NFT Guide

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What is an NFT?

An NFT is a Non-Fungible Token. These tokens are composed of unique, non-interchangeable data that is stored on a blockchain. NFTs can be used in interactive experiences such as games and they have a unique advantage in the potential use in multiple projects plus they can be sold, traded, and people can sometimes earn royalties when they’re exchanged. NFTs currently can be found as digital images, videos, and audio. Essentially, most digital files can be saved as an NFT through blockchain processes. Minting is required for NFTs that are to be sold or traded on a marketplace.  

Currently, there are a few excellent examples of NFTs but there is a ton of potential for meaningful application of the technology. In Axie Infinity, a game where players nurture and breed cute monsters to battle other players, the creatures themselves are NFTs in order to create unique characters and stats. Meanwhile, collectors are enjoying owning and trading various art pieces like the punk rock-style apes of Bored Ape Yacht Club; these items double as a membership to events. Even the real estate industry has found a use for NFTs, mostly for verifying important documents and tracking essential paperwork. However, picking an NFT or a product that uses them should be a process and one should always try to avoid scams.

How to determine a real NFT project from a scam

Unfortunately, as with most new technology or popular products, scams are abundant in the NFT space. It’s easy to get swept up in social media excitement and many NFTs are introduced to the public through sites like Twitter, Reddit, TikTok, and Discord. Always note the goals of the NFT project and look over the general investment pitch. Always check the people involved and look at the various websites and profiles available. As with any investment, there is an inherent risk involved so please be sure to consult financial professionals when considering major or frequent investments. 

Here are some basic things to consider when evaluating an NFT project or product:

Does the website look legitimate? 

Projects with a lack of transparency can be a huge red flag as knowing who is developing it is critical. Those who are anonymous may be looking for quick cash and the benefits of NFT include the long-term applications of the token or the growth of the item’s value. Trustworthy teams can usually be found on LinkedIn or they might have individually verified accounts on Twitter. For example, a team lacking programmers might not be the best choice for an NFT game company. 

Is there documentation with clear language on the details of the project? 

Sometimes projects include their whitepaper, an abstract that breaks down the base components and goals. Does the project list out the utility of the NFT or is there a roadmap for before and after the launch? Perks and benefits of buying into a project should be concise and might come in the form of exclusivity, discounts, and services. 

Picking an NFT that aligns with your interest is also important. For example, some projects specifically benefit certain causes.

Where can I get an NFT?

Utilities for NFT is basically what the development team indicates what the NFTs would bring to investors or holders. Perks and benefits can come in a variety of creative ways from getting access to exclusive items and services.

Where can I get NFT?

Most collectible NFTs are sold on a public market. These tokens are often released as whole collections that are fully minted and ready for purchase through sites like OpenSea, Rarible, etc. The cost of public sales can vary wildly and are subject to market change. NFTs used for games sometimes have their own markets but can be found in public markets on occasion. 

Specific projects are sometimes moderated through individual websites that usually involve being whitelisted, which is a process that verifies a user. Whitelisted users can then purchase the NFT and go through the minting process. Airdrops are sometimes used to release pre sales to individual markets quickly, such as a specific online group like a Discord channel or to followers on Twitter. A lot of these projects reward early adopters with a randomized NFT, so be aware that there can be an element of chance. 

Those looking for upcoming projects to potentially beat the crowd can find a calendar of upcoming NFT releases through NFTCalendar.io which is the current go-to for that information.

What is minting?

Minting converts data into unique asset that can be traded, sold, purchased, and integrated into experiences such as games. As an example, a piece of art becomes an NFT through the minting process. This enables the ability for the digital item to be unique.

What can I do with an NFT? 

As of now, the applications of NFTs are still being explored. Developers have already started to use NFTs as assets in games with most NFT capable games being referred to as blockchain or Play-to-Earn games. In these games, NFTs can be used to establish in-game economies, provide unique items or characters, and enable autonomy such as building in-game towns. 

The most popular NFT integrated game, Axie Infinity, allows players to raise unique digital creatures and breed them for even more customization. The monsters have special visual elements, traits, and abilities that affect gameplay aspects, particularly in player-vs-player battles. 

Of course, the aforementioned Bored Ape Yacht Club and other sets such as CryptoPunks enable the collection of digital images and assets. Bored Ape offers event access and has entered pop culture as celebrities adopt and share their favorites online and on television talk shows. Record-breaking sales continue to push the value of desirable NFTs upwards. In December 2021, Pak’s “The Merge” was sold for $91.8 million USD. 

There is always a potential for scams or market crashes, so be aware of the volatility of the current NFT world. This is expected to stabilize as blockchain technology is used more but it’s hard to predict the future and who knows what form NFTs could take in upcoming projects.

FAQ

How do I know an NFT is authentic?

NFT ownership is recorded on the blockchain, and that entry acts as a digital pink slip. Exchanges and creation can all be determined.