NFTs – for Dummies (like me)

This is a dummies guide to NFTs.  I will try to answer: What are NFTs? Why NFTs – the benefits? Why all the Fuss? How Do NFTs Work? How to Create an NFT; How to Buy an NFT?  How to Sell an NFT? What do NFTs actually look Like? Please note this is not given as consultative advice. These are observations from a non-expert- trying to understand NFTs from a marketer’s perspective.

What are NFTs?

Let’s start with a song (and a visual) about NFTs. Not from Elton John, but rather, Elon Musk, who is tweeting about selling his own animated audio NFT song (hit the play button below). NB It can take a minute to load.

Although most people, including Elon Musk, call the above, an NFT, it is, strictly speaking, not an NFT. The above is just a video clip on a  loop (or a ‘video print’).  An NFT is more than this. Think of an NFT as an envelope (Evenden 2021). The historical information about the ownership of say the above video clip is on the front of the envelope, along with a unique identifiable number. Inside the envelope, there is for example, the above video clip and a smart contract.  Beyond standard copyright law, additional requirements or specifications  can also be added to the NFT.  

An NFT is a Non-Fungible Token (a unique digital token), which many see as a certificate of authenticity, or a  deed or proof confirming you own the right to display the above art on your wall or in your wallet (digital wallet). It might give you the right of ownership of the copy you bought (for your private use) but not necessarily over the ownership of the original artwork. Production rights and copyright are automatically retained by the artist unless otherwise specified in the contract.  Regardless, non-fungible means ‘irreplaceable’ since each token is unique. And ‘Unique’ creates scarcity which, in turn, increases the market value for NFTs.

Click the link to see Peruvian Luis Tamani’s amazing animation: La Medicina Vive en Mí / Medicine Lives in Me. You will also see the details of the NFT included.

Click Here to see the stunning animation plus you can see a brief description of the piece,  information about the artist, the trading history and the chain history, the bid history (including any bids that were subsequently cancelled), the winning bid, the price, the buyer (Wise-Crow) and an invitation to anyone else who might now like to bid and buy it from Wise-Crow. 

An NFT is technically an ERC-721 token on the Ethereum Blockchain. Another meaning of ERC is a ‘collectable’. The artwork is minted into the ERC-721 token. This token contains:   

(1) the historical information of any transactions plus artist information (including the artist’s public key) plus the number of likes (see the tiny ‘heart’ symbol above the image in the NFT).
(2) a unique identifiable number = the token ID (click ‘chain info’)
(3) a picture of the art  
(4) a smart contract (the NFT is effectively a smart contract – you don’t need humans to sign signatures). Standard copyright law applies and more specific conditions can be added to the description section.  
(5) a list of unlockables  (additional optional extras e.g. a table mat or even a jigsaw with the art printed on it accessible via a link in the description. 

NFTs can include art (paintings, graphics, videos, GIFs, songs, poems, tweets, posts even video games, virtual real estate, books), even birth certificates and an awful lot more. Fungible means ‘replaceable by another identical item’. Non-fungible means irreplaceable or unique.  Another way of thinking about NFTs is as a process of documenting authorship and ownership.

Why all the fuss?

The frenzied excitement around NFTs possibly comes from the feeling of ownership of something scarce – typically a digital asset.  NFTs create scarcity by definition since each NFT is unique. Plus perhaps, some FOMO (fear of missing out). Finally, NFTs can insert trust in what might have previously been a trust-less system where it was difficult to prove ownership and originality. The Wall Street Journal has hailed NFTs as: ‘NFTs Are Fueling a Boom in Digital Art’ (Wall Street Journal 11 March 2021).

 

A digital artistic renaissance?

Artists are excited by this, as finally, instead of them getting 10% they can get up to 90% revenues in their contracts. They now have a world where the interest in art appears to be growing. Perhaps the beginnings of a new era where art and artists thrive instead of struggle.  Is this the dawn of a new renaissance?

London auctioneer’s Christie’s recently sold its first purely digital art NFT.  It is from the relatively radical artist Beeple.

