How Does NFT Work
You are probably already familiar with the non-fungible tokens (NFTs), the popularity of which has skyrocketed in recent times. Of course, the usage of such tokens now extends far beyond digital art, but it was the foundation of the NFT market.
NFT is a digital representative (asset) of a digital file or physical object. There are several types of NFT:
- art items
- video game items
- trading cards
- sports moments
- domain names
- fashion items
So now the question arises: how exactly does the transformation of an object into a token happen that encapsulates the uniqueness of a thing impossible to fake? Or, in simple words, how does NFT work?
NFT minting process inside out
Minting is the process of NFTs building on the blockchain. In more detail: “uploading” your digital art (or other digital objects) on the Ethereum blockchain or converting a digit file into an asset — a token. Then, you are free to purchase or trade it with cryptocurrencies.
The thing is, NFTs are produced using Ethereum-based (mostly) smart contracts. Besides, the platform supports multiple standards for minting NFTs.
Flow, Solana, Wax, Tezos, Binance Smart Chain are some of the alternatives to Ethereum regarding the NFTs building.
What about NFT artwork storing?
There are 2 ways of NFT artwork storing:
- Artwork and token on a blockchain or decentralized storage
- On a centralized or private server
The first method is considered the safest one. It ensures the “liveliness” of your artwork even after the project’s failure or the website’s deletion.
The second method implies the usage of private servers or a centralized storage (AWS, for example). However, this method also has its pitfalls:
- Your NFT will be in vain if hosting “breaks down” or a malfunction in the storage mechanism.
- If the server holders change the picture to which the token is linked, the picture in NFT will also change.
Metadata as a digital object description
Token metadata usually implies the following information: object description, attributes, date of token generation, the link to artwork and other data. The metadata is stored in the token after its production and determines the most important thing — its uniqueness and non-fungibility.
However, it is important to note that this metadata generation occurs at the Reveal stage, which follows the actual transformation stage of the digital file or object into an asset. So the process of token building itself does not yet determine the thing’s uniqueness. After the Reveal stage, when the asset (art object, for example) is endowed with genuine uniqueness, rare creature hunters come into play. It drives up the price of the NFT.
So it is better to purchase NFTs at a bargain price at the minting stage.
Standards define the capabilities of NFTs. The very first is the Ethereum NFT standard — ERC-721, – was developed in 2018. It is the one that defines the uniqueness of the token. Also, this standard ensures a safe token transfer function — safeTransferFrom.
Another popular standard is ERC-1155, developed by Enjin. The standard can be used to create both fungible and non-fungible tokens on Ethereum. In addition, the standard allows both tokens to be described in a single smart contract. Finally, ERC-1155 gives security and the ability to trade without the threat of token hacking.
Also there are other NFT standards, such as Metaplex (Solana), NEP-171 (Near), Simple assets (WAX), NFT-RFC (Cosmos), TZIP-12 (Tezos) and many more.
Does the NFT minting process take a lot of time?
The answer to this question is ambiguous. But today’s token creation platforms are a bit like marketplaces or YouTube or Spotify. So it’s not that complicated.
OpenSea, Rarible, SuperRare, BakerySwap, KnownOrigin, etc., are some of the top NFT marketplaces. Regardless on the platform utilized, the transaction fee may be different.
In brief, the process is the following (using NFT marketplace tools):
- You сreate an account on an NFT marketplace (you also need to set up a wallet extension, for example, Metamask);
- Then upload a digital file, create a collection and mint token;
- Add an item name and description;
- Put it up for sale!
Сreating your own token is not a challenge. Still, minting is more than just creation — it’s a process of reorganizing objects and representing them in the digital world.