Minting NFT Tokens using ERC-721

What is a Non-Fungible Token (NFT)?

Now that we have explained what NFTs are, we can dive into the extensive history of these assets.

Colored Coins

One could argue that Colored Coins are the very first NFTs to exist. Colored Coins are made of small denominations of a bitcoin and can be as small as a single satoshi, the smallest unit of a bitcoin. Colored Coins can be used to represent a multitude of assets and have multiple use cases, including:

• Property
• Coupons
• Ability to issue your own cryptocurrency
• Subscriptions
• Access tokens
• Digital collectibles

2014 — Counterparty

These memes have an intense fanbase. There is even a type of meme exchange called the Rare Pepe Meme Directory.

Today, Counterparty has numerous projects built on its platform and many of them involve NFT-like assets. You can browse the various projects on Counterparty here.

March 2017 — Rare Pepes on Ethereum

With Ethereum gaining prominence in early 2017, memes started to be traded there as well. In March of 2017, a project by the name of Peperium was announced to be a “decentralized meme marketplace and trading card game (TCG) that allowed anyone to create memes that live eternally on IPFS and Ethereum. ” Similar to Counterparty, Peperium also had an associated token, with the ticker symbol of RARE, which was used for meme creation and paying listing fees.

June 2017 — Cryptopunks

What is the Ethereum Token Standard (ERC)

Some virtual cats were even selling for over $100,000.

CryptoKitties was launched in October 2017 in an ingenious manner by a Vancouver-based company called Axiom Zen. The team had been working on the project for a few months when they released the alpha version during the ETH Waterloo Hackathon, the world’s largest hackathon for the Ethereum ecosystem. With over 400 developers in attendance, it was the perfect place and time to introduce the game. The CryptoKitties team won first place in the hackathon and the game quickly went viral.

The rise of CryptoKitties coincided with the 2017 crypto bull market, which added more fuel to the fire. People were buying, breeding and trading virtual cats like crazy. This opened many people’s eyes to the potential of non-fungible tokens. Axiom Zen then spun out a company called Dapper Labs, which secured $15 million dollars in funding from top investors including a16z and Google Ventures. After witnessing the activity within the CryptoKitties community and seeing top investors pour money into Dapper Labs, people began to realize the true power of NFTs.

2018–2019 — NFT Cambrian Explosion

CryptoKitties blazed the NFT trail but they could not have done it without the prior projects that laid the groundwork by building unique digital assets. This interesting graphic released by nonfungible. com shows just how important CryptoKitties is to the current NFT ecosystem.

This chart shows that people who own CryptoKitties tend to play other NFT games, while people who play other NFT games generally do not expand to play others. CryptoKitties acts as the perfect gateway into the world of NFTs.

CryptoKitties also may have experienced great growth due to the functionality of breeding different cats, which creates an entirely new cat or ERC721 token. There are now endless functionalities for NFTs, including character names (similar to domain names), plots of virtual land, virtual clothing, event entrance tickets, asteroid mining resources, and more. Perhaps the most exciting development within the space is the numerous NFT games and projects that are collaborating with each other to make items interoperable. For example, perhaps a player in one game has a sword that can be brought into another game to become a rare piece of clothing. With interoperability, the possibilities are truly endless.

Where To Next?

The history of non-fungibles is much longer than most people realize. The first attempts at NFTs were in the 2012–2013 Colored Coin era, but I believe now in 2019 we are still exceptionally early. Despite the massive growth we have experienced in the past two years, the space is still extremely young and growth will only continue. In fact, I believe the growth of the NFT ecosystem will accelerate as more people and companies realize the impact that NFTs can have and implement them more. Developers will continue to create innovative uses and interoperable items will be a complete game-changer. I suspect within five years the NFT space will look radically different than it is today, in which case I will have to write yet another update on the history of the ecosystem!

