The world of blockchain and cryptocurrencies has progressed a lot since its beginning in 2009. Today, there are numerous niches within this rapidly growing industry, such as DeFi, blockchain gaming, etc.
One such niche is the NFT space. If you’ve been following cryptocurrencies and blockchain, there’s a great chance you’ve come across NFTs. The last couple of years have seen rapid growth in NFT projects and an astronomical surge in the amount of revenue NFT has brought in the blockchain industry.
I’ve been following the NFT space for quite some time, and it is pretty vast in terms of how the NFTs are being leveraged in various industries such as entertainment, art, gaming, books, etc.
Here are some tidbits about NFTs and their growth across industries such as art, gaming and entertainment.
As someone who started without knowing much about NFTs, it was quite a hassle to understand their various facets. Right from knowing its history, to how it works, to diving into its usage in multiple industries, everything required me to search in different corners of the web. So I thought, why not create an all-encompassing guide to NFTs in 2021.
I’ll be covering the topic from scratch and moving on towards aspects such as where they can be used, how you can benefit from them, case studies in different niches, popular marketplaces, and more.
So let’s jump right in.
Table Of Contents
- What Are NFTs?
- History Of NFTs
- Benefits Of NFTs
- How To Create And Sell Your Own NFTs?
- Best NFT Marketplaces For Africa
- NFT Case Studies
- Disadvantages Of NFTs
NFTs are non-fungible tokens that can represent entities both tangible and intangible. For instance, take Bitcoin. If you exchange one Bitcoin with someone for one Bitcoin in return, the value is the same. This means Bitcoins or cryptocurrencies are fungible because you can exchange them like for like.
Let’s say you and your friend decide to exchange 1 Bitcoin. For that, you send 1 Bitcoin to him and they send 1 Bitcoin to you. Once the transactions pass, both of you will have 1 Bitcoin whose value will be the same. Moreover, there is no differentiation between your Bitcoin and their Bitcoin. So, this is why the cryptocurrency Bitcoin is fungible.
However, NFTs are non-fungible because each NFT represents a unique item that cannot be exchanged like-for-like. So even if I exchange an NFT with someone else, both of us would end up with two different NFTs, which may be of varied values.
For instance, you have an NFT of a sports trading card and your friend has an NFT of another sports trading card. Both of you like what the other has and decides to exchange them. However, the value or price of both the trading cards may not be the same. Even if they are, they both are different trading cards. This is why NFTs are called Non-fungible tokens.
Some of the most common things that NFTs represent in 2021 are digital art, paintings, music, books, etc. However, NFTs are not limited to only these. They have been used and can be used for so many other things. Let me share a glimpse of that by walking you through the history of NFTs.
Here’s a small video to further explain the difference between non-fungible and fungible tokens.
The idea of NFTs first emerged around 2012-2013 as colored coins. The idea behind this was relatively simple. To represent real-world objects such as equities, bonds, lease papers, real estate, etc. These NFTs would then be proof of ownership of any of these assets.
However, the growth of NFTs went in a direction that nobody had anticipated.
Over the years, various companies and blockchain projects began using NFTs for crypto art, trading cards, limited-edition collectibles, memorabilia, avatars, etc.
Between 2018-2021, people and celebrities from various industries joined the bandwagon to create their own NFTs. Musicians, actors, sports players, you name it.
Even independent creators such as artists, writers, authors, etc., began showcasing their work on NFT marketplaces and platforms, thus increasing their reach and ability to earn from their work.
For instance, in numerous African countries such as Kenya and Nigeria, photographers and digital artists are putting out their work as NFT collections. Besides them, even athletes such as Eliud Kipchoge, a marathoner and world record holder, sold NFTs worth $50,000. The collection had video highlights of his career.
Another instance of this is when a Nigerian artist named Jacon Osinachi sold crypto art worth $75000.
As you see, NFTs have come a long way and today hold immense advantages for creators and celebrities alike. Here are a few simple benefits of NFTs:
- NFTs provide autonomy to independent creators. They can showcase their skills and create anything they wish without much interference from others.
