In the midst of the cryptocurrency craze, a new type of digital asset began making headlines: the non-fungible token, or NFT. Although NFTs have been around since 2014, they became national news in March 2021, when Christie’s auction house sold a piece of digital artwork by Mike Winkelmann, known as Beeple, for a whopping $69 million.
But this wasn’t even the highest-priced NFT ever sold. That honor goes to Pak’s “The Merge,” which sold for an incredible $91.8 million on December 2, 2021. With that type of money involved, NFTs became a global sensation.
Yet, many people still have no idea what exactly an NFT is, or how to buy and sell one. Although the concept of selling an NFT is similar to posting an item on auction site Ebay, the specifics can get complicated. For example, you’ll have to understand at least a little bit about cryptocurrency and the blockchain to successfully create and list an NFT.
But once you’ve familiarized yourself with the process, it does become relatively straightforward. Here’s a quick look at what you need to know about NFTs.
How To Make an NFT
- Create an item you want to turn into an NFT.
- Choose a blockchain.
- Mint your NFT.
- Set up a digital wallet or crypto exchange account.
- Choose an NFT marketplace.
- Upload your NFT.
- List your fixed price or set up your auction.
What Exactly Is an NFT?
An NFT is a digital asset that represents some tangible, real-world item, oftentimes artwork. These creations are tied to the blockchain and are unique representations, which in some cases can give them significant value.
For example, if a well-known artist creates a digital representation of an exclusive work, the buyer of the NFT essentially owns the actual artwork, although in digital form. Like with an original Monet painting, other buyers may own prints or copies of that artwork, but there is only one original.
This differentiates NFTs from other, existing forms of digital creations, which can have little value because they can be endlessly replicated. In fact, one could argue that the primary reason NFTs have much value at all is due to their unique, one-of-a-kind characteristics.
The “non-fungible” part is what gives an NFT its uniqueness. “Non-fungible” refers to the fact that the NFT cannot be replaced with something similar, as it’s a one-of-a-kind object. Bitcoin, for example is “fungible” because no Bitcoin has unique characteristics. Any bitcoin can be exchanged for another bitcoin, just like any U.S. dollar could be exchanged for another.
However, an NFT is a unique, “non-fungible” item because an exchange of two NFTs involves two different items, even if they may appear similar at first glance.
How Do I Create and Sell an NFT?
Creating an NFT is similar to putting up an item for sale or auction on a website like eBay. In the NFT world, there are numerous NFT marketplaces, with exotic names ranging from OpenSea and Rarible to SuperRare, Foundation and Nifty Gateway.
In the simplest of terms, once you’ve established an account at one of these sites, you can create your NFT by simply uploading a digital file of your asset, such as a photograph or original drawing. However, the details are quite elaborate. Here’s a breakdown of how it works.
Create Your NFT
First, you’ll have to choose the item that you want to turn into an NFT. This could be anything from a work of art to a picture, music, a tweet or even a meme or GIF. Of course, you’ll have to own the intellectual property that you want to turn into an NFT.
In other words, if you’re a painter, you can choose any of your own personal creations and turn them into an NFT. But you can’t just download a copy of your favorite Monet painting and try to turn it into an NFT. This is intellectual, or even physical, property theft.
Only original items that you have the legal right to own can be turned into a digital representation that you can sell.
Mint Your NFT
Next, you’ll have to mint your NFT using a blockchain of your choice. Ethereum is one of the most popular blockchains for NFT creation. However, many other options are available, including Polkadot, Binance Smart Chain and others.
While most beginning NFT creators stick to Ethereum — and even many NFT veterans as well — there may be reasons you would prefer a different blockchain, such as lower fees and/or faster transactions speeds.
Set Up Your Digital Wallet or Crypto Exchange Account
Step three is to set up a digital wallet or crypto exchange account. You’ll need a place where you can buy crypto because you’ll have to pay some fees to mint your NFT, and that must occur on an exchange and/or in a digital wallet.
You’ll also want a place to collect your crypto earnings in case you manage to sell your NFT.
Choose Your Marketplace
You won’t be able to sell your NFT unless you have a place to sell it, so the next step in the process is to choose your NFT marketplace. Much like selling an item on Ebay, an NFT market is a place where you can upload your NFT and select a price for it.
There are many places you can upload an NFT for sale, so you’ll want to do some research and pick the one that offers the best chance for you to get the most money for your NFT.
OpenSea is a popular market for a variety of NFTs, but there are also some specialty sites that may attract customers more suited to your particular NFT. NBA Top Shot, for example, is a market focused on basketball-related items.
Note that some marketplaces require you to transact in a specific cryptocurrency. If you don’t understand how a particular market or crypto works, you might want to use one that is Ethereum-based, as this is a popular, well-known and frequently traded crypto.
Upload Your NFT
Once all of these elements are in place — the creation of your NFT, the opening of a crypto wallet, and the selection of a blockchain and an exchange — it’s time to upload your NFT.
Each marketplace has its own requirements for how you can upload a file and what the specific steps are, so you’ll have to follow those instructions to turn your digital creation into a marketable NFT.
Set Your Price
If you have a specific price in mind for your NFT, you can list it at a fixed price and wait for someone to pay it. However, there are other options as well. Just like on Ebay, you might choose to auction your NFT. This way, bidders can compete against one another and hopefully drive up the price of your NFT until it is sold to the highest bidder at the time the auction expires.
On some marketplaces, you can also choose to have an open-ended or “unlimited” auction, which only ends when you choose. You can also typically set a minimum price that bidders have to pay before your NFT can be sold.
In some cases, you can also attach royalties to your NFT, in which you get paid again if it resells on the secondary market.
Are There Fees Involved?
The short answer is yes, there are definitely fees involved in creating and selling an NFT. In fact, fees for NFT creation and transactions can be high. Rarible, for example, charges both the buyer and the seller 2.5% of the transaction price to help maintain the network.
But depending on the platform you use, you might have to pay everything from a listing fee to a minting fee, a commission and a transaction fee, and tracking all of these fees can be complicated.
For example, most NFT marketplaces call their listing fee “gas,” and it isn’t paid directly to the marketplace. Rather, it goes to the miners who process the transaction on the Ethereum network.
It’s essential to understand all of the fees you’ll have to pay throughout the NFT creation and sales process because you might actually end up losing money if the fees are too high and you’re offering a low-cost NFT.
Although fees are likely to fall over time as NFT marketplaces become more popular and competitive, for now, they remain high. If you’re looking to turn a profit on your NFT — which is the goal behind most NFT creation — be sure to incorporate all of the fees you’ll pay and then set a minimum price that gives you an ample profit margin.
- Can I create my own NFT for free?
- While you can create the original work behind an NFT, it will cost you money to list it on an exchange and get it sold.
- How much does it cost to create an NFT project?
- Fees for creating an NFT vary depending on which exchange you use. A listing fee of about 2.5% is common, while additional fees for minting or other transactional costs may apply.
- What can I use to create an NFT?
- Some marketplaces allow you to create and list an NFT directly using their own sites. Others will allow you to upload a wide variety of file types, from JPG or PDF files to PNGs, GIFs, MP4s, MPs, WAVs and many others.
- Can I make my own NFT and sell it?
- Anyone can make an NFT, but whether or not you can actually sell it is another matter. Plenty of listed NFTs never get sold. You'll have to somehow create a buzz for your creation that makes it stand out from others if you want to successfully sell it on a marketplace.