Intro to NFT
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Hello! My name is Liz Staley and I’m a long-time user of Clip Studio Paint (I started using the program back when it was known as Manga Studio 4!). I was a beta-tester on the Manga Studio 5 program and for Clip Studio Paint, and I have written three books and several video courses about the program. Many of you probably know my name from those books, in fact. I write weekly posts on Graphixly.com and on CSP Tips, so be sure to come back every week to learn more Clip Studio Tips and Tricks from me!
As of the time of this writing, NFTs are taking the online - and the offline - art world by storm. But what is an NFT, how are they beneficial to artists, should you sell them, and what impact do they have on the environment? I will try to answer all those questions and more in this article! This writing is by no means a comprehensive article about NFT creation and sales, but more of a primer. Even with several days of research and taking notes like I was studying for a college exam, I am definitely not an expert on this method of selling art with cryptocurrency! But I think this is an interesting way to sell art and it’s exciting to see something like this emerging right before our eyes.
(My actual desk while writing this post!)
In this article we will cover the following topics:
What is an NFT?
Benefits for Artists
Potential Environmental Impacts
Creating and Selling
Let’s dive right in!
What is an NFT?
NFT stands for Non-Fungible Token, which is a cryptocurrency transaction with added information in the form of an image, gif, MP3, video file, or some other type of file attached to it. Each token is part of a blockchain, which is a bit like a Chain of Custody log. The blockchain shows a ledger of each transaction associated with a token and proves who owned that token before.
Blockchains contain three primary bits of information - the data of a transaction, a unique code for that transaction (like a barcode or serial number), and the code of the previous transaction. Each block points to the previous block, which is what makes a chain. These blocks are very hard to alter, partially because most cryptocurrencies use a system called “proof of work” that slows down the processing to make a block in the chain.
Changing these blockchain ledger entries takes lots of time, energy, and all changes must be verified by the other users on a Peer-to-Peer network. This makes these transactions very secure and difficult to fake their authenticity. There’s a lot of other technology that goes into blockchains, and it’s really easy to fall into a rabbit hole on YouTube of explanation videos, but this is a basic explanation of how they work and why they’re so secure.
Now, back to tokens! A standard token in cryptocurrency is fungible, meaning it can be traded like-for-like. If you have one token of cryptocurrency and trade it for another token, you still have one token. It’s like trading one American quarter for another American quarter. You still have a quarter and the two are nearly indistinguishable from each other.
NFTs are unique, however, and can’t be exchanged like-for-like. Trading an NFT is like exchanging your Shiny Charizard for a Blue Eyes, White Dragon (Wow, showing my age there!). They’re both trading cards, but they aren’t exactly the same. Then I can take that Blue Eyes, White Dragon card and trade it for, say, a used car. Each item in this chain of trades is unique, and that’s basically what trading NFTs is like!
Not every NFT is completely unique, however. Just as prints can be made of original artwork, copies of an NFT can also be made. These copies don’t hold the same value as the original, just in the same way that a print of a Monet doesn’t hold the same value as owning the original painting.
So, in the most basic of senses, an NFT is a digital transaction that is associated with a particular extra file that contains something of value (art, music, comic, animation, video, photo, etc), and that transaction also comes with a certificate of authenticity that would take a lot of time and effort to fake. (More about that in the section about the impact of NFTs on the environment)
Benefits for Artists
NFTs come in a range of prices, from small quick-to-make images to more ambitious works like entire graphic novels, artists can put up a wide offering of ways to buy their art.
An artist can sell an NFT today and continue earning on it tomorrow in ways that other types of selling just can’t do. NFTs can be coded to pay the creator a percentage of all sale prices down the line, usually 2.5-10% of the sale price. This means that any time your work changes hands, you keep getting paid for that piece - which isn’t possible if you sell an original painting or print at a craft show and then the buyer sells it again down the line!
NFTs also give a way for fans of a creator to support them, and we all know how important it is to have a variety of income streams in order to make it in today’s art world!