Tools & Development Assets

Pre-requisites to go through the article:

Here is a brief description of each element we use throughout the process based on its documentations:

• OpenZeppelin is a library of modular, reusable, secure smart contracts for the Ethereum network, written in Solidity. It allows to leverage standard, tested, and community-reviewed contracts for its own purposes and can significantly reduce the development time of applications. We will use Presets contracts in OpenZeppelin Contracts 3 to create an ERC721 and deploy using Truffle.
• Truffle is a development environment, testing framework and asset pipeline for Ethereum, aiming to make life as an Ethereum developer easier.
• Node JS. We need to use some Javascript code and Truffle, what needs Node Package Manager (npm) to be installed.
• Virtual Studio Code or any other IDE which supports Solidity and JavaScript to modify some code and in order to customize your token.
• Infura , that provides access to public nodes for all testnets and the main network, via both free and paid plans.
• IPFS (InterPlanetary File System) is a protocol and peer-to-peer network for storing and sharing data in a distributed file system. IPFS uses content-addressing to uniquely identify each file in a global namespace connecting all computing devices.
• Pinata provides secure and verifiable files for your NFTs. Whether you are a platform, creator, or collector, simply upload through Pinata, copy your IPFS CID, and attach to your NFT before minting to have secure and verifiable NFT files.
• The asset that you want to tokenize (image file in this case).

Metadata

There are many approaches to solve the metadata storage. For this article I’ve chosen to do it off-chain (so, I’ll host the metadata out of the blokchain) but in a decentralized way using IPFS to retrieve the metadata.

To retrieve the data we have off-chain, OpenSea reads the ERC-721 Json Schema, what makes things easier.

Since we are going to deploy static NFT, we will need to set-up all the metadata in advance for every token we want to deploy.

This is a reference for the ERC721 Json Schema:

This would be a real example of an NFT metadata:

OpenSea’s Metadata documentation

You can check the links below the article if you want to see examples already made and its result.

Upload metadata to IPFS & Pinata

Pinata IPFS Service

First thing we will do is upload the images to Pinata that we want to attach to our tokens, it will allow us to keep the image stored immutably and decentralized manner.

After that, we’ll see our image in ‘My Files’. Click on it and copy the URL to the metadata text file associated.

Finally, we should have a folder as the one below containing the different files with our metadata.

Our metadata folder for tokens 0, 1 and 2.

We will finally upload the folder to Pinata.

And it will give you an URL that you will need later for the contract deployment script.

If you click on it, should bring you to a folder like this:

Should be something like this:

You can check inside how my examples have been done.

Setting up the environment

You will need WSL2 to execute every command on Windows OS

Start creating a new project:

npm init -y

Then, install OpenZeppelin Contracts which contains many different Solidity files which we will use for our ERC721’s implementation:

And installing the development framework for deployment, which will be Truffle for this tutorial:

npm install truffle

Setting the Truffle project

To use most Truffle commands, you need to run them against an existing Truffle project. So the first step is to create a Truffle project.

npx truffle init

This command will create a directory called ‘contracts’ and a configuration file (‘truffle-config. js’), a Javascript file which can execute the necessary code to create and manage your truffle environment configuration, e

We’ ll do a dive into this file later.

ERC721 & Extensions

Smart-contracts in Solidity are kind of similar to the “classes” concept in the OOP paradigm. Contracts contain persistent data in state variables, and functions that can modify these variables. Calling a function on a different contract (instance) will perform an EVM function call and thus switch the context such that state variables in the calling contract are inaccessible.

Basically we are importing different Solidity smart contract with different functionalities in just one file that combine all of them to give us most of the potential of the standard.

And these functionalities allow us to execute different transactions related to NFTs and the ERC721 standard :

• Burn. Which allow you to send the token to a ‘black hole’ account with no-access to the public, whom can only check the balance but not its content.
• Pause. Allows you to pause the transfers of the NFT, what could be useful if for any reason you would like to stop the marketability of the asset.
• Add Metadata. Return a token URI. Our token URI will be baseUri + tokenId, which will be automatically added and increased with every minting.

