You’ve probably heard of non-fungible tokens, or NFTs — and you may have heard that some of them are selling for big bucks. Still, NFTs are somewhat of a mystery to many people, whether they want to invest in them or not. Even for NFT investors, the process of creating an NFT, which is called “NFT minting,” is something of a mystery.
But we’ll clear it all up below. We’ll explain what an NFT is, discuss how to create an NFT and more.
Related: Intrinsic value and time value of options, explained
NFT basics
NFT, or non-fungible tokens, are unique digital assets that can be traded, bought and sold. They usually take the form of some type of artwork, or even in-game assets for certain virtual worlds. Each NFT is its own metadata codes, which are stored on the blockchain, to ensure that they remain unique.
NFTs are sort of like digital trading cards, except each is one of a kind. Unlike other digital assets, like Bitcoin, for example, there’s only one of them, with no copies. In that sense, it preserves the rarity of the digital asset at hand.
How does NFT minting work?
The process is essentially boiled down to deciding where and how you want to do it, hooking some tools (your digital wallet and a blockchain network) together, and then hitting the “mint” button.
Whether you want to preserve an asset of your own creation — like a work of art — or create NFTs to sell or trade, learning NFT minting can be easy with the right tools. One other thing you’ll need: some background in the crypto space or general knowledge of blockchain technology.
What are the benefits of minting an NFT?
While each potential NFT minter will have their own reasons, there are generally a few benefits to creating an NFT:
- Democratize ownership: Creating an NFT allows numerous parties to own a stake in the digital asset.
- Sell unique digital assets: Not only can you trade, buy, or sell stakes in assets, it’s possible that in the future artists might even receive a cut of the sales.
- Store and preserve value: You can store the asset’s value in a tangible way — similar to how a physical coin can be minted with a specific precious metal concentration. Plus, preserving value digitally is generally considered safe, thanks to the security of the blockchain and the built-in scarcity of NFTs.
How to mint NFTs
While aspiring NFT minters have some decisions to make regarding which specific tools to use, the basic steps of creating NTF are largely the same.
1. Create a unique asset
The first step in minting NFTs involves deciding what type of unique asset you want to create. There’s an entire world of digital assets out there, ranging from in-game weapons to digital trading cards.
As an example, say you want to create an NFT that is a piece of digital artwork. You will need to turn your digital art into data that lives on a blockchain. The Ethereum blockchain is a popular choice for NFTs, but there are others, like Binance Smart Chain, Polkadot, and Flow by Dapper Labs, to name a few.
2. Buy tokens
You’ll need to buy crypto that is used on the blockchain you’ve chosen. In fact, the blockchain will influence the wallet services and marketplace that you choose as well, since some only work with certain others.
In our example, you would buy some Ether (ETH), which is Ethereum’s native cryptocurrency, to pay for transactions on Ethereum. The easiest way to do that is to hit up a crypto exchange.
3. Deposit crypto into a non-custodial wallet
You’ll need a hot wallet, connected to the internet, in which to store your funds. A crypto wallet is an application that lets users interact and connect with the crypto network and their account.
For NFT minting, it’s important to get a non-custodial wallet so that you have full control over your funds — with no third-party involvement. You own the private keys to your wallet. Conversely, a custodial wallet is one that may be assigned to you by a crypto exchange. They’re more convenient, but you don’t have control of your private keys.
4. Choose and add assets to an NFT marketplace
Next, you’ll need to choose an NFT marketplace; there are many to choose from. OpenSea, Mintable and Rarible are all marketplaces suitable for NFT minters.
Some marketplaces charge users minting fees, and there may also be costs associated with firing up your account (for example, Ethereum gas costs), listing an NFT and transacting on the platform.
5. Add your assets to the NFT collection
While each marketplace has specific instructions for creating an NFT from your account, the gist is the same: Choose the piece of artwork you want to mint, fill in some details (collection name, a description, etc.) and execute the minting process by adding the asset to your collection.
With your NFTs in your collection, you can get started listing, marketing, and selling them.
The takeaway
The process for minting NFTs may vary slightly from platform to platform, but the basics are the same: you need a unique digital asset, tokens, a non-custodial hot wallet and an NFT marketplace.
Learn More:
This article
originally appeared on SoFi.com and was
syndicated by MediaFeed.org.
SoFi Invest
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA/ SIPC. SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA, the SEC, and the CFPB, have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Digital assets and cryptocurrency
In the last ten years or so, a new asset class has swept the globe—digital assets and cryptocurrency. It began with Bitcoin in 2009 and has since expanded into thousands of different cryptocurrencies.
Bitcoin, the first and largest cryptocurrency by market cap, is widely considered the gold standard of the asset class. Over time, other coins have seen their values plunge to zero, and it’s likely that many others will follow.
Only cryptocurrencies with large market capitalizations and a historical track record of success can be considered potential investments. Most digital assets are purely speculative in nature. Here’s what potential investors need to know about digital assets and cryptocurrency.
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Broadly speaking, most digital assets fall into two general categories:
- cryptocurrencies (money)
- cryptographic tokens
The two are often called “coins” and “tokens,” respectively, for short.
Grindi / istockphoto
There are many different types of cryptocurrency beyond Bitcoin. These include:
- Bitcoin Cash
- Litecoin
- Ethereum
- Ripple
- Stellar
- NEO
- Cardano
- IOTA
In 2011, Charlie Lee created a “hard fork” of the Bitcoin (BTC) network, meaning a new and different blockchain was created based on the old one. Lee called this new coin Litecoin (LTC). LTC uses a different consensus algorithm than BTC, generally allowing for faster transactions with lower fees. But because the Litecoin network is much smaller, it’s also less secure.
