influence into cold hard cash through the medium of NFTs. Don’t read the news about the Nyan Cat meme selling for $590,000 and dismiss NFTs as a fad, an overpriced joke, or a bubble.
It’s a distinct possibility that buying the iconic 2011 imagery is probably a secure investment that’ll be worth even more when the 2020s are over when that meme will be viewed with even more nostalgia.
So how does buying and selling NFTs work? Let’s break the process down. You don’t have a sale without a buyer, a seller, and a product. In this case, the product is the NFT.
That NFT could be anything but right now, it’s the digital art world that’s seizing on NFT technology in a big way. Musicians are starting to monetize music and other IPs through NFTs too.
Then there’s the seller, the owner of the private keys for the NFT. If they created the NFT, they’ll have a public key too but it’s the private key that’s pertinent for transactions.
Sellers are creators or those who have bought NFTs and, typically to cash in on the investment, they want to send the private key (and so the ownership) of the NFT to a new owner.
That’s the buyer. Many buyers buy NFTs because they’re interesting and humorous and aren’t too expensive. If you look at the stratosphere of NFT sales, however, then buyers are those with money who want to own a collectible item.
Maybe they’re willing to put their money where their mouth is for an NFT they enjoy or identify with. Often, they’re investing in the NFT with the expectation that it’ll be worth even more in the future.
How To Buy NFTs
NFTs are commonly bought from a marketplace. They’re still emerging, so they’re not available on all platforms where crypto is traded. If you’re interested in buying NFTs, OpenSea, Rarible, SuperRare, and Foundation are the most popular trading platforms right now.
Online retail giants like eBay are also looking into allowing NFT sales for verified users. Different marketplaces will offer different NFTs, so those deep into the crypto space will likely have multiple accounts with a few of these platforms.
Similarly, you then need a wallet. They function a lot like a crypto wallet, and many crypto wallets can even accommodate NFTs.
You download them, set up the secure wallet, connect to the platform and purchase NFTs, where they are then transferred to the wallet to be kept safe.
To purchase NFTs using the wallet, you’ll probably need to buy with cryptocurrency. Many NFTs use the Ethereum blockchain and are priced in their proprietary cryptocurrency, Ether (ETH).
That said, the creator of the NFT and the marketplaces those NFTs are listed on will dictate which cryptocurrencies are required.
If you’re targeting a single NFT, the process of finding compatible marketplaces, wallets, and cryptocurrencies will be relatively simple.
Given the nature of NFTs at the moment, where they’re offered as collectibles or digital art, they might be made available in selective drops. Drops will happen on specific platforms and last for a certain amount of time, and often with a limited supply.
They’ll drop at certain times and can be snapped up in minutes, if not seconds, so you need to be ready to receive them. Art or pack drops sell out fast if there’s a group of people who will buy them up.
When you finalize an NFT purchase, you receive the private key for that NFT. In the eyes of the blockchain, this recognizes you as the owner of this unique piece of data.
How To Sell NFTs
Since many NFTs are bought as investments to be sold once their value increases, those interested in NFTs will want to know how they’re sold too. You sell NFTs by listing them on marketplaces where they’re sold.
Of course, we’ve all seen the examples where digital art has been hosted and auctioned by art auctioneering services but, for most NFTs, they’ll be exchanged through marketplaces.
When listing your NFT for sale on a marketplace, you’ll need to price it and decide the nature of the sale – whether it’ll be sold for a fixed price or an auction.
While some wallets allow for fiat purchasing, most NFTs are bought and sold with ERC-20 tokens. The most popular of these is Ether, as said above, but some other crypto coins have become associated with NFT sales.
You can then “sign” the NFT using your wallet and you have the option to program royalties into every future sale.
This is revolutionary for artists selling their work as NFTs as, once the initial sale has been made, subsequent sales will net you some cryptocurrency as your work proliferates the market.
You can earn a commission whenever the NFT sells to a new person, which can grow into a viable income stream if interest in the NFT is high and the token keeps trading.
For programming in royalties for secondary transactions, OpenSea is a great NFT exchange. Some places will ask for a fee when listing NFTs that can cut into profit, so be aware of that.
When you sell the NFT, you’re transferring the private key that corresponds to that unit of blockchain data to somebody else. Whoever receives that key is now recognized as the proud new owner of the NFT.