The Preset contracts have already been compiled, so we only need to copy the artifacts to the build/contracts directory:

mkdir -p build/contracts/

Deploy contract script

Don’t forget the last ‘/’ on the baseUri!

Here we are setting (in order):

• The contract we are using
• The name of the collection
• Symbol of the NFT
• baseTokenURI pointing to the IPFS which points to our metadata.

Migrations

As written in Truffle docs: Migrations are Javascript files that help you deploy contracts to the Ethereum network. These files are responsible for staging your deployment tasks, and they’re written under the assumption that your deployment needs will change over time.

So, migrations are really useful when you want to manage the interactions of a bigger project and you want to deploy different smart-contracts than rely on each other at different times.

You can find this file inside the migrations directory as ‘1_initial_migrations. js’

And it’s Solidity code, which you can find in the contracts folder inside your project directory.

Deploy to a public testnet (Rinkeby)

An Ethereum testnet is a network very similar to the main one but in which the ether has no value and can be obtained for free. This makes them especially useful for purposes like testing the transactions cost.

What do we need to deploy on a public testnet?

• Get hold of a testnet node
• Create a new account
• Update our networks configuration in our Truffle configuration file
• Fund our testing account

Create a new testing account

To send transactions on a testnet you need an Ethereum account. Truffle and mnemonics package provides you this:

*(If you don’t have it installed, you’ll be asked for it)

And this will print on your console screen a serie of words which you will need to sign the transactions with your account, so keep them to write them later in the secrets. json file.

Keep your mnemonics safe, even for testing purposes.

Update your networks configuration in our Truffle configuration file

After the installation is completed, we will modify the truffle-config. js file with a new connection to the Rinkeby’s testnet.

Should look like this:

A secrets. json file is required inside the project directory in order to not hardcode your mnemonics and your projectId (from Infura). You can use any other secrets-management solution you like as long as it’s safe.

In this case, the file used should contain something like this:

OpenSea

Now we will list our NFT in OpenSea to make it visible and buyable by anyone.

To obtain the address of our contract on Rinkeby we can use the Truffle console:

Go to Opensea and click on ‘My Collections’, and then the three vertical dots to ‘Import an existing smart contract’.

After choosing ‘Live on testnet’, copy & paste your smart contract address:

This is a common issue, Opensea will display your tokens, but it might not be instantaneous. As long as you can see the token contract and transactions on Etherscan Rinkeby, you know it is a valid ERC-721 contract and has minted X items. Sometimes you have to wait 12/24 hours to get their NFTs to appear.

It could get a bit of time until OpenSea gets the metadata, just refresh pressing that button.

The example I made for this tutorial can be found in here:

And more in another profile where you can find a collection made with Generative Adversarial Networks and some different types of properties on its metadata:

Import it to your Metamask wallet

As well, you should be able to import your NFTs into your Metamask wallet. Just open the Metamask Chrome extension of the address you passed for the minting earlier, and select ‘Import Tokens’ down in the menu. You will be asked for the contract address and after you copy it there, it will set the token symbol you passed earlier automatically. Also, you need to select the decimals.

Next steps

Many possibilities at this point to further develop your NFTs:

• One of them could be to study how to make the deployment on the mainnet as well as how to estimate the cost.
• Another could be the incorporation of oracles in contracts to carry out verified off-chain operations.
• Check how to incorporate all metadata directly on-chain and check how the gas and fees work.
• You could use an API to expose centralized metadata.
• Create dynamic NFTs.

What is a Non-Fungible Token?

Fungible means to be the same or interchangeable. For example, Ethereum tokens, all the members of a particular token class, have the same value. The same can be said of Cardano tokens. Fungible tokens are interchangeable 1:1.

With this in mind, NFTs are unique; each one is different. Every single token has unique characteristics and values. The types of things that can be NFTs are collectible cards, artworks, airplane tickets, etc. They are all clearly distinguishable from one another and are not interchangeable. Think of Non-Fungible Tokens (NFTs) as rare collectibles; each has unique characteristics, unusual attributes, and most times, its metadata.