Beeple’s piece sold for $69 million and is claimed to be the third-most-expensive work ever by a living artist. It was simply a montage of 5,000 graphic images. It was a ‘product of the climate of nonstop social media outrage that defined the Trump years’ (with one image amongst the 5,000 showing baby Trump feeding from a large tube coming from Hilary Clinton’s crotch. Not everyone was enamoured by the piece/s!

Then we had the Nyan Cat original Gif which went viral in 2011, was shared by all and then, the unique NFT of the original Gif was sold.

This gif went viral in 2011. Then ten years later, its NFT is sold for just under $600k. How come?  The Gif of a rainbow-casting feline went viral in 2011. Feb 2021 the original Gif was sold at an online auction for 300 ether (just less than $600k). The Wall Street Journal asked: ‘How come an original Gif of something that was already pervasive around the internet  could sell for almost $600k?’ WSJ answer: ‘Because it was sold as an NFT!‘

Why NFTs – what are the benefits?

A new product type or art type is emerging where many traditional artists are now also collaborating (or even creating )  ‘printed video’ or animated video of their art. See Luis Tamani above stunning work above.  

A new marketplace for artists, this is a new channel for artists to display, promote and sell their art. It brings digital and non-digital art into the digital world. Non-digital art can be digitised by photographing, video-ing, animating, converting into 3D renderings, creating montages and more.  NFTs Are fueling a boom in digital art.

Revenue boost for artists, NFTs are effectively smart contracts and smart contracts are 100% programmable. NFTs can also have added built-in royalties, rights and any other functionality. More artists can be compensated for their work.   Instead of contracts where artists end up with a 10% royalty – they can now earn 90% revenue for their works of art.

Add value to art, NFT buyers can be given unique privileges and unlock new experiences. The rock band, Kings of Leon ‘dropped’ (published) three NFTs linking to some artwork from their latest music along with some ‘privileges’ which include 4 x front row tickets for their concerts for the rest of the buyer’s life.

For art buyers, it is another way to support artists, start a collection, build an art investment portfolio or just show off your creativity and/or show off your art. NFT buyers can display their digital artwork in a TV frame. Some framed TVs (Samsung) come preloaded ( e.g. 100 pieces of art categorised in a different genre to suit your mood plus an optional extra $5 monthly subscription to access even more art. Or just show your own digital art acquisitions.  NFTs can be the first step for many people to show off their creativity and become art collectors.

Track Ownership and see who created the NFT, who owned it, where it came from, and more. There is a permanent history stored on whichever Blockchain is used. This potentially gives NFTs more value than ordinary art since on-chain art history is easily traceable.

 

NFTs – the future of the art world?

A new renaissance for art? The Insider’s, Grace Kay,  wrote the headline (above) 14 Mar 2021. But equally, the headline of the post also says: ‘Selling crypto art can come with huge hidden fees, leading some people to lose hundreds of dollars. In addition, not all NFTs verify the person selling the original art piece – is actually the original creator. ‘Anyone can say I am the person who created this token and it can be very difficult to verify this – especially if you don’t know who they are‘ (Wall Street Journal).  So be careful.

However, the Insider does highlight some noticeable NFTs recently sold.  Notably, Beepie’s NFT animation (called #1/1 Crossroad) of people walking past a dead trump with the words ‘loser’ tattooed on his arm – sold for $6.6m on the Nifty Gateway. Have a look at this animation. See the new owner of the NFT, Delphina Leucas, and  what she feels about it all (apologies for the language); plus the bidding history; plus the contract address: 0x12f28e2106ce8fd8464885b80ea865e98b465149  and the Token ID: 100010001.  You can also see the artist information, the Edition History, Global History, Market Stats plus an invitation to make a Global Offer to buy It from  Delphina Leucas. Don’t forget to click the Crossroad picture to see the animation.

