ReBlonde: Your Source for NFT Marketing Services

Non-fungible token. So now you know what an NFT is! Just kidding, I’m sure you’re still confused since you’re probably asking yourself what the heck fungible means. Merriam Webster defines fungible as “capable of mutual substitution.” Think of it this way: You can trade a dollar for another dollar or a bitcoin for another bitcoin, and you’ll end up with the same value you had to begin with. If you have an NFT that represents ownership of a particular physical painting, however, you can’t swap it out for a different NFT from, say, the Bored Ape Yacht Club. Each individual NFT holds its own, unique value, and therefore it is non-fungible.

Like bitcoin and ether, NFTs are digital assets on a blockchain with a distinct identity that makes them unique and verifies ownership. NFTs represent the IP rights of assets ranging from physical paintings to digital art, video clips, and even tweets.

Mike Winkelman, a digital artist known as Beeple sold an NFT of his work for a whopping $69 million back in March 2020, the most expensive piece of digital art ever sold. The piece is named Everydays: the First 5000 Days, a collection of 5000 digital images from Winkelmann’s Everydays collection.

You would think more people would know about NFTs’ origins given their current popularity, but this is something even crypto finatics might find themselves asking. Artist Kevin McCoy created the first NFT: Quantum, an art piece created entirely on the blockchain, in 2014. McCoy was motivated to “create indelible provenance and ownership of digital images,” which basically just means he wanted an untouchable place for digital artwork to exist permanently. And thus, NFTs were conceived.

McCoy’s digital art led NFTs to be adopted across many industries, but their concept has more humble beginnings. In 2012 “colored coins'' were created: small bitcoin denominations that demonstrate an array of assets like coupons, real estate, company shares, or subscription purchases. This laid the groundwork for NFTs by enabling physical assets to be digitally valued and stored on a blockchain. While not technically considered an NFT, colored coins are often accredited for sparking the concept that led to NFTs’ creation.

This might be the most-asked question to arise during the recent NFT craze. I wish it was a simple answer (ideally “no”), but the question itself is pretty nuanced.

To understand how digital assets could affect the environment, let’s take a closer look at the process of creating an NFT. You’re probably aware that most NFT’s are minted on the Ethereum blockchain. In order to do so, NFT miners must use the proof of work (PoW) system on specialized computers, racing to finish mining a block and using vast amounts of electricity while they’re at it. And this is where the climate conversation comes into play.

The electricity required for PoW is where hefty amounts of carbon emissions are produced, because of the extensive time and energy required. NFTs can only exist with the process of mining, so while an NFT itself is not necessarily bad for the environment, the same cannot be said about the process in which it is created.

Strides to make the mining process less impactful are being taken. Ethereum is planning to transition to a proof of stake model (less harmful to the environment) for the highly anticipated Ethereum 2.0 update. Hopefully the eventual launch will be one of many effective solutions used to soften the impact of block mining. Otherwise, the debate will continue: does the NFT justify the means?

Is physical art? In short, there’s your answer. The fine art world has been plagued with controversy for years around questionable sales and the prevalence of bad actors looking to use rare art as a means to cover up shady finances. This type of scrutiny sounds awfully familiar to highly publicized, absurdly expensive NFT sales. Does this mean art in general is used for money laundering? The obvious answer would be no, as that is not the purpose of buying or selling art, this same reasoning can then be applied to NFTs.

Whether purchasing a sculpture for their home or a jpeg of a cartoon chimp, your average art collector likely does not have malicious intent. Rather, they are making a purchase for personal, financial or cultural gain.

While there is the possibility for NFTs and other digital assets to be hijacked as a medium for  illegal practices, this kind of thing happens in other fields as well. Singling out the field of NFTs for something they are not intended or created for becomes redundant. And while there might be some dodgy NFT exchanges that do not implement Know Your Customer/Anti Money Laundering protocols, the adoption of government regulations around digital assets and cryptocurrencies will likely change that very soon.

The short answer to this question is yes, NFT sales are taxable around the world. That being said, the way in which NFTs are taxed can vary wildly depending on tax protocols in each country and the frameworks they utilize to tax assets, income, investments, and capital gains.

Unfortunately, there is no linear or straightforward guide as to how NFT sales are taxed globally. Before venturing into the world of NFTs and digital assets either as a buyer or creator, we recommend doing some due diligence and looking at your government’s tax protocols, specifically income, capital gains, and self-employment taxation. Sadly, most countries and governments do not yet have a specific tax framework or protocol that deals singularly with cryptocurrencies, let alone digital assets like an NFT.

If you want to get the maximum enjoyment that you can out of joining the NFT wave, looking into how your purchases or creations will be taxed will absolutely help you avoid the pitfalls that can come from being blasé about your involvement in this exciting new space.