What is ERC-721?

ERC stands for Ethereum Request for Comment, and 721 is the proposal identifier number. ERCs are application-level standards in the Ethereum ecosystem, they can be a smart contract standard for tokens such as ERC-20, the author of an ERC is responsible for building consensus with the Ethereum community and once the proposal is reviewed and approved by the community it becomes a standard. You can track the recent ERC proposal here. ERC-721 was created to propose the functionality to track and transfer NFTs within smart contracts.

ERC-721 defines some functions with compliance to ERC-20. This makes it easier for existing wallets to display simple token information.

Use cases of Non-Fungible Tokens (NFTs)

Now that we know what ERC-721 tokens are and how they work let’s see how we can build and deploy our own tokens.

We’ll deploy our contract on the Ropsten testnet. To get started, you will need the Metamask browser extension to create an ETH wallet and some test ETH, which you can get by going to the Ropsten faucet. You’ll need to select Ropsten Test Network on your Metamask wallet and copy-paste the wallet address into the text field in the faucet, then click Send me test Ether.

Adding Files to IPFS

Step 1: Creating IPFS repo.

Step 2: Starting the IPFS daemon.

$ ipfs daemon

Step 3: Adding an image to IPFS

Go to the first terminal window and add the image to IPFS (art. png here).

$ ipfs add art. png

Step 4: Adding JSON file to IPFS

Create a JSON file nft. json and save it in the same directory as the image.

adding files to ipfs

$ ipfs add nft. json

Creating our own token.

For ease and security, we’ll use the 0xcert/ethereum-erc721 contract to create our NFT. With 0xcert/ethereum-erc721, we don’t need to write the whole ERC-721 interface. Instead, we can import the library contract and use its functions.

Head over to the Ethereum Remix IDE and make a new Solidity file, for example — nft. sol

Explanation of the code above:

Line 2: Declaring the solidity version.

Line 4-5: Importing 0xcert/ethereum-erc721 contracts.

Line 7: Starting our Contract named newNFT and mentioning it’s extending NFTokenMetadata and Ownable contracts.

Line 9-12: Initializing the constructor and setting name, a symbol of our token.

Line 14: Declaring function mint with three arguments, variable _to of type address which will store the address of the receiver of NFT token, variable _tokenId of uint256 type which will hold the token id, variable _uri of type string which will store the URI of the JSON file. Declaring mint as external means, it can be accessed from other smart contracts and outside the self scope.

Line 15: Minting token using the address of the receiver and token id.

Line 16: Setting token URI using token id and URI of JSON file.

Compile the smart-contract and deploy it using injected Web3 (make sure to select Ropsten testnet on Metamask before compiling the contract). Approve the transaction from metamask.

If you receive an error message before deployment, “This contract may be abstract,” make sure to select the appropriate contract under the Contract tab.

Confirm the transaction in Metamask

• Add your Ropsten address in the _to the field.
• Enter any Big number value in the _tokenid field (we suggest 1 since it’s the first).
• Add URI of JSON file in the _uri field, which we obtained in the previous section.

Click on transact and confirm the transaction from metamask. Now you have the token on the Ropsten chain.

You can check other details like name, symbol, owner, or tokenuri by entering the token id we mentioned earlier.

What is NFT? 10 Minutes Video Tutorial

We can describe an NFT as a cryptographic token that defines an asset uniquely. It can represent both a digital asset such as an image, but it can also track real-world assets, such as a house or car, or a song, for example. As you can uniquely define assets, this means you can also prove ownership over said assets, and moreover, prove their authenticity.

You might wonder why we need non-fungible tokens to uniquely track assets? The problem with regular tokens created using the ERC-20 standard is that they are divisible and can be interchanged.