IIIII

NFT’s Layers of Added Value

In addition to being seen as a potential art investment, or pure artistic pleasure, or creating emotional value (particularly bragging rights),  NFTs can also offer layers of privileges and ‘unlockable benefits’.  PLus conditions can be attached to the contracts. In fact, unlimited complexity can be built-in to these smart contracts.

Conditions: For example, conditions can be built into the NFT that the original artists earn, say, 10% royalties on every subsequent sale of the NFT in the future. So that as buyers sell on their art, the artists (or the artist’s estate) still get a royalty with every sale of their art. Hence some artists see NFTs as a renaissance. Yesterday they perhaps would get 10%, whereas today they get 90% plus an ongoing 10% royalty on any subsequent sales. Perhaps NFTs will help more artists to survive and thrive?

Privileges and Unlockable Benefits: The only limitation is the artist’s imagination when it comes to NFT privileges and unlockable benefits. All sorts of added value extra features and benefits can be layered into NFTs. Artists can add t-shirts, calendars, jigsaws, coasters/drings mats with the artwork printed on it, as well as a specific right to print or display and/or own the particular version/edition of a piece of art. NB Standard copyright law exists and any variation needs to be specifically added into the digital document.

Rock band, The Kings of Leon created 3 pieces of NFT art supporting their latest album and buyers receive NFT perks like 4 front row tickets for each of their tours for life. Highest bids at the time of writing are in the $12k range.   Below is Ruke’s NFT which is called RAWK.  The unlockables for his deluxe edition are listed below this animation.

Types of NFTs

NFTs have been applied to just about anything including art, sport and surprisingly, already-published viral Gifs (Nyan Cat), collectable Penguin Pixels, plus even more surprisingly,  a tweet.

Jack Dorsey, Twitter CEO recently made the first tweet ever into an NFT.  and sold it for just under $3m. Jack Dorsey says he will give it all to charity.  Here is Jack’s tweet.

The bidding started at $1 on 15 Dec 2020 and ended up being sold on 6 Mar 2021 for just under $3m  to @sinaEstavi.

Meanwhile, Mick Jagger is creating  a loop of his new track ‘Eazy Sleazy’ (with FooFighters frontman Dave Grohl) as an NFT to Raise Money for struggling Indie Venues during COVID.

Singer Shawn Mendes uses NFTs to sell digital versions of his guitar, necklace, vest and earrings to fans (who, in turn, then use them on their own digital avatars).

NBA (National Basketball Association) Top Shot allow collectors to buy NFTs of basketball highlight video clips (e.g. a ‘dunk’) as NFTs.  $338m of these scarce NFT collectables (in 6 months). Buyers don’t actually own the video clips – just the NFT. The clips cannot be duplicated or used commercially.

Champion Sportswear Fashion company use NFTs to display their new season’s designs. NFTs are newsworthy – if you create one – you’ve got a story. So champion sports clothing launched its Spring edition with NFTs being used to display the new line of clothes.  Buyers also get a sweatshirt with their NFT on the front.

Pixel Penguins

Pixel art is trending in the NFT world. Here are the much-loved Pixel Penguins by Buuvei aka i3uuve1. There are 100  x 1-of-1 Pixel Penguins. People really like these collectables.  Each penguin portrays a particular emotion or a character.

The penguins are part of a pixel penguin lovers community. At the time of writing 78 have sold with 4 still available to buy. 18 are still yet to mint. The pricing is interesting.  The first ten penguins were  ‘dropped’ (published or released) and then priced at 0.01 ether ($20 approx). Each drop has 10 penguins. Each drop price increases.  The first 10 were 0.01 ether ($20 approx). Next 10 are priced 0.02 ether ($40 approx) etc.  Buuvei calls this pricing ‘a bonding curve’.  Explore it yourself by clicking PixelPenguin or just clicking  www.opensea.io and then search for PixelPenguins NFT. 

The Mischievous Girl

An amateur photographer asked his daughter to smile while a house burned in the background. It was a controlled burn i.e. removing a house.  This photograph won an award three years later and went viral.  Zoe made it into an NFT and sold it last month for $500k to 3F Music Production (Dubai) who said: “Our management team is always in cooperation with some highly knowledgeable and experienced art advisers who believe that we must grow with technological movements that help us to not only promote our business but also to support artists and the art market.”

