How do you pay for NFT

Next up is adding all the relevant information needed to mint your NFT. You can also choose whether you want to create a single NFT (BEP-721) or a series (BEP-1155). A series allows you to sell multiple versions of your collectible, but each is still unique by an identifier. (*This feature will be available soon in a future update.)

How to Create Your Own NFT on Binance

You’ll now find yourself on the upload page. Click to select the image, video, audio, or file of your choice to be turned into an NFT.

Next up is adding all the relevant information needed to mint your NFT. You can also choose whether you want to create a single NFT (BEP-721) or a series (BEP-1155). A series allows you to sell multiple versions of your collectible, but each is still unique by an identifier. (*This feature will be available soon in a future update.)

Your file will now upload, and Binance will create your NFT. You can also see the transaction ID associated with the minting that you can copy into BscScan. Click [List NFT] to go to your collections or wait to be redirected.

The next few steps were relatively simple. Since the rose was already isolated, a shape existed. Color constraints forced the same color overlays to the rose. Another thing I did was set the roses drop shadow layer blend mode to `Multiply` as I knew the black would react nicely with the oranges.

What is an NFT?

If you’ve never heard of cryptocurrencies or the blockchain then you may not be familiar with what NFTs are. NFT stands for non-fungible token. Something that is fungible can be replaced by an identical replica. Whereas something that is non-fungible cannot. A token is a digital asset stored in your wallet. A wallet holds your items and allows you to use your tokens.

NFTs are tokens that store unique sets of data. The tokens are certified proof of ownership like a deed. What’s cool about NFTs are the limitless possibilities. Teams are capturing moments, creating highlights and building communities all around NFTs. While digital artists are creating and minting art for sale on digital marketplaces.

Some people want to buy a new wave of coins that have utility usage. I was lead creative on Gary Vaynerchuk's NFT project, which had a very interesting collector base. The tokens he [offers] grant access, they have utility. One is a breakfast bat. If you buy it, you can exchange it and he'll have breakfast with you.

'You have to be able to sell yourself'

For people looking to get into [selling NFTs], it's definitely about understanding that this is a new method of being able to create revenue from your creativity, the same way Etsy and Amazon changed the way we can earn money from things we create.

People have been selling canvases and doing commissioned artwork for thousands of years. In the last 50 years, you've had digital art. Now, we have a way to sell digital art that's not in the traditional sense – whether it's a commission or gallery show. This is a new medium, a new marketplace, a new way to monetize art, and not only that: a new way to create it.

Video by Jason Armesto

It doesn't take supplies, it's easy to do. You can do it in your living room. [It's] not some crazy thing – [you] don't need supplies and a huge studio.

Do your research on the marketplaces and be good about preparing yourself to become a marketer. You need to not only produce creative, compelling work, but you have to be able to sell yourself.

I’m closely observing DAOs, which are just coming up in all parts of the world. Traditionally, there would have been an art collective, of artists together doing some work. Now they’re trying to be a DAO.

This entrepreneur paid $69.3 mn for an NFT so you can get it for free

Vignesh Sundaresan, also known as MetaKovan, spent $69.3 million on a Beeple non-fungible token earlier this year, but he’s not very possessive about it.

The beauty of an NFT is that everyone gets to enjoy it, the Indian cryptocurrency entrepreneur and investor said in an interview with Bloomberg News. In fact, he’d be happy if everyone downloaded a copy of “Everydays: the First 5000 Days.”

The blockbuster price he paid helped bring attention to the burgeoning market for NFTs, which has exploded in popularity since then. It’s gotten attention for the potential of the technology as well as the numerous brands and celebrities piling in. Yet, it’s also been the subject of questions about trading scandals, valuations and what an NFT purchase actually gives the buyer.

Sundaresan spoke with Bloomberg about his thoughts on NFT property rights and what he’s watching next. Below are highlights from the interview, edited for length and clarity.

What do you think about property rights on NFTs?

At the end of the day, information wants to be free. You try to have paywalls, you try to do so many things. But even those methods of having information or data inside walled gardens of any kind of security, they’ve not done very well on the internet.

If someone is releasing music, maybe it gets pirated. All these issues seem to be very native to the internet. If you try to fight that, I don’t think it’ll be useful at all.

What NFTs do, instead of giving the importance to that copy of the file, it kind of gives importance to something else big. The idea that some person supported an artist at some time and this was the memorabilia.

If you have an NFT, I believe everyone gets to enjoy it. But you don’t need everyone to pay for it. There can be a few people who pay for this production, and they get a credit to have been part of this production. And that’s it.

It’s fine to download. I’m happy if someone were to download Beeple -- The 5000 Days -- everyone in the world.

Are you involved with any big-name series like CryptoPunks?

Personally, I’m not involved in CryptoPunks or Bored Ape Yacht Club.