We don’t want this property for tracking unique assets. This would mean you can divide your digital image or physical car into different tokens and distribute it. That would defeat the whole purpose of non-fungible tokens, as you want only one of them pointing to a single asset. Moreover, if we can make copies of tokens, it becomes impossible to uniquely define them.

For that reason, non-fungible tokens solve the interchangeability problem. A regular ERC-20 token can be interchanged with any other ERC20 token. Again, ERC-721 tackles this exact property. Therefore, each NFT token tracks a different asset and can’t be interchanged with another asset.

To give you a better understanding, let’s take a look at a fungibility example. The fungibility property matters most for digital currencies such as Bitcoin. This allows people to freely trade Bitcoins with each other as it doesn’t matter which Bitcoin you own.

What are the Characteristics of Non-Fungible Tokens?

We’ve already discussed the importance of uniqueness. NFTs allow you to uniquely define an asset by providing metadata that describes the asset and sets it apart from other assets.

For example, a project, such as Decentraland, sells virtual pieces of land. To uniquely define each piece of land, the metadata consists of virtual coordinates and the properties of the land, such as the percentage of land that’s covered by grass or what buildings it has.

Rarity

Rarity, also referred to as scarcity, is an element that makes NFTs popular. With a traditional ERC20, token developers can freely define the limits for the token. Let’s say you want a supply of 1,000,000 tokens? Yes, that’s possible. Do you want more tokens? Just increase the total supply within your smart contract (different algorithms put different rules on that possibility or prohibit it entirely).

Someone else can’t register the same asset for a second time, which makes assets rare. In other words, rarity gives value to NFTs, as long as people want to spend money on them. To get back to the Decentraland example, you can truly own a piece of land in a game and trade it just like a real piece of land.

Indivisibility

Lastly, you can’t split NFTs. For example, you can own one full bitcoin. However, if you don’t have enough money to buy a full bitcoin, you can split a bitcoin into smaller denominations and buy 1/10 of a bitcoin. The denominated units of bitcoin are known as satoshis.

How do Non-Fungible Tokens work?

As mentioned before, Ethereum introduced the ERC-721 standard that allows developers to define unique assets. It was finalized on the 24th of January 2018 and defines the functions for Ethereum contracts to comply with it. However, the ERC721 metadata contract is much more interesting for us as the real magic happens here.

We can provide both a name and symbol for the NFT we want to define. Furthermore, we have to provide a URI that points to a JSON file that describes the unique properties of the NFT. A JSON file is another form of data notation where we keep track of properties such as name, description, and image URL to further define the NFT.

Why do we need non-fungible tokens?

NFTs are very convenient for digital economies. The gaming industry, for example, is home to many micro-economies. Just take a look at games such as CS:GO, League of Legends, or Fortnite: Battle Royale. Each of those games hosts an economy of in-game assets that can be traded among players. Players often receive in-game assets for winning a game, such as skins for their avatar or stickers for their weapon.

Source: CSGO marketplace

Here, gamers are willing to pay money for receiving a beautiful skin to enhance their gaming experience. However, gamers do not truly own those assets, and often, the game can still control the price for in-game assets or make modifications to a particular skin which can cause its price to drop sharply. This has happened in the past with CSGO skins.

To avoid this:

“NFTs are a great use case for gaming economies so that digital assets can’t be altered, the scarcity can be controlled, and gamers can trade these digital assets

This would even open up the possibility to create inter-game economies where a weapon or avatar skin can be used across different games.

Furthermore, the decentralized identity movement also benefits from NFTs as you can link physical properties such as your house or car to your decentralized identity, becoming a true proof of ownership where you can trustlessly transfer assets in a global market.

To summarize, here’s a shortlist of possible representations for NFTs:

• Collectibles
• Art: both physical as digital
• In-game items, such as skins or stickers
• Items in a virtual world, such as a piece of land
• Real-world assets, such as cars or houses
• Identity-related properties, such as certifications or medical history.

Next, let’s list five popular projects using NFTs.