 

NFTs for offline art
Imagine you are a sculpture.  You have created a real-world statue. It’s in your workshop. Can you create a NFT for a real world piece of art? Answer: Yes. You could digitise the sculpture (create a photo, a rotating video or a 3D rendering). Upload these onto an NFT platform, set a price, add a description, define any other privileges, clarify the terms (which could include ownership of the real sculpture), click ‘sell’ and wait for someone to buy the NFT.  

LLLL

How Do NFTs Work?

An NFT is stored on a blockchain. It represents a unique digital asset. NFTs are different to cryptocurrencies in so far as they are not ‘mutually interchangeable because they are unique’. NFTs are not fungible/ not interchangeable. Most cryptocurrencies are fungible i.e. they are interchangeable – each cryptocurrency unit has the same value. All NFTs are different.

If you want to get into the NFT market and ultimately sell your art. Here are the steps required.

1. Go get some ETH – go to somewhere like binance.com  (check you got the right name as there are lots of similar names waiting to rip you off); set up an account and buy some Eth (Ethereum) crypto-currency. 

2. Set up an Ethereum wallet that supports ERC-721 (the NFT Token Standard). For example Metamask.io extensions are available for (Chrome or Mozilla). Read T&C.  Add password. Set up your secret word  or your ‘Backup Phrase’ – this is your private key (12-24 words in exact order). NB if you lose these words/phrase you lose access to your wallet and its money permanently.  

3. Set up your account/profile on a gallery/publishing platform  e.g. opensea.io – a marketplace gallery & auction house which uses: Ethereum cryptocurrency.  Opensea earns 2.5% commission. Plus there are GAS fees (the cost of computer energy required to create an NFT on a blockchain). Gas fees are often paid by the buyer. Double check who pays what? 

4.1 Upload a file of your digital art*  to opensea.io  to exhibit it and include it in an auction. *NB Do not upload the full high-resolution artwork (you can make the full high res file available as an unlockable).  This offers some protection – so that the high res does not get copied by a viewer. Some platforms won’t give you the space to upload large files anyway. 

4.2  Describe your art and set the price. Set the terms (e.g. copyright retained by the artists, ongoing 10% royalties from future sales, any reproduction rights etc. )

4.3. Add any unlockables – when you buy something – there’s a box (with a description) that also says ‘click here to unlock’. When you unlock you will see further instructions often including a code to access either the full high-resolution art file or an additional gift e.g. t-shirt with the art printed on it.

5.’Drop’ – announces that your art is available to buyers. It is sometimes also referred to as ‘post your listing’. The official term is ‘minting your NFT Token’. ‘Drop’ can also mean you have minted the art piece i.e. you are ‘dropping’ your NFTs in your wallet and on a gallery/platform like Opensea, rarible, foundation or nifty gateway. Announcing a drop presents a great publicity opportunity.

6. Promote your art.  Getting it into a gallery or a platform is not enough. An exhibition is not enough. You have to promote and market your exhibition heavily through all of your social media platforms, your networks including Clubhouse.  Publicity and publicity stunts can also help. In fact your promotion should start long before your ‘drop’.

7. Sold! When someone bids or buys, you receive an alert.  Once your artwork is bought it is then ‘minted’ on a blockchain.  When you sell your NFT, the token is transferred in exchange for ETH, from wallet to wallet.

 

Here is an NFT Listing called ‘Birds in a Monastery’ by i3uuve1 aka Buuvei. A ‘an NFT Listing’ means it is on display in a gallery (opensea.io) and available for sale. This is an ERC721 token otherwise known as an NFT:

Birds in a monastery by i3uuve1 also known as Buuvei is on linktr.ee/Buuvei is listed or exhibited on OpenSea (here’s the link so you can explore yourself. Have a look around. 

