What is an NFT, how can you create it and how can you earn money

If a year ago, I would have gone out on the street and asked a hundred people if they had ever heard of NFT, surely no one would have answered me.

Today, however, if I were to ask the same question, almost everyone would say that they have heard it at least once.

In a few months, it went from being something marginal to being a real sector with a market value of tens of billions of dollars.

NFT: their history

Despite the fact that they have become extremely popular only recently, NFTs have quite a long history behind them.

The first appearance of a kind of NFT dates back to 2012-2013 when “colored coins” were invented, which were nothing more than tokens representing real assets on the Blockchain. Owning these tokens was equivalent to owning in real life what they represented.

A short time later, in 2014, Counterparty was created, the first example of a platform where you could create and sell your own tokens, a concept very similar to that of NFTs.

In the following years, this platform began to expand and the first crypto-art collections were created, such as “crypto kitties” and the very famous “crypto punk”.

In 2018, NFTs were known to most blockchain experts, but only in 2021 did they officially become mainstream, thanks to the sale of some of these tokens for millions of dollars.

Now that you know their origin, it is time to explain to you in the simplest possible way what it is about.

What is an NFT?

First of all, NFT is the acronym for Non-fungible token. But what does it mean? A fungible good is something that does not have a specific individuality and that could easily be exchanged for something else equal. Non-fungible NFTs are the exact opposite.

They are unique tokens that, therefore, cannot be exchanged for other identical tokens, because there is only one copy of each NFT thus they are unique.

To make everything clearer, let’s make an example. Bitcoin is a fungible asset, as there are approximately 19 million of them in circulation right now.

A work of art, on the other hand, is a non-fungible good because it is unique and there is no identical one with which it can be exchanged without us realizing it.

How it works

An NFT can represent anything, both a physical asset and a digital asset. It can be, for example, a painting, a song, a video, but also something related to the real world, such as a document or a ticket for a concert.

All non-fungible tokens have a unique identification code saved on the blockchain and are directly linked to a wallet. When you buy an NFT, you are not sent the physical version of what you bought, and the ownership is transferred to the blockchain system.

Anyone can verify who owns an NFT, so it is impossible to claim to own a certain token and sell someone else a copy.

Most NFTs are based on the  Ethereum blockchain , but many projects based on  Solana  and other platforms have also received strong feedback.

How you can create an NFT

As he said, anything can be an NFT, so let’s say you want to create one based on a drawing you made a few days ago. All you have to do is take a photo or scan the design, after which you will have to go to a platform that, with the same simplicity of  Squarespace or Wix , will allow you to turn your file in png or jpeg format into a NFT.

After you have uploaded the design to the platform, you will have to connect your future NFT to a blockchain wallet, which you can create online in a few minutes. After you do this, in order to create the token definitively and be able to actually put it up for sale, you will have to pay a gas fee. The latter is a fee to be paid to reward so-called “Ethereum miners” for the work of creating the token.

This fee does not have a fixed value, it usually amounts to a few euros, but in certain periods it can cost tens of euros.

After paying this fee, you can put your NFT up for sale, which will be auctioned. If you receive a satisfactory offer you can accept it and at that moment the NFT will become the property of the new buyer.

Another considerable advantage is that the creator of the token forever receives a commission for all future sales. Therefore, if even after a few years the NFT you created continues to be traded, you will continue to receive a commission.

How to invest in NFT

Earning with NFT is possible not only by creating them, but also by investing in them. Investing is extremely easy, you just have to go to a market like Opensea, find an NFT that appeals to you and try to make an offer. If the owner accepts it, the NFT will officially be yours.

NFTs are definitely something extremely innovative and fascinating. In a few months they have become one of the most relevant sectors in the entire blockchain world and who knows if they will continue to grow.

It is possible to make money investing in NFTs, but it is still incredibly risky, much more so than investing in crypto. We must therefore operate with extreme caution, keeping it as a hobby.

But be careful, it is easy to buy them but it is also very easy to lose money. It is really a very risky and unpredictable investment.

To have any hope of selling your token at a higher price, you need to buy one that you think might have a market.

It is still a medium-long term investment, it could take years for your token to gain value, so don’t expect big gains after a few days.

My advice is to inform yourself before investing and, perhaps, to buy a token from a field in which you are an expert, be it musical, artistic or any other genre.