Non-fungible tokens, or NFTs, are unique digital assets and cannot be replicated or duplicated. Unlike traditional digital collectibles, NFTs are stored on the blockchain and are completely decentralized. Unlike traditional cryptocurrencies such as Bitcoin or Ether, NFTs represent unique digital items. NFTs can be used in a variety of ways, including video game items such as weapons or characters.
Unlike traditional cryptocurrencies, NFTs do not simply represent a single unit of currency. NFTs are decentralized and are issued by the community through a process known as “minting.”.
What Is Minting?
To understand how NFT minting works, it is first helpful to understand how traditional cryptocurrencies are mined. A blockchain is a digital ledger that records transactions across a network. In order to create new units of a cryptocurrency, users must “mine” new coins. Miners are users who dedicate computing power to the network to verify transactions and add them to the blockchain.
The process of minting NFTs is a unique feature of the blockchain. Unlike traditional cryptocurrencies, where an authority generates new coins, NFTs are minted or created by the community through a process known as “minting.” Each NFT represents a unique digital item, and to mint an NFT, a user must submit a digital object to the NFT’s blockchain. The digital object is then stored in the blockchain, and the blockchain holds the digital object until the user claims it.
How Can You Mint NFTs?
Before minting an NFT, you need to be aware of the three factors that influence your minting: the blockchain, the NFT marketplace, and the costs. Each of these is important and can be the difference between success and failure.
The blockchain you choose will determine the gas fees paid by you while minting the NFT. Ethereum, Binance Smart Chain, Polkadot, Tron, Tezos, and many more chains now support NFTs, each with their own quirks. Most NFTs are minted on Ethereum, where the gas fees fluctuate with energy demands and network availability. Ethereum can be quite expensive, and Binance Smart Chain is a cheaper alternative with faster transaction speeds.
The majority of reputable NFT marketplaces have a mandatory vetting process for NFT sellers, and these vetting processes make your assets appear more trustworthy, drawing more customers. For example, platforms like Rarible and Foundation. Curated and invite-only marketplaces are some of the more elite platforms for both artists and collectors, such as WazirX’s brand new NFT marketplace. This aura of exclusivity ensures that only high-quality art and unique digital assets are allowed on the platform, making themselves a one-stop shop for serious NFT collectors.
The costs of minting an NFT depend on the chosen platform and blockchain. For example, some platforms let you mint NFTs for free and pass on the gas fees to the buyer. This model is suitable for mass-produced NFT collections, but a single, one-time fee is a better option for smaller collections.
After you’ve chosen your blockchain, marketplace, and costs, the next step is to publish your NFTs and put them up for trade on the marketplace of your choice.
Trading Your NFTs
Trading your NFTs is an important part of the NFT ecosystem and often the most enticing aspect of it. Trading NFTs has its own set of requirements, namely a valid wallet and a marketplace compatible with the wallet. If your chosen blockchain is a new and obscure entry to the market, chances are that it is not going to be present in any of the major wallets. That is why it is recommended that you pick well-known blockchains, even if obscure ones are better optimized to your preferences. With the integration of multi-chain, the blockchain requirements will be obsolete, but it is important to bear this in mind until then.
With a wallet linked to the marketplace, you can now successfully trade your NFTs to others for the cryptocurrency that’s built on the NFT’s blockchain. If you haven’t published your NFT via a third-party marketplace, a few wallets also offer an NFT section, which lets you transfer NFTs with ease.
As NFTs are still in a developing stage, there are a few risks associated with investing in them, such as fraud, phishing, etc. The best way to keep your assets secure is to either invest in a hardware wallet for cold storage or to only trade NFTs through trusted third-party marketplaces such as OpenSea, WazirX, and others.
We have covered everything you need to know to get started with NFTs and more in this post. We hope it helps you get started. As the NFT ecosystem matures over the incoming years, the addition of P2E games, NFT entry tickets, and other use cases will turn this fledgling technology into the forerunner of Web 3.0.
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn’t represent any investment advice or WazirX’s official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.