With only 2 weeks into 2022, Non-Fungible Tokens (NFTs) don’t show any indication of slowing down when it comes to making headlines. From giants like Gap and Konami launching their first official NFT collections to JP Morgan’s analysts claiming that “greater use of NFTs tokenization is in the line-of-sight for 2022”, the NFT craze seems to be going strong. This growing trend has many artists and content creators wondering how they can create and NFT to take advantage of NFTs and grow their communities while capitalizing on content.
Unfortunately for them, the NFT creation process seems to become more complicated as marketplaces like LooksRare continue to open and different networks seek to become major players in the niche. Sure, creating the NFT itself is not an extremely difficult process but choosing the right platform, network, and model requires a certain degree of technical knowledge.
If you are one of the creators that are now facing the challenge of launching your own NFT collection, you will be happy to know that you are not alone. The technical nature of blockchain networks, NFTs, and crypto has perplexed thousands of content creators to the point that NFT concierge services are now a thing.
The good news is that with a little help, planning, and patience, creating an NFT collection and launching it can be way easier than you would expect at first. If you are interested in taking advantage of the craze, you came to the right place. We have compiled a guide that should provide you with a good understanding of what you should consider when creating an NFT… As well as how to create and market it.
What is an NFT and Why Should You Care?
If you are reading this guide, chances are that you already have an idea of what an NFT is. Unfortunately, the chances that you are misunderstanding the technology are pretty high. Don’t worry, this is the case for most of those who are creating, collecting, or trading NFTs at this time.
With artists like Beeple and Pak, as well as projects like CryptoPunks, Axie Infinity, Bored Ape Yacht Club, and many more, NFTs have become a synonym of digital collectibles. While this is certainly one of the purposes they can serve, NFTs are a digital representation of any asset that is unique in nature and indivisible. This means an NFT could represent anything from a piece of art to real estate ownership, IDs, insurance policies, and much more.
An example of some of the innovative applications given to NFTs includes when TechCrunch Founder Michael Arrington sold his apartment in Kyiv using an NFT, Black Manta Capital Partners’ “Real Estate Token Offerings”, and Auroboros’ showing of NFT-powered Augmented Reality clothing during the London Fashion Week.
While you are probably more interested in art-related applications of NFTs, understanding the further implications of the technology could give you new ideas on how to use them. For example, if you are a YouTuber or content creator, you could use NFTs as a means for your fans to support you in exchange for a lifetime membership (represented by an NFT) which will grant them rewards depending on their contribution. This idea might not sound super innovative as there are platforms that offer a similar model… However, in this case, you wouldn’t need a third party.
Understanding the ins and outs of the technology is certainly a useful skill which you can benefit from. After all, NFT collections that make innovative uses of the technology are the ones making millions in a matter of seconds. Is up to you how to use them!
What Should You Consider When Creating an NFT?
As we said earlier in this guide, making an NFT is not a difficult process but doing it right certainly is. At this time, anyone can look for a guide and launch their own NFT collection in a matter of minutes. However, just like when creating a business, making sure to do it the right way will be the difference between success or getting burned.
If you are looking for the step-by-step version of this guide, you can skip this section. While we recommend that you take the time to consider the different aspects that can affect the NFT creation process, we understand you might have made your mind up already.
For those who will continue reading this section: Congratulations. By taking the time to do your homework we believe you will make the best out of the chance to participate in the NFT trend. Let’s look at some of what we believe are some of the most important things any NFT creator should consider.
Should You Use NFTs in the First Place?
Let’s be honest, we all know that including “NFT” in anything is enough to add value to it these days. With millions of people speculating with NFTs around the world, it is hard to resist the temptation to join the craze. After all, what is the harm in it?
Well, this might come as a surprise to you (or not), but the most important question you should ask yourself is “should I create an NFT”. Don’t get us wrong, here at Grit Daily we love NFTs. However, NFTs might not necessarily be the best way to implement whatever plan you have in mind.
For one, let’s be direct. While NFTs are pretty relevant at this time, there are a lot of people who disagree with where the trend is going. For example, when Square Enix’s President said he wanted to integrate NFTs with the studio’s business model, fans were quick to react negatively. Sure, the studio’s stock bumped… but at what cost?
The conversation around NFTs has become so polarized that even Anil Dash, one of the major contributors to the invention of the technology, has weighed in. In an article for The Atlantic, he shared his disappointment around the speculation in the NFT market by stating despite it not being fully developed by stating:
“When we invented non-fungible tokens, we were trying to protect artists. But tech-world opportunism has struck again.”
When considering joining the NFT craze, you must consider your audience’s reaction to it not only in terms of approval or backlash but also the technical and financial aspects of it. Launching a collection like NFT requires your fans to learn the ins and outs of crypto and blockchain to some degree, which might not be easy for everyone. In addition to this, NFTs are one of the hottest things right now due to their speculative value, which could result in alienating your followers.
What Are You Actually Providing Your Buyers With?
A common misunderstanding around the nature of NFTs is that you are acquiring/providing the digital asset itself. This misconception is the reason behind most of the criticism you probably have seen around NFTs: “Why pay X dollars when I can just screenshot the image?”. The truth is that when acquiring an NFT, the buyer is getting a sort of “certificate of authenticity/ownership” instead of the asset itself.
The implications of this inability of blockchain networks to store the asset itself are several but the most important is that the NFT ecosystem is “centralized” to some degree. As the image is not stored in the blockchain, it is stored in an external server which grants access to the image itself by using the link stored in the NFT metadata.
This fact has been highly criticized, even by Anil Dash in The Atlantic article we mentioned earlier, as it means the asset could potentially be stored if the server goes down or all copies are lost. While this is unlikely to happen as the owner will probably make sure to store it, it is still one of the drawbacks of the technology.
We will talk later on about which services will provide more convenience and security to your audience. However, what you must remember is this: Not all NFTs, marketplaces, or networks are made equal, which means understanding what you are offering is of uttermost importance.
Regulations Are Still Unclear
Cryptocurrency regulation has been known for being muddy waters when it comes to regulation as agencies like the IRS, SEC, and Department of the Treasury haven’t chosen to clarify the rules. Well, regulations around NFTs are even more complicated when it comes to regulation.
Depending on how you plan to use the NFTs, they could fall under one of the many protected assets by any of these agencies. For example, according to Forbes, many types of NFTs would fall under the definition of security established by the “Howey test” as they could be considered investment contracts, with fractionated NFTs (f-NFTs) getting closer to the definition. This means that depending on the type of NFT you want to use, you will need to make sure to comply with local regulations if any.
That being said, NFTs are highly unregulated at this time and as long as you are not trying to create/implement an extremely complex model around your NFTs, you probably are in the clear. Just be aware this could change at any time!
Not All NFT Marketplaces and Networks Are Made Equal
Creating an NFT might be a simple process but choosing the right tools is not. First, you will have to decide which network your token will be created on, which will have an impact on fees, performance, features, and more. Second, the marketplace you choose to sell it will determine the audience that will gain access to it as well as ensure the legitimacy of your NFT.
By choosing the right marketplace and network for you, you will maximize the capital you can make from them. For example, some marketplaces will require you to pay money upfront for the minting process or ask for a commission, which can increase your costs exponentially if you are planning on minting and selling multiple NFTs.
We will take a look later in this guide at some of the most popular marketplaces and networks you can use to create your own NFTs….