The Token ID is highlighted above. This is an administrative number – once an NFT gets minted it gets a token ID. 

The contract address is your public key which is your wallet address, so that other buyers can pay you ethereum. 

LLLLL

How Do I buy an NFT?

Once you have your metamask wallet with some cryptocurrency in it, you are ready to start buying NFTs.  You can visit galleries or platforms like Opensea.io or foundation.app. Once you click ‘buy’  – you get authorization from your wallet to click ‘sign’.  This authorises the commencement of the ETH transfer to another wallet.  

Then a 2nd pop-up appears and this is for the amount you want to set the gas fee: low, medium or high (equals slow – medium – fast minting). 

This is also called minting or putting your art on the Blockchain. It is also called: issuing your NFT token on the blockchain – creating a token – in the ERC721 format on Ethereum.

So when a buyer buys the above – they see in their wallet the NFT which is like a smart contract including the picture – which you can download or display wherever you want (however other people can also look at it also). The buyer, however, is the only one who can claim ownership of the NFT. Behind the wallet (or user interface) is a smart contract with a bunch of code.

LLLLL

What do NFTs look Like?

NFTs are really a process document authority (prominence) clarifying authorship and ownership (receipt) of say, art.  

NFTs contain information about who owns the digital asset; who sold it and when it was sold. In fact, all transaction history (time, date and amount of ETH paid) is registered on the blockchain.

This info is encrypted – ensuring the NFT’s authenticity and scarcity.  When it is sold onto another buyer – another ‘block’ in the Blockchain is created with a different ‘Unique Identification’.  

All NFTs are connected to Blockchain.

Blockchains work by using groups of computers to create a shared digital ledger that no one computer can change. Instead, they must agree by performing complex calculations — a system that yields a secure and unchangeable document. That makes blockchains perfect for creating systems in which unique digital identifiers can be easily and securely exchanged — hence the creation of NFTs.   Source: NBC News 16 Mar 2021

Digital assets on a  smart contract are typically represented solely by a unique identifier (e.g., the token_id in ERC721), so metadata allows these assets to have additional properties, such as a name, description, and image. This meta-data allows galleries like Opensea to display more information. 

LLLL

NTF Challenges

Carbon Footprint – NTF minting leaves a large carbon footprint (as does mining for cryptocurrency). Some cryptocurrencies are more energy-efficient than others. Some NFT artists create an offsetting environmental impact – like planting trees.

Fake Creators – not all NFTs verify the person selling the original art piece – is actually the original creator. Theoretically, anyone could, illegally, create an NFT for a piece of someone else’s art and claim they are the artist who created this token and it can be very difficult to verify this – especially if you don’t know who they are.‘ WSJ

Hidden Fees – Selling crypto art can come with huge hidden fees, leading some people to lose hundreds of dollars. In addition, gas fees of $80 might not seem much to western economies but in many developing countries this is simply unaffordable.

NFT Digital Bubble – ‘Critics are wary that it could be a digital bubble in the making.’ WSJ. Perhaps akin to the infamous Dutch tulip bulb bubble bursting in 1637 after frenzied buying tulip bulbs caused some buyers paying extraordinary high prices for a tulip bulb. Houses were sold to buy tulip bulbs as prices escalated until Feb 1637 when the bubble burst. The market crashed. Prices collapsed and a lot of people lost a lot of money. Or will it level out after the ‘Trough of Disillusionment (as demonstrated by Gartner’s  Hype Cycle below.

Gartner’s Hype Cycle – will this apply to NFTs? 

LLL

Or a renaissance?

‘NFTs Are fueling a boom in digital art’ (Wall Street Journal 11 Mar 2021). NFTs are creating a new market, and channel for artists and definitely are creating new revenue streams for many artists. NFTs also encourage artists to expand and create added value unlockables to strengthen their value propositions and ultimately, enhance the customer experience. While art buyers can track ownership and delve into NFTs to support artists, start a collection, build an investment portfolio or just show off a buyer’s creativity, or simply enjoy art in a different way. Certainly, NFTs will be adopted and used in many different industries beyond art. This is just the start – with plenty of room for creative minds to leverage this new opportunity.