Over the years, many other digital assets and cryptocurrencies have been created. Some have been forks from the Bitcoin code. Many have been born of new projects entirely. Like Litecoin, many of these other cryptocurrencies share similar properties with Bitcoin but have much smaller networks and market caps.
Jirapong Manustrong / istockphoto
Tokens are digital assets that can serve a variety of purposes. One of the most common types of tokens is known as a “utility token,” which is a token that serves a specific function within a digital ecosystem.
An example of a utility token would be the Basic Attention Token (BAT). BAT is the native token of the Brave browser, which seeks to protect users’ privacy with a new advertising model.
This model blocks all ads by default and allows users to opt into which ads they would like to see. When a user chooses to view an ad, they are rewarded with a small amount of BAT. In this way, advertisers can reach their target audience while users can maintain personal privacy.
Ether (ETH), the token of the Ethereum smart contract network, is the second-largest cryptocurrency by market cap. ETH is used as fuel (aka Gas) for decentralized applications—applications that run based on smart contracts that execute automatically when certain conditions are fulfilled.
There are even digital assets for social networks that reward users in the form of crypto when they create and curate quality content, like Steemit does with the STEEM token. Many new use cases are being developed all the time, and the list could go on practically forever.
NiseriN / istockphoto
The Bitcoin white paper, also known as the Satoshi Nakamoto white paper, was published on October 31st, 2008. Just over two months later, on January 3rd, 2009, the Bitcoin network went live, and a new asset class (cryptocurrency) was born alongside a new technology (blockchain).
Bitcoin is a scarce form of digital money that can be transferred peer-to-peer, without any financial intermediary. It uses the proof-of-work (PoW) consensus algorithm and has a fixed supply limit, so it can’t be created out of thin air.
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The benefits of investing in digital assets go beyond the potential for outsized capital gains.
The biggest benefits of investing in digital assets are:
- Individual sovereignty and less counterparty risk
- Portfolio diversification
- Hedge against inflation
There are some people within the community who want to buy cryptocurrency because of the ways it aids individual freedom and sovereignty more than for its potential for prosperity. There are others who value this investment as a unique form of diversification and a hedge against inflation.
SKapl / istockphoto
Bitcoin allows people to become their own bank. When storing assets at a traditional bank or other financial institution, an individual becomes vulnerable to the risk of that institution going bankrupt or mismanaging their funds. This risk is known as counterparty risk.
Because they are peer-to-peer, digital assets and cryptocurrency eliminate all counterparty risk.
By holding their own private keys, investors can have total ownership of their digital assets and cryptocurrency. Other than gold or silver, no other asset has this quality.
Bitcoin has been the best performing asset class of the last decade by far. During eight of those years, the returns from holding Bitcoin exceeded that of any other asset in the world. At the time of this writing, the same holds true for 2020. (That said, as with any investment past performance is not an indication of future performance.)
Cryptocurrency can diversify an investment portfolio in a way no other asset class can. Crypto is known as a “non-correlated asset,” meaning it tends to have little or no correlation to the rest of the investment world (although this has changed at times during 2020).
rockdrigo68 / istockphoto
While all investing carries risk, investors often fail to factor in the one risk inherent in every investment denominated in fiat currency (stocks, bonds, mutual funds, ETFs, etc.): Inflation risk.
The law of supply and demand dictates that when the supply of something increases, its price will decrease absent an equal or greater increase in demand.
With central banks creating tens of trillions of new currency units in 2020 alone, more and more investors have begun looking toward digital assets and cryptocurrencies that have fixed supply limits, like Bitcoin.
It should be noted that the only cryptocurrencies that can serve as viable inflation hedges are those that have a fixed supply limit. Like gold, scarce commodities tend to increase in value during times of inflation.
In addition, global uncertainty and turmoil tend to increase demand for safe haven assets.
And amidst the chaos of 2020, Bitcoin is the best performing asset in the world, being up 80% year-to-date at the time of writing. (Despite this success, past performance is not an indication of future performance.)
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The vast majority of altcoins are highly speculative in nature. Most have very small market capitalizations of less than $1 billion or even less than $100 million, so their prices can swing dramatically in short periods of time due to a lack of liquidity. And in the long run, it’s not unheard of for altcoins to drop to zero, meaning investors lose everything.
Bitcoin might be a little different because it has the most secure network (due to having the highest hashrate), the longest track record, and the largest market cap by far.
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Anyone considering investing in digital assets and cryptocurrency would do well to educate themselves on related subjects.
The Satoshi Nakamoto white paper might be a good starting point. The Bitcoin FAQ on Bitcoin.org also answers a lot of questions and addresses common misconceptions about Bitcoin and cryptocurrency.
The more a potential investor familiarizes themselves with crypto terms like bitcoin halving, bitcoin forks, cryptocurrency wallet and crypto exchange, the less confusing this type of investment will seem.
Due to the volatile nature of digital assets and cryptocurrency, a common strategy is what’s known as dollar-cost averaging. Rather than trying to time the markets, investors sometimes buy fixed dollar amounts at fixed time intervals.
An example would be an investor setting a recurring buy for an automatic purchase of $50 worth of Bitcoin every two weeks.
Khongtham/istockphoto
There’s a lot to learn when it comes to digital assets and cryptocurrency. This relatively new asset class has a lot going for it—from individual sovereignty to a hedge against inflation—but it can feel very much like the wild west to new investors.
Learn More:
This article
originally appeared on SoFi.comand was
syndicated by MediaFeed.org.
SoFi Invest
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Featured Image Credit: Sergey Shulgin / iStock.