Which projects are actively using NFTs?

Many projects have introduced NFTs. Let’s take a look at some of the most prominent projects that make use of this technology.

It’s impossible not to talk about CryptoKitties as this was the first use case of NFTs to hit mainstream media. Its concept is closely linked to that of Pokemon Go. Instead of collecting Pokemons that each have unique characteristics, you can collect digital crypto cats that come with certain characteristics. Through breeding cats, you can create new cats and so discover new characteristics.

(Source: CryptoKitties tutorial)

Decentraland

Next up, Decentraland is a virtual reality world in which you can own a piece of virtual land. The game allows you to further develop your piece of land or build things on top of it. All of these details are stored in the metadata of your NFT. Most importantly, the game allows you to trade virtual land with other gamers so you can create large virtual communities.

Gods Unchained

Remember playing card games and exchanging them with your friends, such as Yu-Gi-Oh? Some collectors went as far as listing cards on eBay or other online marketplaces to complete their collection. As you can see, it wasn’t easy back in the days to trade and collect cards. Card collectors had to deal with various uncertainties –

• What if I pay for a card and don’t receive it?
• What if the card I just bought online is counterfeit?
• How do I prove ownership of a card after buying it?

Gods Unchained has created a collectible card game where cards are issued as NFTs. Therefore, solving all of the above problems as the ownership of cards can be transferred digitally, and you can verify the authenticity of each card. Furthermore, you can quickly exchange ownership of cards via a simple Ethereum transaction.

NBA Top Shots

It’s a novel concept where different moments from various NBA games are captured and then minted into NFTs. There are various tokens with a different rarity.

For instance, some moments are only minted into a few NFTs, while others – into thousands. This is why some are skyrocketing in value as investors flood the market to own them.

More interestingly, the platform has quickly risen to become one of the most hyped ones, and every pack drop receives thousands of people on the waiting list, eager to participate.

OpenSea Marketplace for NFTs

Lastly, it’s worth mentioning the OpenSea marketplace, which allows for any NFT to be auctioned on the platform. OpenSea acts as a decentralized marketplace where trading happens through a smart contract. It allows you to trade more than 200 types of NFTs, including CryptoKitties, SuperRare art, Gods Unchained cards, and even Ethereum domain names.

How to Buy NFTs?

Now that you’re aware of what NFTs are let’s see how you can buy them. First off, there are a few very popular marketplaces that are booming with volume on NFTs. One of them is OpenSea, and the other one is Rarible.

Let’s have a look at how to buy an NFT on OpenSea. To use both of them, you need to connect an ERC-721 compatible wallet such as MetaMask.

This is how the browsing section of the platform looks like. As you can see, on the left side, you can find various collections that are usually the ones trending the most.

Below each NFT, you can see how much time there is until the auction is completed. For this example, we’re clicking on the first available NFT – the one of the Wrapped MoonCat.

This is how the specific NFT buying page looks like. You have all the information needed in front of you. This includes the price history (if there’s any trading data), the creator, a description of the NFT, as well as the current offers down below. From here, there are two options.

First, you can buy the NFT directly for its listing price. In this case, it’s 0,9999 ETH. If you want to participate in the auction, however, you need to “make an offer” using the button down below. If your offer is accepted, your account will be debited, and you will receive the NFT in return for the ETH.

NFTs and Beyond

So, how did NFTs manage to receive value? It’s the same as asking why a particular painting is valued at 1,000 euros. Why would you pay $1,000 for a physical painting that may as well be counterfeit as you can own a digital painting of which you know you are the sole owner, and you can prove its authenticity.

It’s also interesting to note that some particular NFTs have absolutely exploded in value. For instance, Beeple’s “The First 5,000 Days” NFT sold for a whopping $69 million.

SPECIAL OFFER (Sponsored)

Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).

PrimeXBT Special Offer: Use this link to register & enter POTATO50 code to receive up to $7,000 on your deposits.

What does NFT mean?