The short answer is no. An NFT can’t be copied since it has a unique digital identity on a public blockchain that is used to verify ownership. NFT’s identity is a digital record of transactions on a network of computers, making it impossible to copy. Taking a screenshot of NFT art may resemble the artwork, but there is only one true digital copy.

Since NFTs authenticity is easily verifiable, NFTs become a collectible item that is nearly impossible to forge. Imagine you have two copies of the Mona Lisa in front of you. Unless you’re an art connoisseur, you won’t necessarily be able to distinguish the real from the fake. Unlike other collectibles, NFT enthusiasts are able to easily verify if an NFT is original because as a unique digital asset, its transactions are all publicly available, regardless of existing copies or screenshots.

An NFT can represent ownership of a photo, yes. In fact, some have even questioned if NFTs are the future of photography. Any digital asset can be minted on the blockchain, meaning any picture from your camera roll, a professionally photographed landscape, or even your most liked photo on Instagram can, hypothetically, become an NFT.

Well, that’s a good one! Let’s get this out of the way first: There is no “should” or “must” when it comes to investing. Fear of missing out is not your friend, don’t let it goad you into doing something just for the sake of a ride on a hype train. Nobody should be buying things because they “should.” It has to be about a specific purpose, pleasure, or, ideally, both.

That said, NFTs do have a lot to offer on all of those fronts. There are a lot of collections to choose from, so it all really comes down to what exactly you want to do about it. Shopping for a new Twitter profile picture? There’s tons of NFT digital art on platforms like OpenSea and SuperRare. Just pick whatever you think represents you best. Feel like gaming? In games like Axie Infinity and Kryptomon, you can build up your squad of NFT warriors and lead them to battle. Want a passive income? Look for an NFT you can rent out or one that has built-in payments, such as royalties for other art sales by the creator. Wanna become a Metaverse landowner? A whole bunch of platforms, such as OVR, have you covered. There are also various NFTs with baked-in, real-world usability, such as tokens that grant you access to specific events, working as tickets, or come equipped with various tangible goodies. So go for it, the world is your oyster!

In the most absolute terms—no, but terms and conditions apply. Let’s start with a recent tweet by OpenSea, which said that more than 80 percent of NFTs minted with its storefront contract were “plagiarized works, fake collections, and spam.” This already gives us enough to unpack.

Since NFTs as technology do not necessarily include any built-in copyright protection features, scammers hopped on the trend to mint tokens representing images they didn’t create. Under today’s regulation, it’s unreal if that makes for a copyright violation. It sounds like it should, though, given the implied commercial use of other people’s creative works, and even if it’s not, it deserves every bit of condemnation.

There are also other scams, of course, such as the infamous pump and dumps and rug pulls. In such plots, scammers hype a project up, posing as legitimate creators and developers, and abandon it after getting their money.

All that said, though, it is unfair to brand every creator and developer working on an NFT project as a scammer. In the art space, NFTs are giving a fair shot at glory to independent digital artists. On the music scene, they are enabling musicians to take the power back from the streaming giants. So the takeaway is that NFT enthusiasts should never skip their due-diligence checks on prospective investments, but not necessarily that the entire NFT industry is one big scam.

While an NFT is by definition digital, an NFT can represent ownership of physical objects, such as a painting or sculpture. Be warned that buying an NFT of a piece of art does NOT translate into you owning intellectual property rights to the actual artwork. An NFT seller can also sell IP rights to the buyer, but it’s not automatic. So while an NFT can represent a physical object, the owner of the NFT does not necessarily own the actual item it represents.

Depends on which NFT. If you are an owner of Bored Ape or CryptoPunk, you can make a bank by selling it. Other NFTs fail on launch or decrease in value and owners are left stuck with a worthless picture. Owning an NFT is like owning an unpredictable stock that can be worth a lot one day, but within a few hours drop in value. Another way to make money with NFTs is to rent them out, for example, in play-to-earn games such as Axie Infinity. Certain NFTs can be staked to earn their owner's interest in exchange for liquidity.

Every artwork has to go through a specific process before it can be represented by an NFT. Let’s break it down, step by step:

First, you select an art piece. Any art piece will do, whether it be a video, a vector drawing, a song, or even a picture of your cat. Then, you select what blockchain you want to work on. The most common one is Ethereum, but NFTs are also on Cardano, Tezos, Solana, Wax, and plenty more. Ethereum has the most bustling ecosystem, while the rest are less demanding in terms of energy and therefore have less of a carbon footprint.

Once you’ve selected the blockchain, you set up a wallet that will support it. You’ll also need some currency in the wallet, such as Ether (the Ethereum’s native cryptocurrency) or the native token of whatever chain you have picked.

The next step is to select the platform where you want to mint your NFT. There are plenty of platforms to choose from, each one with a different method. Opensea, Rarible, Binance, and Proton Mint are some of the biggest ones, but there are also dozens more.

