Non-fungible tokens, or NFTs, have become a market mainstay. Although they’re not necessarily new, NFTs have gained steam as artists use them to sell digital artwork, and traders jump on board to make millions of dollars. Large corporations are even getting in on the NFT action, with companies such as Starbucks planning NFTs of their own.
NFT trading topped almost $18 billion in 2021, up more than 21,000% from 2020, according to a report from analytics firm NonFungible.com. Though the NFT market took a hit in 2022 with the onset of “crypto winter,” people are still eager to get into the NFT market.
While the numbers surrounding the NFT market can be dizzying, it’s important for anyone interested in getting into the space to understand what, exactly, an NFT is.
Broadly speaking, an NFT is a one-of-a-kind digital asset. It’s been assigned a specific cryptographic identifier that allows its holder to prove ownership. The data related to its ownership and transaction history is recorded on a blockchain network — typically, Ethereum. The important thing to know is that NFTs are digital, irreplaceable, and tradeable through online marketplaces and exchanges.
While most people may be familiar with NFTs as they relate to digital art, they can potentially be used to “tokenize” a number of other things, such as collectibles (think baseball cards), music, and even personal information like medical records.
Though NFTs seem like a newfangled crypto-related asset, they’ve been around for several years, says Connor Borrego, an NFT expert and cofounder of UniPro, a digital growth agency.
“NFTs started in 2015 as meaningless digital collectibles,” he says. “But now in 2022, they mostly act as membership access to online social communities.”
If you’re interested in making your own NFTs, commonly referred to as “minting,” know that it does require some initial legwork and investment. The cost of minting an NFT, can range from a few dollars to a few thousand dollars, depending on a variety of factors. It all comes down to the specifics.
“You can mint an NFT for super cheap by getting artwork on Fiverr and listing it on OpenSea,” says Lisa Teh, cofounder of Mooning, an Australia-based Web3 marketing agency with specialization in NFTs and the metaverse. More realistically, Teh says investors can expect to spend between $100 and $500 to make an NFT.
But, Teh warns, “a lot of people think that they can create an NFT, post it on a marketplace, and then sell it, become millionaires, and retire on an island. If it was that easy, everyone would do it.”
Here are some of the main costs you’ll encounter:
Note: The cost of minting an NFT can vary wildly. Starting from scratch may cost prospective minters hundreds or even thousands of dollars.
Minting an NFT may sound like a technical, involved process. But for most people, it’s relatively simple. Besides making a couple of choices in regards to wallets and marketplaces, minting an NFT isn’t much more than “just having a file to upload,” says Borrego.
The process itself looks like this: Choose a file to mint and a blockchain network and marketplace to mint on; get your wallet in order and connected; and finally, execute the upload. Here’s the process in more detail:
Many types of content — including images or audio files — can be minted into NFTs. Minters need to ensure that they own the rights to whatever they’re minting (either having purchased them, or as the original creator), as they could face copyright-related lawsuits if they do not.
Choosing what to mint into an NFT is the most critical step in the whole process because it will inform important decisions later, says Teh. Depending on what you plan to do with your NFT (sell it, gift it, etc.), it may be best to mint on certain blockchain networks and list on certain marketplaces. So, give a lot of consideration to this step.
Borrego says that choosing to mint art or anything else that you own can be beneficial. The minting process will take, for example, digital artwork and “stamps on information so owners can see where it is and where it’s going,” he says. That can help creators monetize their creations and open up new avenues to derive revenue from them.
Borrego says that the next step is to choose a marketplace, which acts as a digital exchange where NFTs can be minted, purchased, or sold, such as Rarible or OpenSea. This step will involve a lot of consideration, as some marketplaces work with certain blockchain networks and certain wallets, while others will not. Be sure to do your homework. Fees, too, are something that you’ll need to evaluate. And there are some marketplaces that cater to certain audiences.
“On the bigger marketplaces, there can be a lot of noise,” Teh says. “So, if you’re going to list on a marketplace, look at the numerous ones out there that are for very specific tastes,” she says, adding that some marketplaces, for example, are for sports fans while others could cater to music lovers.
Quick tip: It is possible to mint your own NFTs outside of an exchange. However, the learning curve can be steep. Most people mint their NFTs on marketplaces for an easier process and the ability to list it for sale.
After choosing a marketplace, you’ll want to choose a blockchain network to mint on, and most marketplaces offer a handful of choices. Ethereum is the most popular, and busiest, blockchain network. But if you’re using OpenSea, for example, you can also choose to mint on the Polygon, Klaytn, and Solana blockchains.
Teh warns that although Ethereum is the default for many minters, it is inefficient, and tends to have higher gas fees, which may push some minters to other blockchains.
Next, minters will need to set up, fund, and connect a crypto wallet to their chosen marketplace. Wallets are software programs that allow users to send and receive crypto transactions, and they’re essential to the minting process.
You’ll need to choose a wallet that’s compatible with your marketplace and blockchain, and be sure to fund it before you start minting. That typically involves purchasing ETH and sending it to your wallet’s specific address from an exchange. Experts say some wallets, like MetaMask, are probably the safest route for beginners.
Borrego says MetaMask is very user-friendly and even has an extension for the Chrome web browser to make connecting it to most marketplaces easy. But, be sure you’re taking proper security precautions by protecting your seed phrase — if you lose it, you could be shut out of your wallet forever.
Quick tip: It’s up to you to keep your seed phrase safe. Some experts recommend writing it down on paper and storing it in multiple secure locations, or even a safe deposit box at a bank.
With an account set up on a marketplace, a funded and connected wallet, and a blockchain chosen, the final step is to mint an NFT. Each marketplace will have different steps, but generally speaking, a user can follow a built-in guide to complete the process. It’s usually as simple as uploading a file, filling in some descriptions, pointing it at the correct blockchain, and pressing “mint.”
But remember that there can be fees for minting, unless you use a lazy minting option. And while those fees may require you to pay with crypto, Borrego says that some marketplaces are implementing credit-card payments to make it even easier.
After your NFT is minted, it will live in a collection that you create and get listed on the marketplace. Then it’s yours to do with what you please.
All of this leads to one final question: Is minting an NFT worth it? There’s no direct answer. It will completely depend on your preferences and what you’re looking to get out of it.
If you’re hoping to make a lot of money minting and selling NFTs, the odds are against you, both Teh and Borrego say. But it may be worth it to mint NFTs for your own reasons, such as creating gifts or keepsakes for friends and family. Be sure to weigh the benefits of NFTs with what you’re willing to invest to create them.
Borrego says that he thinks NFTs will be around for a long time, and that we’re currently only scratching the surface of their utility.
“People think of NFTs right now as collectible digital items, and they don’t understand why people are speculating on them,” he says. Perhaps a good way to think of many of the hyped-up NFT projects currently gobbling up traders’ attention is to think of how they’ll be viewed in the future, he suggests.
In effect, many NFTs these days may essentially become “antiques,” Borrego says, and that may appeal to a certain type of investor.
“It’ll be like proof that you were there for the advent of Web3.”
