Non-fungible tokens (NFTs) have garnered a lot of attention in recent months as a seemingly endless parade of celebrities, artists, and investors push their own versions of digital commodities.
In a world where most things can be replicated and shared online, NFTs claim to offer an antidote to this, providing a digital product with a finished offer and confirmed rarity. NFTs use the same blockchain technology that powers Bitcoin and other cryptocurrencies and have become popular among investors.
However, this unregulated structure makes them easy to handle and trading highly prized NFTs for huge sums of money has been described as a Ponzi scheme. Californian painter and illustrator Eriana Ura-Smith describes NFTs as a “hypercapitalist exercise creating scarcity where there is none and using art as a vehicle to do so.
Another criticism of NFTs comes from those who argue that the blockchain technology that maintains the network of digital artworks has a huge carbon footprint and could become a significant contributor to climate change.
A report of The New York Times claims that creating an average NFT brings with it “more than 200 kilograms of planet-warming carbon, equivalent to drive 500 miles in a typical American gasoline car.”
How are NFTs made?
Unique collectible assets have been promoted as a way for artists to make a living from their work in the digital age. The so-called rarity guarantee aims to create a digital product that can become as valuable as a prized physical work of art.
And, financially at least, some artists have succeeded. Last year, an artist known as Beeple sold a digital collage entitled Daily: first 5,000 days for $69 million at the prestigious British auction house Christie’s.
This sale saw Beeple place »among the three most valuable living artistsaccording to a press release from Christie’s. However, the actual process of creating an NFT is quite simple…
1. Select a work – NFTs begin as a unique digital asset that the owner wishes to commodify. If an artist has an image, song, meme, GIF, or any other digital product that they have sole ownership of, it can be converted to NFT.
2. Choose a blockchain – As mentioned, NFTs are hosted using blockchain technology and different systems provide different levels of service. Most creators base their NFTs on Ethereum, but Tezos, Polkadot, and Cosmos are also available.
3. Create a digital wallet – Blockchain technology underpins the NFT universe, so you will need to set up a digital wallet where you can store your digital assets. AlphaWallet, Trust Wallet and Coinbase Wallet are some of the most popular.
4. Choose a marketplace – Once minted, artists need a place to sell their wares and this can be done on a multitude of NFT marketplaces. Different marketplaces tend to specialize in different things and some are dedicated to one type of artwork, like the basketball-focused NBA Top Shot.
5. Choose a selling method – Once the NFT has been created and uploaded to a marketplace, all that remains is to choose the terms of the sales process for all interested customers. Generally, it is either to sell the NFT at a fixed price; the establishment of a fixed-term auction; or run an unlimited auction that the artist can choose to end whenever they want.