Then, you upload your artwork onto the platform and provide as many details about it as you’d like. Most importantly, you need to specify how many NFTs you are going to issue. You can choose to mint multiple copies of your work or you can make it one-of-a-kind, with one token per one underlying asset, effectively increasing the rarity of the piece.

The last step is to pay the associated gas fee, which will change depending on the daily operational price. The gas fee covers the transaction that actually creates the token on the blockchain, complete with the link to your art in its metadata. Once the payment is complete, your new NFT is born! Now you can publicly list it and try your hand at selling it for millions!

NFTs are entirely programmable, meaning their creators can attach various rules and terms to them. Some creators opt to add royalties so that every time the token changes hands on the secondary market, they get a cut of the profits. 

The creator sets the royalty percentages when they mint their token, effectively coding the terms into the smart contract on the blockchain. The standard is about 5-10 percent, meaning that’s how much the creator gets from the deal’s total whenever the token’s owner sells it to another person.

Just remember, not all NFTs yield royalties—the terms must be in the smart contract. But once they are, you can sit back and reap the benefits!

NFT games mix the worlds of finance and gaming, providing players opportunities to earn income as they play. But an NFT game is different from just holding crypto-collectibles in your wallet, since it uses NFTs in its rules, mechanisms, and player interactions to create characters, avatars and items that players can collect to assist their gameplay and trade with other players. An item’s value depends on its use and rarity. Developers implement smart contracts that set out how NFTs function within the game. The contracts are stored on the blockchain. Items are traded as if they were physical assets and each transaction is recorded on the blockchain.

While some games release a limited number of NFTs, other games enable players to create new NFT items to use in gameplay. Some games are designed as metaverses, in which players can receive rewards for playing the game and advancing their skills. Games reward players with cryptocurrency tokens, which they can use to buy the NFTs. Players own in-game items, giving them the chance to earn money by reselling their NFTs on secondary markets, renting them to other players, or transferring them off the platform.

NFT marketplaces are platforms where NFTs can be stored, displayed, traded and in some cases minted (created). These marketplaces are to NFTs what Amazon is to goods. In order to access and use these types of marketplaces, you will need to have the following:

• A crypto wallet: You’ll need to choose a wallet that is compatible with the blockchain network that supports the NFTs you wish to buy (below). For example, if you plan to buy or sell NFTs based on the Ethereum blockchain platform, you will need to use a compatible Ethereum wallet such as MetaMask. For NFTs sold on the Solana platform, you will need to use a wallet service such as Sollet.

• Coins in the wallet: You will need to pre-fund your wallet before buying, listing or minting an NFT. Again, you will need to find out which cryptocurrencies are supported by the marketplace you intend to use.

• A user account: You will need to set up an account on the particular marketplace you wish to purchase NFTs from.

It’s worth noting that, for the most part, listing and creating NFTs on a marketplace platform incurs a blockchain network fee. The fee varies depending on which blockchain-based system you decide to use.

In layman's terms, “minting” an NFT refers to the process of turning a digital file into a crypto collectible or digital asset on the Ethereum or any other blockchain supporting non-fungible tokens. During the process, the NFT creator can embed royalties from subsequent sales, a commission the target wallet would receive whenever the token changes hands on the secondary market.

If you are using the Google Chrome browser, you can easily install the browser extension “Metamask,” which is the default wallet of most NFT marketplaces and blockchain apps. But make sure your wallet has Ether (ETH), the native cryptocurrency of the Ethereum blockchain, or buy up some native tokens of any other chain you will be minting on. From there, you’re ready to create your first NFT. Connect your wallet to one of Ethereum-based NFT marketplace (OpenSea NFT, Rarible, Nifty Gateway), create a profile there, and begin uploading files for NFT conversion. You can then assign a description of the item and specify the social media channels for the collection before clicking the “Mint NFT” or “Is for sale” button, depending on the platform.

After uploading the file as well as approving and paying the gas fee, the NFT minting process automatically begins. During this, the smart contract on the target blockchain creates a token with a link to the associated asset in its metadata.

Though they may resemble them superficially, NFT’s aren’t a pyramid scheme. They are more similar to security tokens, which represent an underlying financial asset, – but without the regulations that come with one. Buying and selling NFTs is, in essence, just like buying and selling cryptocurrency. You can either invest or speculate on their future value or purchase them for their current utility, ease of transaction, and popularity. As is the case with any investment, they carry the potential to make money alongside the risk of losing it.

With the hype around cryptocurrencies and the risk of scams, such initiatives will always be, in some shape or form, branded as a pyramid scheme by its critics. Yet most NFT transactions are stored on Ethereum’s public ledger, making them transparent, publicly viewable, and fully accountable – nothing like a pyramid scheme.