NFT stands for «non-fungible token. » At a basic level, an NFT is a digital asset that links ownership to unique physical or digital items, such as works of art, real estate, music, or videos.

To really get a handle on NFTs, it’s helpful to get familiar with the economic concept of fungibility.

• Fungible items can be exchanged with one another with ease because their value isn’t tied to their uniqueness. For example, you can exchange a $1 bill for another $1 bill, and you’ll still have $1 even though your new bill has a different serial number.
• Non-fungible items aren’t interchangeable. With NFTs, each token has unique properties and isn’t worth the same amount as other similar tokens.

So why are people shelling out so much money for NFTs? «By creating an NFT, creators are able to verify scarcity and authenticity to just about anything digital,» says Solo Ceesay, co-founder and COO of Calaxy. «To compare it to traditional art collecting, there are endless copies of the Mona Lisa in circulation, but there is only one original. NFT technology helps assign the ownership of the original piece

Selling NFTs has been a lucrative business in the art world. Here are a few examples you may have heard about:

• Digital artist Beeple sold «Everydays — the First 5000 Days» for $69.3 million through a Christie’s auction.
• A 20-second video clip of LeBron James «Cosmic Dunk #29» was sold for $208,000.
• A CryptoPunk NFT sold for $1.8 million at Sotheby’s first curated NFT sale.

Other people may be able to make copies of the image, video, or digital item that you own when you buy an NFT. But, similar to buying a unique piece of art or limited-series print, the original could be more valuable.

How NFTs work

As the underlying technology and concept advances, NFTs could have many potential applications that go beyond the art world.

For example, a school could issue an NFT to students who have earned a degree and let employers easily verify an applicant’s education. Or, a venue could use NFTs to sell and track event tickets, potentially cutting down on resale fraud

What does it mean to mint an NFT?

You can create a collectibe as a single image or as multiple images. Depending on the marketplace you use to host your NFT, you may be able to add a name, description, and other metadata to your token. You’re also able to set royalty amounts on your NFT, which are percentages you will make from every subsequent sale on the secondary market.

What’s the difference between NFTs and cryptocurrency?

Cryptocurrencies aim to act as currencies by either storing value or letting you buy or sell goods. Cryptocurrency tokens are fungible tokens, similar to fiat currencies, like a dollar. NFTs create one-of-a-kind tokens that can show ownership and convey rights over digital goods.

How to buy an NFT

You can buy, sell, trade, and create NFTs from online exchanges or marketplaces. The creator or current owner may choose a specific price. Or, there may be an auction, and you’ll have to bid on the NFT.

• Foundation: A community-curated marketplace that requires creators to be invited by other creators who are already part of the platform.
• Nifty Gateway: An art-focused marketplace that works with big-name brands, athletes, and creators.
• OpenSea: One of the first and largest marketplaces where you can find NFTs for a wide-range of collectibles.
• Rarible: Offers a range of NFTs with an emphasis on art. Uses its own RARI token to reward members.
• SuperRare: A marketplace that focuses on curating and offering digital art.

The sign-up process can vary depending on the marketplace. Generally, you’ll buy NFTs using a cryptocurrency, such as ether (Ethereum’s native cryptocurrency), although the price may also be listed in dollars. Depending on the marketplace, there may be different fees associated with each transaction.

The bottom line

While there may be many practical applications for NFTs in the future, they’re primarily used with digital art today.

«For creators, NFTs create a seamless way to sell digital art that might not have much of a market. Additionally, there are ways in which creators can get paid fees for each subsequent sale of the art,» says Ceesay. «On the flip side, collectors are able to speculate on digital art as well as have bragging rights on rare collectibles on the chain

If you’re considering purchasing an NFT as an investment, know that there’s no guarantee it will increase in value. While some NFTs sell for thousands or millions of dollars, others may remain or become worthless.

A diagram showing the right to own of an non-fungible token and linked file. In most cases, it is heavily dependent on the token’s smart contract.