Environmental Impacts of NFTs
It’s impossible to discuss NFTs without also talking about the environmental impact that they’re having. Artists making money is a great thing, but what is the potential cost that these sales are having on our climate and power grids?
Before we get into this, I do need to say that as of the time of this writing, the figures presented below for energy usage have not been substantiated. All sources found for these numbers were sourced from one study, and the writer of that study has stated that they deliberately were biased in their findings. Please take this into account when reading and do your own research if you are interested in selling NFTs but have concerns about the environment.
Creating, or “minting” an NFT has been described by some concerned artists as an “ecological nightmare pyramid scheme”. The creation of the average token uses an amount of electricity roughly equivalent to what a person living in the EU uses in a month. This insane guzzling of energy is because of the processing of the blockchain that we discussed earlier.
If you want to learn more about the environmental impacts of selling NFTs as of March 2021, this article from qz.com is a great resource: https://qz.com/1987590/the-carbon-footprint-of-creating-and-selling-an-nft-artwork/
There are more environmentally conscious ways of trading NFTs and cryptocurrency, but implementing those systems is coming along slowly. The most popular platform for NFT buying and selling is currently Ethereum, and they use the ledger verifying system that is potentially the hardest on the power grid and worst for the environment.
But there are other systems that don’t guzzle up huge amounts of electricity while still keeping the blockchain ledger safe. One of these is called Proof of Stake. Instead of requiring large amounts of energy to ensure the blockchain stays accurate, this system requires users to lock up some of their cryptotokens in the network, showing that they have a “stake” in keeping the ledger accurate. If a user is caught falsifying the ledger, they lose their stake of tokens. Ethereum has said for years that it will implement a Proof of Stake system to cut down their carbon footprint, but hasn’t switched yet. Of course, in order to implement this change they will have to convince their users that the change is a good one, which may be difficult and might be part of the reason why the switch hasn’t happened yet.
Many artists selling NFTs are trying to offset their emissions by investing in renewable energy, conservation, and new technology that would reduce CO2 levels. Artists are the ones pushing the most for change, so hopefully with the explosion of interest in NFT properties, change will come more quickly.
Creating and Selling NFTs
Now that you know what an NFT is and some of the concerns, maybe you’re wondering how can you create and sell your own NFTs?
As we’ve discussed this whole time, NFTs can be just about anything that may be seen as having value - art, music, animation, comics, video, and more. Some artists are even releasing entire comics that are exclusively NFT products!
To start selling NFTs, you will need to sign up for your marketplace of choice and have a cryptocurrency wallet set up. This wallet will need to have cryptocurrency in it, which is one of the complications of selling NFTs because it means you do need to have some money up front in order to get started.
Also, there are hidden fees that can be astronomical in selling NFTs as well. Many sites charge “gas fees” for every sale, which is the price for the energy required to complete the transaction and add to the blockchain, along with a fee for buying and selling. You also need to think about conversion fees and that there are fluctuations in cryptocurrency prices depending on time of day.
These fees can mean that sometimes you pay more than you get from selling the NFT. Different marketplaces have different fees, so do your research, read all their documentation, and choose wisely before selling your first NFT.
Some of the most popular marketplaces for NFTs are Rarible, OpenSea, and KnownOrigin.
Once you pick where you’ll sell your products, you’ll need to log into that marketplace and upload a file. This process of creating your NFT is called “minting”. The marketplace will ask if your NFT is a single or if there are multiple copies, and if it’s part of a collection. Fill in this information and upload your file, then add the title, description, whether you want bids or a set sale price, and the other information that is required.
You can also build royalties into your NFT so you continue to make money off future sales of the piece. This is a really neat feature of NFTs, allowing artists to continue getting paid down the line one the same creation as it changes hands instead of only making money off a sale once.
Complete the process according to your marketplace of choice and collectors can start bidding and purchasing.
This article just barely scratches the surface of this new and exciting way to sell digital art, but I hope that it’s enticed you to look into this new venue to make a living from your creations and learning if it’s right for you!
You didn’t bring up the major concern of the rampant art theft and the headaches it gives to people who do not want to participate in any of this, but find themselves having to go through extra lengths to protect their artwork.