SINGAPORE – Singer Madonna grabbed the headlines in April when she bought a Bored Ape Yacht Club non-fungible token (NFT) for 180 ether, a cryptocurrency worth US$560,000 (S$777,000) at the time.
NFTs are digital assets that exist on decentralised online ledgers called blockchains.
What Madonna bought was the image of a cartoon ape.
The next month, she worked with digital artist Michael Winkelmann to release her own NFT series titled Mother Of Creation.
These are three digitally rendered videos that recast her as a nude woman giving birth to flora, fauna and technology.
NFTs have risen in popularity in recent years as investment assets, digital collectibles and proof of ownership of real-world objects, with content creators, artists and celebrities joining the scene in recent times. About US$25 billion worth of tokens were sold last year.
Mr Winkelmann, who is known as Beeple, has also created other NFTs, including one which was sold to a Singapore-based buyer last year for about US$69 million worth of Ether then.
In Singapore, influencer Irene Zhao has reportedly sold more than 1,100 NFTs – showing her in various poses – for a total of about $7.5 million in cryptocurrency.
How do you create an NFT – also known as minting – and sell it?
Here is a quick guide from The Straits Times on how to do so on NFT marketplace OpenSea.
As most NFTs are sold for cryptocurrency, consumers looking to mint an NFT should first have a cryptocurrency wallet.
This wallet is a device or program that stores the passwords which give owners access to the cryptocurrencies they own.
Physical wallets commonly look like USB thumb drives, while online wallets exist as software or apps.
An example of an online wallet is MetaMask, which is available as both an Internet browser extension and an app.
The wallet allows users access to the Ethereum blockchain, where a majority of NFTs exist, and its native cryptocurrency Ether.
Before minting an NFT, users should choose the blockchain on which to create the token.
OpenSea allows users to select from several blockchains on which to mint an NFT.
The most popular one it supports is the Ethereum blockchain.
Other online platforms and apps that can be used to mint NFTs differ in the blockchains that users can create tokens on.
For example, users of NFT marketplace Solsea can mint NFTs only on the Solana blockchain, while NinjaFT users can create tokens only on the Binance Smart Chain.
Users can also create NFTs directly on the blockchain using programs known as smart contracts.
To mint an NFT on OpenSea, users should first connect their cryptocurrency wallet – such as MetaMask – to the platform.
They then choose a digital file – an image, video, audio or 3D model – that the NFT will be based on.
Users upload the chosen file onto the platform or app, and fill in details such as the NFT’s name and description.
This step creates the NFT on OpenSea’s servers, but the token does not exist on the Ethereum blockchain yet.
In some blockchains like Ethereum, NFT creators must first pay an administrative fee in cryptocurrency – which can be termed “gas fee” or “network fee” – for the token to be uploaded onto the blockchain. This makes the new token visible for sale to the rest of the blockchain users.
The fee amount differs between blockchains and can fluctuate depending on factors such as the number of NFTs being minted at the time.
But OpenSea also allows a user to create an NFT on the Ethereum blockchain without requiring them to pay any administrative fee – a method known as “lazy minting”.
Instead, the first buyer of the NFT bears the cost of the administrative fee. The NFT exists only on the platform’s servers until it is bought and then automatically uploaded onto the blockchain.
When listing an NFT for sale on OpenSea, a user can choose between two types of sale – a fixed price or a timed auction.
In a timed auction, the NFT is put up for sale at a starting price decided by its owner or creator.
The owner or creator can choose to sell the NFT to the highest bidder after a set period of time, or have the starting price decrease over time to a minimum amount and be sold to anyone who is willing to buy the token at any point in time.
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MCI (P) 031/10/2021, MCI (P) 032/10/2021. Published by SPH Media Limited, Co. Regn. No. 202120748H. Copyright © 2021 SPH Media Limited. All rights reserved.
