5-Minute NFT Crash Course: Everything You Need to Know | CoinCodex (2023)

NFTs have grown in prominence in recent years, attracting both die-hard fans and outspoken critics. As of 2021, we've seen an explosion of NFT collections and marketplaces, and NFTs have made their way into mainstream media through various endorsements — for example, you may have seen celebrities put their social media profile pictures into different NFTs from collections like CryptoPunks have changed and Bored Ape Yacht Club.

Although NFTs receive a lot of attention, the concept of NFTs is not exactly intuitive to the average person, and there are still many common misconceptions about NFTs. In this NFT crash course, we provide you with a crash course that will update you on everything you need to know about NFTs and clear up the most common misconceptions people have about them.

What are NFTs?

the termNFTis an abbreviation for "non-fungible token". An NFT is a digital token with a unique identifier issued on a blockchain.

A blockchain is a unique type of distributed ledger that tracks transactions and balances and is very difficult for anyone to alter to circumvent the rules of the protocol. This makes it easier to determine the provenance of an NFT and makes it difficult for anyone to pass off a copy of an NFT as genuine. Some popular examples of blockchains used to issue NFTs are:ether,Solanaepolygon.

NFTs can be used to represent digital collectibles and works of art where exclusivity and scarcity are paramount. They can also be used to represent other types of digital objects where protection from counterfeiting is important, e.g. B. event tickets or passes that offer access to exclusive communities.

Another benefit of NFTs is that since they are issued on a blockchain, they can be freely traded on a peer-to-peer basis at any time. You can send NFTs to another user 24/7, regardless of your geographic location.

In practice, NFTs are most commonly used to represent digital media such as images, video, and audio. However, in most cases the media is not actually stored on the NFT itself. Instead, the NFT usually contains a reference pointing to the media it is intended to represent.

PFP NFTs and the collection that started it all

The most popular type of NFTs are profile pictures or "PFP" NFTs, which are often used as avatars by their owners to represent themselves on the internet. PFP-NFTs are typically released in collections that contain a large number of unique digital images that share a common theme.

The most influential collection in the PFP-NFT genre is CryptoPunks as it introduced the design used by hundreds if not thousands of other NFT collections today. If you go to an NFT marketplace and look for the NFT collections that are seeing the most trading activity, pretty much all of the top collections are heavily influenced by CryptoPunks.

The CryptoPunks collection consists of 10,000 unique avatars automatically generated by code. There is a pool of possible attributes that any CryptoPunk can have and these attributes were randomly selected during the generation process. Attributes include things like gender, skin color, hairstyle, and accessories, and each CryptoPunk has a unique combination of attributes, so no two CryptoPunks look the same.

Each attribute has its own rarity - some attributes appear on a large number of CryptoPunks, while others only appear on a few of them. For example, the Earring attribute appears on over 2,400 CryptoPunks, while the Alien attribute only appears on 9 CryptoPunks.

Typically, CryptoPunks with rare attributes fetch a higher price compared to CryptoPunks adorned with more common attributes. Actually somethe most expensive NFTsof all time come from the CryptoPunks collection.

As mentioned, the concept pioneered by CryptoPunks has been emulated by countless other NFT projects with varying degrees of success. By far the most successful CryptoPunks-inspired collection is the Bored Ape Yacht Club, which rivals CryptoPunks in terms of overall value. Other examples of successful PFP-NFT collections are Azuki, DeGods, CloneX and Doodles.

NFT markets

NFT Marketplaces are online platforms that allow users to buy NFTs from other users or to list their own NFTs for sale. NFT markets are also a great way to discover new NFT collections and keep track of which collections are gaining or losing popularity.

The currently most used NFT market isOpen sea. The OpenSea marketplace can be used to trade NFTs on many different blockchains, which is one of its greatest strengths. A variety of NFTs are listed on OpenSea, including PFP NFTs, Art NFTs, Gaming NFTs,Metaverso-NFTs, Photography NFTs, Membership NFTs and more.

The best thing about NFTs is that they are based on open source technology, so anyone can create their own NFT marketplace and release it to the public. Other examples of popular NFT markets include:Blur,magic Edenerare appearance.

To buy or sell NFTs on an NFT marketplace, you need an NFT wallet. We explain what you need to know about NFT wallets.

nft wallets

LikeNFT-Walletis software that allows you to store, receive, and send NFTs. In most cases, normal cryptocurrency wallets also work as NFT wallets. For example, if you want to collect NFTs on the Ethereum blockchain, you can use the MetaMask wallet software as your NFT wallet. You will also likely use MetaMask to store ETH, which is used as a currency to buy and sell NFTs and pay for transaction fees on the Ethereum blockchain.

When setting up a cryptocurrency wallet to store NFTs, it is very important to have a safe backup copy of your recovery phrase. This way you can access your NFTs and cryptocurrencies even if you forget your wallet password or lose the device you installed the wallet on. You should never share your recovery phrase with anyone as it gives you full access to everything stored in your wallet.

You should also be very careful when transferring NFTs or cryptocurrencies as these transactions cannot be reversed. If you send your NFTs to the wrong address or if they get stolen, the chances of getting them back are slim to zero.

Invest in NFTs

if you searchNFTs as an investment, there are a few things to keep in mind.

The term "blue chip NFTs" refers to NFT collections with significant valuations and trading volume that are expected to retain (or even grow) much of their value over the long term. While these are certainly the most attractive NFTs, the barrier to entry is often very high.

When it comes to crypto assets like Bitcoin or Ethereum, you can invest as little as you like. For example, you can easily buy $10 worth of Bitcoin or Ethereum. NFTs, on the other hand, generally cannot be broken down into smaller denominations, so they're not a good option for people who only want to make a small investment.

If you want to invest in a premium collection like CryptoPunks, you will have to spend a significant sum - at the time of writing, the cheapest CryptoPunk on the market is listed62,38 ETH, which equals $112,000. The lowest listing price for an NFT is referred to as the "reserve price" of the collection.

You can buy an NFT from other blue chip collections like Azuki and Pudgy Penguins for less money, but you usually have to spend at least a few thousand dollars to get an NFT from a collection that's considered blue chip. Here are the minimum prices for the top 10 NFT collections by market cap:

If you invest in less established NFT collections, you could face liquidity problems when selling. These collections also tend to be much more volatile than blue chips and can lose a lot of value quickly.

Still, investing in NFTs can certainly be profitable for savvy investors. The NFT sector still has a lot of upside potential as it has only been around for a relatively short time. Also, NFT prices from large collections have fallen in the cryptocurrency bear market, so there may be good buying opportunities at this time.

Overall, we can safely say that investing in NFTs involves more risk than investing.in Krypto investieren. In some cases, you can get NFTs throughfree nft drops, which can be a risk-free way to get into NFTs.

Conclusion: NFTs are an exciting new industry that has the potential to grow in surprising directions

NFTs are a very new technology that is still gaining traction. Although the prices of most major NFTs fell along with cryptocurrencies during the 2022 crypto crisis, it is safe to say soNFTs are certainly not dead.

although it is possibleMake money with NFT, new investors need to be cautious as NFTs often show great price volatility. Additionally, more established "blue chip" NFT collections tend to have a high barrier to entry, while less popular NFT collections struggle with liquidity and even greater price volatility.

Still, there's a lot to explore in the NFT space, and NFTs don't necessarily have to be viewed as investments. For example, collecting NFTs can be a great way to support your favorite artists.