- Creators can get paid directly via NFT marketplaces without going through numerous intermediaries like in the real world.
- Geographical barriers are no longer a challenge, as anyone from even the remotest parts of Africa can reach audiences from other countries and continents.
- There’s a clear ownership proof for creators, which would reduce challenges such as counterfeit items, theft of intellectual property, etc.
- Celebrities now have yet another avenue to connect with their fans by sharing collectibles and memorabilia, which are exclusive to NFTs and come in limited editions.
- Furthermore, celebrities can share a sneak peek of upcoming projects, behind the scenes, etc., via these NFTs to their more loyal fans.
If you’re someone trying to create your own NFTs, you must lead in with a strategy that begins from what you’re trying to sell and ends with how you market it.
If you’re an independent creator, it is vital that your NFTs are unique and can add some sort of value to the buyer’s life. This can be either engagement, entertainment, or anything that can make the audience want to buy your NFT.
Furthermore, marketing is perhaps another significant aspect of this. Celebrities such as Twitter CEO Jack Dorsey can sell their tweets for ridiculous sums of money, but that wouldn’t be the case with independent creators who’ve designed and created something outstanding.
Understand how best to market your NFTs. Try to give the audience a little taste of what they would get on buying your NFT collection. Speak to the audience in a voice and tone they understand. Be part of communities online and build a following around your NFTs, So before creating your first NFTs, these are a couple of factors to build your strategy around them. Now, let me take you through how to create/mint and sell your own NFTs.
- Create an Ethereum wallet if you don’t already have one.
- Add ETH to this wallet, either by depositing it from other wallets if you own ETH or buying ETH using fiat money.
- Choose an NFT marketplace/platform where you want to create your NFT and create an account there.
- Link your Ethereum wallet with the platform.
- Create your NFT collection by choosing what items you want to transform into NFTs.
And that’s it. You’ve created your first NFTs.
Here’s a small video that briefly explains NFTs and how you can create and sell them.
While choosing your marketplace, you need to consider factors such as gas fees, copyright policies, etc. A gas fee is an amount you pay to create an NFT or perform a transaction.
Based on my experience, here are the top 3 NFT marketplaces that you can leverage to buy, sell and trade NFTs.
Open Sea is one of the leading NFT marketplaces globally, with more than 20 million users active on the platform. Popular for trading cards, art collectibles, and sports memorabilia, Open Sea is perfect for digital artists and sports enthusiasts.
You’ll need an Ethereum wallet, Trust Wallet, Metamask, etc., to be able to perform transactions on this platform. Open Sea charges 2.5% on every transaction, which is a competitive rate in the industry. In fact, it is much cheaper than platforms such as SuperRare, which charges about 15% for every transaction.
The UI is simple, straightforward and one can easily navigate through the various tabs and features available. Furthermore, it ranks the most popular NFTs by trade volume for the audience to know what’s currently trending.
Rarible is yet another famous NFT marketplace that is popular for games, metaverses, memes, arts, photography, and more. Like Open Sea, the transaction/gas fee on this platform too is 2.5%. However, here the platform charges 2.5% from the buyer as well, with an option for the seller to cover the cost if they wish to.
While Open Sea has a very e-commerce website vibe, from the get-go, Rarible is pretty vibrant and bling when it comes to its UI since it showcases some of the popular and quirky NFTs on the platform.
Rarible also allows users to possess its native token that acts as a governance token. It enables users to be a part of decisions that determine how the platform should grow further.
Compared with Open Sea, the overall fee is relatively high, and the customer support is limited.
SuperRare specifically caters to the art niche and has a highly selective process. Creators and artists would have to submit their work to the platform for them to screen it and see if it fits their ethos and kind of work. Only if one passes the screening stage can one host their NFTs on the platform.
Moreover, the fees on this platform are multiple times more than that of Rarible and Open Sea, with about 15% per transaction.
The UI is pretty sleek, elegant and gives the vibe of an authentic art gallery. The curation process brings the best artworks to the forefront, and the best artists can shine here. However, it does become less inclusive than other platforms and, hence, becomes a space for fewer people.