The world is changing and so too is the world of art. Perhaps the beginning of a new artistic era courtesy of NFTs?

The Cyber Chef from SuperFarm       SuperFarm – NFT Platform where you can Buy, Create and Sell Crypto NFTs

LLL

“Build me a better mousetrap and the world will beat a path to my door” is commonly quoted* but it just ain’t true – great products, and even great art, and great NFTs need to be promoted. Some artists don’t like this but even the world’s biggest bands, actors, authors and artists have to promote themselves – do interviews, tell stories, do social media, send press releases etc. *Ralph Waldo Emerson did make similar statements way back in 1889. Regardless, It was wrong then and it is still is today, great art will not always get a crowd beating a path to its door. Sometimes this happens but for most artists it just doesn’t – hence you got to beat your own drum: Networking, Clubhouse, publicity, PR, social media, adding unlockable  benefits like having dinner with the author (with up to 6 of your friends) once a year  (or once only if you prefer) to hear why the artists created the art and also, perhaps, to hear why the buyer bought the piece – call it marketing or call it common sense (however common sense ain’t common) call it whatever you want – you still got to beat your own creative drum in this exciting new world of NFTs.

 

Many thanks to those that have helped me to learn about NFTs and suffer my endless questions. This includes: 

Tyrone Post, founder of New NFT Daily who is an NFT Educator, an NFT artist and a philanthropist.  Insta: tyronepost801 
Buuvei, our artist from Mongolia, with his Birds in a Monastery NFT – and his PixelPenguins, you’ll also find him linktr.ee/Buuvei 
RUKE of RUKEink in Orlando, Florida or Instagram rukeink and his rawkdrop.com site
Olga Evenden a Dublin artist olgaevenden_art  wrote a more succinct NFT Basics Guide including the excellent ‘envelope analogy’*  https://linktr.ee/olgaevenden 
Wise Crow who is researching and investing in crypto’s and NFTs insta: wise.staking
Jason Voges for the idea of artists, dinners, feedback and more  jvoges78

 

Get Well Soon Tyrone Post who is now suffering from COVID-19. We wish you a steady recovery and send you lots of warm wishes, love and positive thoughts.

Thanks also to everyone in the room ‘NFTs, Penguins, Genesises and more’ – a Clubhouse room and the other Clubhouse rooms (I will add more later – I am searching for them!).

 

Please do post a comment (at the end of the page). Please do correct me if I got any of this wrong. Any suggestions or additional information is most welcome. I know I have missed some other NFT rooms on Clubhouse – please let me know and I will add them. 

I will be writing a NFTs for Dummies part 2 which will include AI Driven Avataar Artists that can create an infinite amount of NFTs plus NFTs that self generate their own NFTs soon.

 

If you enjoyed any of the above – you might also enjoy: 

• Great Covid Idea: Photo Exhibition Transforms 500 Unused Dublin Poster Sites

• Engaging at Scale with Personalised Videos in Conversations

• Here Come The Really Clever Bots – where AI meets customer needs

• Artificial Influencers – Meet Shudu & Miquela
• How Trump Won (Part 2) – using the Magic Marketing Formula – a SOSTAC Planning Analysis
• How Rats Work = How Twitter Works?
• Facebook Data: How it was used by Cambridge Analytica & Might Be Used Again

 

Warning: You might find these disturbing

• Marketing Gone Wrong: Is the Dark Web* Worse Than Subliminal Seduction? – this is not about the traditional ‘dark web’ – it is however, a must-see TED talk
• The Dark Arts Of Marketing – Breaking Down Society to Create a New Culture – Using Data & IRD -is this really happening?

 

On a More Positive Note: Here are some inspirational stories from my NFP Great Sportsmanship Programme – the most recent was called ‘Stop Asian Hate – Grow Global Love’ which I have now changed to Grow Global Love a story about a truly amazing Chinese lad who epitomizes everything good in sport and life.