I did not understand what this was or what this would become actually. Still, it’s not for me. I don’t want to be part of something very exclusive. In a way we are trying to do something very inclusive.

I want to figure out other ways of scaling the number of connections we have on the internet. These projects will have to figure out why they’re limited to these many numbers, and what effect will that have on what they can do in the world.

What tokens do you like?

Today, the most exciting area for me is parachains, which are part of Polkadot. Polkadot is just a skeleton and there can be so many chains that attach to the skeleton, and can scale themselves.

You can participate in the parachain auction, where you lock up your DOT for a couple of years, you get back your DOT. And for that you’ll get rewarded with some of these parachain tokens. For me, it’s a great way right now to think about capital allocation. I’ve been in Polkadot for a while now, and I’m not looking to change my position.
What do you think about decentralized autonomous organizations (DAOs)?

I’m closely observing DAOs, which are just coming up in all parts of the world. Traditionally, there would have been an art collective, of artists together doing some work. Now they’re trying to be a DAO.

I think Wyoming has been leading the way – they’ve figured out a lot of things they can offer, and people are going to figure out how they can allow people to host DAOs in their home country. That’s going to be the next phase, because I feel like it will have real impact in the world.

What are you working on now?

Working with artists has been nice, and in the next four or five months we’ll see a lot more that comes out of this.

We launched something on Instacart. It’s a programmable music piece but it was made by artists in India; 40 artists participated in this. They figured how to route it -- for every sale, the payment trickles out and gets out to everyone. I think it’s great model to look at how we bridge cultures from all over the world and present them in a global market.

“I've got a copy on my hard drive,” Professor McCormack says. “It doesn’t seem like a good deal to me.”

The paradox of NFTs: What are people actually paying for?

Digital image depicting NFTs, or non-fungible tokens

In March, an NFT attached to digital artwork by a graphic artist known as Beeple (aka Mike Winkelmann) was sold at auction for US$69.3 million. It became the 100th-most-expensive work of art ever to be officially traded, and is in the top three of auction prices for a living artist.

What is an NFT?

NFT stands for non-fungible token.

“They’re colloquially known as ‘Nifties’,” says artist and researcher Jon McCormack. NFTs are traded using blockchain technology – the same technology that supports cryptocurrencies such as Bitcoin.

But where currencies are “fungible” – that is, mutually interchangeable, so that one Bitcoin has the same value as another – an NFT has value because it’s (supposedly) unique.

The paradox here is that an NFT is a digital asset and therefore not unique. Digital technology allows a song, or a photograph, or a drawing, to be replicated easily and exactly.

Traders and artists are aware of the absurdity – a sense of irony is partly what’s driving the market, Professor McCormack believes. Beeple rode the wave.

“He started experimenting with 3D software, and to learn the system, he made a promise to himself to do one image a day, and he was posting them on Instagram,” Professor McCormack explains. Anyone can now download a copy of the auctioned artwork, Everydays: The First 5000 Days, a composite of these Instagram posts.

“I've got a copy on my hard drive,” Professor McCormack says. “It doesn’t seem like a good deal to me.”

So what are you paying for?

A unique code is attached to the JPEG of the digital artwork – this code or token is the NFT.

“In the art world, it’s very common to have a certificate of authenticity,” Professor McCormack says. “This is a digital version.”

Blockchain technology is often described as a digital ledger, where anyone can see who owns the asset, and how it’s traded. The “crypto” aspect is designed to make the blockchain hacker-proof – but the complexity of the system has an environmental cost (of which more later).

“The problem with NFTs is that the only thing that’s rare is the NFT itself,” Professor McCormack says. “And in some cases, because the technology is still developing, the actual thing that you’ve bought is not contained within the NFT. There’s just a pointer to a webpage. So if that web server goes down or the image gets deleted or disappears, you have nothing, really.

“You still own the NFT, but it’s useless.”

How do you pay for an NFT?

NFTs in their present form were developed by a cryptocurrency called Ethereum, but many other cryptocurrencies now trade their own NFTs, Professor McCormack says.

In October 2017, Ethereum made changes to blockchain technology that enabled players to use NFTs to adopt, breed and trade digital cats in a game called CryptoKitties. A craze took hold, a speculator made the news by selling a Cryptokitty for more than $100,000, and NFTs began to be used in other blockchain games.

(NFTs are now also used as a trading chip between gamers, so that a magical sword in one game, say, can be exchanged for a token with special properties in another game. They must be purchased with a cryptocurrency, and if the currency increases in value, so does the NFT.)

The potential for NFTs to be used as a way of trading in other digital assets that might have value to collectors began to take hold.

The digital artwork ‘Everydays: The First 5000 Days, by graphic artist Beeple, aka Mike Winkelmann

So what’s being traded?

