Understanding On NFT (Non-Fungible Token)

 How it works

Getting started

What is an NFT?

NFTs prove ownership of a unique digital asset like art, music, collectibles, videos or anything else with blockchain technology.

NFT stands for non-fungible token. That sounds like an intimidating technical term (no more nerd talk, promise!). But NFTs are just digital certificates of authenticity.

If you buy a physical painting, you know it’s real because you see the artist’s signature on the canvas. Somebody can photocopy the painting, but they don’t own it — you do. Before NFTs, digital assets were like photocopies:

You can see who posted something, but you can’t see who owns an Instagram post, Pinterest Pin or Reddit meme.

NFTs are like a signature for digital items: They authenticate ownership of digital assets like art, collectibles, music, videos, in-game assets, and more. Just like physical certificates, they document:

Who created it

When it was created

Who bought it (and when)

The price(s) it solds for

Who owns it now

(Technically, NFTs can contain any data the creator wants to include, but the above are most relevant.)

All of this is public via a blockchain, so anyone can trace each of your NFTs from the original creator all the way to your wallet—and verify its authenticity (even the friends who call you crazy for buying a profile picture 😉).

But owning digital assets is more than “nice to have”, a fun hobby or a digital stamp collection:

Some NFTs unlock digital (or physical) experiences, grant access to exclusive communities, let you contribute to projects, grant premium access to software products… We could keep listing awesome features, but that list would be endless and our writer needs to get this done before tomorrow’s meeting. Tbh, this technology is so new, we probably haven’t even seen 4.20% of the use cases.

What is a blockchain?

A blockchain is a network of computers that track transactions in their network and generate a giant ledger of who owns what (and how much of it). That’s a lot of beep boop action!

So if you ignore your friends’ well-meaning advice and spend six figures on a CryptoPunk, computers around the world confirm you as the NFTs new owner—and ensure it stays in your wallet.

Blockchains that host NFTs include:

Flow

Tezos

Polygon

Ethereum

Solana

...and many more

Rarible currently enables selling and buying digital assets on the Ethereum and Flow blockchains, with more to come..

What are Proof of Work (PoW) and Proof of Stake (PoS) blockchains?

We’re almost done with the technical terms, just bear with us for a moment here! These two “consensus mechanisms” are different ways blockchains validate transactions. There are big technical differences, but we promised to spare you the technical talk—so let’s talk about what matters to you.

The main practical differences are:

Proof of Work is extremely secure and decentralized, but consumes high amounts of energy and makes blockchains relatively slow because it relies on miners and their hardware to verify each block. In the case of Ethereum, it can also lead to high fees for buying, selling or minting NFTs.

Proof of Stake blockchains usually have lower fees and higher performance since blocks are published by stakers—the PoS equivalent of miners—who lock up their funds in a smart contract. Because these blockchains are more efficient and no noisy expensive hardware is involved in the process, they also consume way less energy and have a smaller carbon footprint.

As far as how you interact with digital assets, nothing changes between Proof of Work and Proof of Stake blockchains.

What is a wallet? Why do I need one?

Your physical wallet probably contains your money, a form of ID, and maybe pictures of your loved ones (we’ll ignore that 3 year-old Starbuck’s membership card with $1.83 on it).

Your crypto wallet does that on a blockchain. It has an “ID” (a long string of numbers and letters), your cryptocurrencies and any NFTs you bought with those cryptocurrencies. There are a number of wallet providers, including Metamask (the most popular and easy to use), Fortmatic, Coinbase and Rainbow, among others.

When you create a crypto wallet, you get a “seed phrase” — a series of words which let you recover your currencies or NFTs if you lose access.

NEVER GIVE THIS PHRASE TO ANYONE. Anyone who knows your seed phrase has full access to your wallet and can buy, sell or transfer any funds or assets. Neither Rarible support nor any trustworthy individual or organization will ever ask for your seed phrase.

To transact with cryptocurrencies or NFTs on Rarible or anywhere else, you need to connect your wallet to log in.

Some of the wallet connect options on Rarible include MetaMask, Rainbow, Coinbase, Fortmatic, Portis, and others.

How do I choose the right wallet?

Wallets are free, so experiment to find the provider you like most. If you want, you can even import your wallet into another provider’s software with your seed phrase.

MetaMask is one of the most popular options for the Ethereum blockchain, existing as both a mobile app and a browser extension. Fortmatic is one of the easiest wallets for newcomers, as it allows you to create one using your email address. Rainbow Wallet offers a great visual experience and browsing tools. Coinbase is a popular wallet that allows you to create a business account.

How much does it cost to create an NFT?

When you first create an NFT, you “mint” it with a few clicks — which might mean you have to pay a fee to the network (none of this goes to Rarible).

Fees depend on the blockchain and minting option. Blockchains charge a fee for minting, buying and selling. Imagine it like highways on a road trip. Some are free. Others charge you a toll, which can be cheap or expensive.

Creating a new NFT requires two interactions:

Minting your NFT

Making your NFT available for sale

As one of the most popular blockchains, Ethereum tends to have higher fees while the Flow blockchain is cheaper to mint on. But don’t let fees be the factor—the most important factor is minting where your audience has their wallets. Those are unique for each chain.

Or you could mint for free instead! Some of the wizards (okay, coders) on our team figured out how you can mint without paying for it.

If you enable “free minting”, the buyer of your NFT covers the fees. Keep in mind that fees might surprise fans who are trying to buy your creations. Free minting also adds your creation to the Rarible collection (collections are like folders for NFTs), not your own. To launch your own collection, you have to cover fees.