Nevertheless, if you think you’ve got the right skills and taste, you can create NFTs on this platform and showcase your work.
NFTs have opened a world of opportunities for artists that come from all walks of life. A few of the significant advantages are:
- Inclusivity for anybody to create art and sell it to people across the globe.
- Artists can now support themselves by directly reaching their audience who buys their work.
- Copyrights and other such issues are solved since NFTs can show proof of ownership.
In various African countries such as Nigeria, Kenya, and Zimbabwe, artists are banking on crypto art to earn a living and showcase their skills. Jacon Osinachi is a pioneer of this space in Africa and has been known to be one of the most bankable artists in the NFT world.
However, there are still challenges that need to be addressed. Considering the sheer volume of the population, only a small percentage of the people have penetrated the barrier of data and understanding NFTs.
It is difficult for people to get into the NFT space, understand it and then leverage it for their own means due to the complexity of this new industry. To surpass this barrier, artists such as Jacon Osinachi are undertaking work that can help onboard artists interested and passionate about the field.
People are just starting, and NFT in the art niche is going to get much bigger.
Although the NFT boom happened with the spotlight on art as one of the most popular niches, the fashion industry had started experimenting with NFTs before that itself. With increasing awareness of sustainable fashion, brands started creating digital fashion for their customers.
As absurd as this might seem, people have been going gaga over digital-only clothes and accessories. For instance, The Fabricant, a digital fashion company, sold a digital dress for about $9500 in 2019. Another clothing brand, RTFKT, known for its streetwear, sold digital sneakers worth $3.1 million.
Fashion giants such as Gucci and Burberry are also joining the bandwagon to get their piece of the pie.
In fact, digital fashion is expected to gain more popularity as people spend more time in virtual worlds. An example of this is the millions of dollars gamers around the world spend on skins. Fashion brands could tie-up with these games and cater to them by designing clothes, attires, and skins for the games, which can be bought, sold, or traded as NFTs.
Speaking of games, blockchain gaming is booming. Recently Axie Infinity broke a record of $1 billion lifetime sales and is currently one of the highest traded NFTs not just in the gaming world but overall.
Amongst the three categories of art, fashion, and gaming, the third seems to have the most promising future in terms of how vast and deeply ingrained it can be within the entertainment and gaming industry.
Gaming companies such as Atari have already begun working towards creating their own spot in the industry.
NFTs in this space would mostly be used for in-game assets such as skins, characters, items, trading cards, weapons, etc. The current vision for numerous gaming companies is to create an all-encompassing economy in the gaming world which would enable players to play, earn, invest in cryptos, etc.
Like the previous two fields, even gaming is still in its early stages, and the innovation here can genuinely be monumental.
- While NFTs have several benefits and advantages for people across the globe, it also has its disadvantages. One of its biggest challenges is the level of threat it poses to our environment.
- NFTs are majorly present on the Ethereum blockchain, which consumes one of the highest amounts of energy and is second only to Bitcoin. The Ethereum blockchain has received constant backlash and criticism over its electricity usage and its adverse effects on our climate.
- The NFT boom is a contributor to this excess consumption of energy. Having said that, Ethereum and numerous other blockchains are working towards finding a greener way of operating this potentially disruptive technology.
- Ethereum 2.0 was launched with one of its primary purposes being that the electricity consumption is reduced.
- Although we haven’t seen other developments, it will be interesting to see how the developers find a way to mitigate this issue and what it would mean for the overall blockchain operations and functionalities.
And we’ve reached the end. NFTs, in essence, are a step towards the digitalization of numerous real-world assets and thus a step towards digitalization of the real world itself. Although this might have pros and cons, the pros seem to outweigh the cons if the climatic challenges are solved.
NFTs by design are bound to create more opportunities for people who want to showcase their skills and build their audience, customers, and communities. This democratization is much-needed progress for creators across the world. Well, so when are you starting your NFT journey and what platforms will you choose?