Memes are being traded. Basketball stars are selling clips of their best shots. Bands are selling their albums as NFTs. New York Times reporter Kevin Roose wrote a column about NFTs, then created an NFT of the piece and auctioned it to see what would happen. He sold it for US$560,000.

In March of this year, Twitter founder Jack Dorsey sold his first tweet – “just setting up my twttr” – for US$2.6 million.

Virtual shoe brand RTFKT Studios sold its range of digital sneakers in seven minutes for US$3.1 million. And a black virtual hoodie from the streetwear label Overpriced has been purchased for US$26,000 – it can be worn at digital meetings.

Melbourne street artist Lushsux is selling JPEGs of his large mural portraits as NFTs. He said in a recent interview: “I sold a piece called The 8 for 88.8 ETH, or, like, $250,000. I’m literally one of Australia’s highest-paid living artists. Top 20, at least. And some guy is trying to sell one of my Elon Musk portraits for $1.4 million. You could buy a Whiteley for that price. Or, like, a two-bedroom house in Melbourne.”

Lushsux also said he didn’t believe the market would be sustainable for long.

Will the bubble burst?

“One of the interesting differences between Bitcoin and Ethereum is that Bitcoin has a fixed number of coins that are ever going to be available,” Professor McCormack says.

The limited number of Bitcoin adds to their value, “whereas Ethereum is open-ended so that you can keep creating Ethereum”, he says. “So the only thing that’s really valuing Ethereum are the people who’ve invested in it. The only way it gains value is because people just say it’s worth more, and they’re willing to pay for that.”

If the market decides Ethereum is worthless, then the party’s over. Cryptocurrencies were created in the wake of the Global Financial Crisis to avoid being manipulated by governments and central banks. That also makes them vulnerable, because they lack legal and institutional protection.

Close-up of an Ethereun cryptocurrency token sitting on a keyboard

Professor McCormack believes the NFT trend is partly driven by celebrity culture and its own hype. COVID lockdowns have also played a part.

“People are sitting in front of their screens all day long, and you can own stuff just by doing a transaction on your laptop,” he says. “But if you look at it more deeply, what are you owning, and what’s the concept of ownership?”

What the purchaser of an NFT actually owns remains “a legal grey area”, he says.

“There’s currently no legal framework for what ownership means in NFT terms, as far as I know in any country, unless there’s some explicit agreement as part of the NFT sale – that there’s a transfer of copyright, for example. And because anyone can access that image, it’s hard to see why it’s of such high value.”

NFTs are a mixed bag for artists

If an artist sells their NFT through a sales site – such as Rarible, Foundation or SuperRare – using Ethereum for the recommended minimum price of $100, they can actually lose money because of the high cost of selling art on the blockchain, Professor McCormack says. Ethereum trades consume considerable energy, and from an environmental perspective that’s reason enough to stay away, in his opinion.

“You can own stuff just by doing a transaction on your laptop,” he says. “But if you look at it more deeply, what are you owning, and what’s the concept of ownership?”

On the other hand, artists do have the ability to keep making profits from their work of art if it gains in value down the track.

That’s because some NFTs can specify that the artist receives a cut of the profit whenever the NFT is traded. That’s different from a traditional artwork that can be sold cheaply when the artist is unknown, and then resold at a massive profit without the artist earning extra. (Some jurisdictions have passed laws that seek to redress this.)

Professor McCormack says NFTs have also allowed artists to continue making a living from their work during the COVID era, when travel is difficult and lockdowns have kept people away from galleries.

Fraud is still possible

Forgery is a perennial problem for art collectors, and it’s infiltrated the NFT market as well. The lack of legislative controls adds a greater element of risk.

“There’s instances of people paying money for things that don’t exist, or of people creating NFTs of an artist’s work without that artist’s permission and then trading them, and the person getting the money and the artists getting nothing,” Professor McCormack says.

The environmental cost

Cryptocurrencies such as Bitcoin and Ethereum rely on an energy-hungry system called “proof of work” to verify their transactions. Some cryptocurrencies that specialise in NFT trades use an alternative system called “proof of stake” to appease customers concerned about greenhouse emissions. The pros and cons of various alternatives are described here.

Professor McCormack believes the most ethical and environmentally responsible stance is to step away from the NFT marketplace altogether.

The business of buying and selling NFTs is “using up energy that could be used for other purposes”, he says.

And the energy of verifying the blockchain transaction is only part of it. “It’s the energy of manufacturing the computers.”

Professor McCormack describes NFT speculation as a form of gambling. It’s contributing to a global silicon chip shortage and “really not being used for anything that’s useful for humanity, in my opinion”, he says.

“If you look at the science of what’s happening to our environment, everyone should be worried about what’s happening to the planet. And I think that really means you have to think carefully about where energy is used and the purpose that it’s used for. I think it’s a moral decision.”

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