What is an NFT and how can I make one?
It will have been difficult to avoid hearing the word and phrase, ‘NFT’ – from ‘Weird Whales’ to ‘Crypto Punks’ and ‘Crypto Kitties’. But what exactly are NFTs and how might it be a good thing for my business?
NFT – Non-Fungible Token is a digital version of anything you can make into a computer file – an image, sound, music, film, animation – anything you can turn into a JPG, PNG, SVG, MOV or MPG.
Where it differentiates from just those file formats is that these files can be made unique. And these files can then converted into a digital currency and recorded on a blockchain – an internet-wide way to record in the form of a digital ledger any transaction that’s uneditable, unique and private. This means that the file will live forever and can be passed from one owner to another but only exist once (but we’ll revisit that part again later).
Once this file is converted to a digital file and recorded on a blockchain, it can then be traded and collected. The NFT file can be placed either on public view from your trading account, so that people can see all the NFTs you have collected and what ones are for sale. Alternatively, you can store them offline in something called ‘cold storage’ – basically, similar to a hard drive for complete privacy.
But why trade a digital file? Why trade a Monet or a Renoir? Because they are a unique piece of art that only one person can own at a time. Some argue that an NFT isn’t like owning a physical painting, however, if you own an NFT of, say, a unique piece of digital art created (and verified) by Banksy – you could print it on t-shirts, make prints of it – sell magazine rights to use it and so you see that digital file – or NFT – is a storage of wealth and its yours (just like the Renoir) to do with whatever you like.
And when you no longer want to own it or someone wants it, you can sell it.
There are special platforms and processes needed to follow to turn your file into an NFT and something that can be sold or traded but that is a complex subject and something that there’s no need to go into in this article. Needless to say that the team at Aubergine are skilled and knowledgeable in working on blockchain technology.
The technology is in its infancy – the current NFT market, whilst exploding, is somewhat like websites in the 1990s – the journey has only just begun and the ideas of using NFTs to protect branded goods by issuing an NFT when you buy a high-end branded project, like shoes, handbags or jewellery is just one aspect.
So, what can this do for your business?
Put simply, if you produce anything that has a visual or audio element to it that you want to sell and NFT might be for you.
If you are a designer that produces artwork for posters, prints and other printed good – you could convert some of your designs to NFTs and sell those, too. You always own the rights to the original artwork and the files that you sell can be restricted to just a JPG or you can sell the original artwork file.
If you produce software, music or any form of file that can be digitised, it can be converted into an NFT.
Examples can be found on one of the most popular NFT trading platforms, Opensea. Here, you can see my small collection of artwork made by me, turned into NFTs but if you browse all the different types of collections, you’ll start to see how many possibilities there are.
Let’s go back to the point I made right at the start about how many of the NFT exist. You can choose. If you want to sell a piece of digital art, much like a Renoir, there’s only one – so when it’s put on the trading platform, you can define there is only one and only one person can own it at one time. However, you can also make 10, or 50 or 100 – just like virtual collecting cards so that you can control the supply of them on the marketplace. This is used particular well in the trading cards area – football cards, baseball card – anything like that, there are a set number of them which means the price can rise depending on how desperately the collectors want them.
Making in income
The last part is about how to make the money. So, you’ve decided you want to convert something to an NFT and sell it. Let’s assume it’s just one thing for now – a piece of digital artwork and there will only be one. You set the price you want for it but you can also set a small percentage of every time it’s then resolve for its entire life, forever, that comes back to you. So, if you create an NFT and you sell it for, say, £100. You can set the recurring fee or 2.5% – that means that every single time that NFT is traded from one person to the next, you receive 2.5% of whatever the selling price is. Forever.
Virtual money to real money
As you might imagine, with something so cutting edge, NFTs are paid for in crypto currency – typically a currency called Ethereum (ETH) similar to Bitcoin. These crypto currencies are becoming freely available to most and we can easily guide you in how to set up a crypto wallet and get yourself your first crypto. As I write this, Paypal now offer crypto currency to its users. However, when you sell your NFT – you will then receive your recurring income each time it’s sold in the currency it was sold it – usually Ethereum.
But don’t worry – it’s not that different from using your online banking and, following the right steps and best practice security, it’s as safe as bank online, too.
NFTs are going to be the future of digital asset transfer – it’s entirely possible that homes, trademarks, advertising space in virtual worlds (aka the metaverse) to certificates of authenticity for trainers, sneakers or watches and handbags will become common place.
If you are interested in talking to our expert team, call Mark Tomkins today on 01525 373020 (+44 1525 373020 outside the UK)
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