In the last 24 hours alone, 3,836 NFTs were sold with a trading volume of $3.03 million. Top NFT collections include CryptoPunks, with a trading volume of $1.04 million, Sorare, with its $351.09k trading volume, and Rarible, which has a trading volume of $285.18k. These figures are outstanding on their own without mentioning the often cited Beeple NFT “Everydays – The First 5000 Days”, which sold for $69 million at Christie’s. NFTs give content creators more autonomy when it comes to earnings and content rights, therefore enabling creators to maximize their earnings. NFTs also provide more value to digital creations thanks to their limited nature and their having unique codes, making them a very lucrative opportunity for creators. Aside from the actual sale, they can stand to earn more if a buyer resells their work. While these precedents make NFTs look appealing, they do come with their own set of risks and issues that every creator should be mindful of. There are legal implications that need to be considered, particularly when it comes to regulatory frameworks such as intellectual property rights issues, financial regulation, and taxes. To help you get a better understanding of NFTs, we’ve created an NFT Guide for creators. It explores what NFTs are, how they work, their potential benefits, and how creators can start minting, or creating their very own NFTs.
8 Things Creators Must Consider About NFTs:
What Makes NFTs So Special?
Are NFTs a hype or are they here to stay? If they are a hype, are they worth it, and what makes them so special? These digital assets store extra information and are more varied compared to their traditional cryptocurrency counterparts, enabling them to take on a whole host of forms, from artworks to audio files. What makes them even more special is that the creator is able to decide on the “scarcity” of their NFTs. Say, for example, that you want to just mint five NFTs. While these may have some similarities, each one still comes with its own unique identifier. You therefore have the capacity to create scarcity and have a role in establishing the demand for your creations. NFTs have allowed an increasing number of individuals to engage with digital assets, from creation and selling to purchasing these tokens. But are NFTs even a good investment? The answer largely depends on the individual who’s willing to pay for NFTs, shares Merav Ozair, a blockchain expert. According to Ozair, time is an important determiner of an NFTs’ value, much like it is an important component in assessing the value of any other investment. We’ve already established that NFTs are unique, but are they special enough to stand the test of time? Will we see more of NFTs even after the pandemic pans out? This remains to be seen, given that NFTs are relatively new digital entities. What’s clear is that they might have the potential to change the way we deal with creative work, posits Jeff Bell. However, if you’re looking to acquire a few NFTs of your own to jumpstart your collection, Bell suggests some points to consider. These are also helpful points to think about if you’re thinking of marketing your own NFTs:
What rights come with an NFT? Will you be able to get copyright? What about opportunities for licensing? What exactly are you getting? Are the terms negotiable?
While the future still remains somewhat uncertain for NFTs, there’s no denying that they’ve already made an impact on today’s digital landscape. Ultimately, as suggested by Corey Noles, it’s up to the public to decide the fate of NFTs—whether they’re here to stay or doomed to slowly peter out like any other hyped up trend.
Different NFT Types
According to William M. Peaster, there are more than 10 popular use cases of NFTs. These include:
Digital art Digital music Event tickets Gaming assets Blockchain domain names
Virtual real estate, luxury goods and insurance policies that have been tokenized are also considered popular use cases for NFTs. For creators who are looking into joining the NFT industry, it’s helpful to know the different types and the popular NFT platforms that cater to these different niches. These include SuperRare, Nifty Gateway, Foundation, and OpenSea.
Helpful NFT Tips for Creators
Breaking into the NFT industry may seem easy, but there are some things you need to consider:
1. Getting Started
Let’s say that you already know what it takes to mint an NFT. Where do you go from there, especially if you’re just starting out? Yes, your creation has become a part of the Ethereum blockchain, but more than putting your work out there, make sure to look into the NFT community. If you’re an artist who’s looking for guidance, there’s no better place to start than NFT communities. In Jared Polites’ article, he interviewed two artists, JN Silva and ThankYouX, who have worked together to create a collaborative NFT. In the article, Silva notes the value to be had from the NFT community. He shares that given the small size of their community, the artists are willing to help each other out. According to Silva, the fragmented educational journey that comes with NFTs makes it easier for budding NFT artists to immerse themselves in the community and start following the artists they like. ThankYouX adds that engaging the community is also important, given that it’s “built on relationships” and support. As a creator, you also have to think about the creator market fit, an important component for sustainable growth. It’s basically finding your niche, or a space where you can establish yourself as an expert. A good creator market fit acts as a foundation that helps creators have a more stable career. Before you get too excited and think about content creation and growth, you have to ensure that you’ve got your creator market fit established.
2. Knowing What You Can Offer
While it may be tempting to join the latest NFT art trends, Silva and ThankYouX caution against going with the tide. With NFTs becoming a new gateway for creativity for both established and novice names, more and more individuals are keen on joining the industry. However, this also means there’s much more competition. Knowing what you can offer and staying authentic, according to the two artists, can help you succeed. What is it that you’re trying to convey? What are your strengths? Your vision? As with any other individual who’s “made it” though, success and recognition in the NFT industry may take some time. Along with knowing what you can offer, you should be able to market yourself, according to Polites. He suggests that creators who are just starting out should take the time to market themselves. While this can be challenging to some, the beauty of the NFT industry, says Silva, is that there are other ways to market yourself without the need for too much personal exposure. You just need to be ready to take the first step, and that, according to him, is to make your presence known to the community. From there, you can continue to learn the trade and make a proactive effort to achieve growth.
3. NFTs are Two Separate Things
Now, this may come as a surprise to some, but NFTs are technically two separate things, according to Adrian Perry and Jenny Konko. With NFTs, you get the actual token and its so-called “associated content”. The NFT itself is not considered as content per se and it’s unable to grant rights to the content. The writers share that NFTs are tied to content in both a mechanical and legal sense. Regarding the mechanical aspect, NFT issuers provide the content through various modes of delivery. For example, it can be made available through a single download or by streaming. Perry and Konko add that it’s also possible to have NFTs where there’s no content, only a connection in name, but these can still be considered as valid NFTs. Now, this is where things get more interesting as well as a bit confusing. It’s likely that there’s a connection between the right to issue NFTs and the rights in the content that’s associated with them, as suggested by Perry and Konko. Keep in mind that NFTs are two separate entities. When you issue an NFT, whether you’re the creator or a reseller, you’re also issuing a license to your buyer. For the issuance of a license to be possible in the first place, you as the issuing party should have the rights for licensing. At present, the scope of content-related agreements is limited. Still, this limitation may pose additional problems when it comes to revenues or royalties over secondary market sales.
4. Counterfeiting and Infringing Also Exist for NFTs
Perry and Konko explain that while blockchain technology makes it almost impossible for an NFT to be duplicated or manipulated, the content that’s associated with it may be subject to infringing. This opens a can of worms. Some artists are seeing NFTs they didn’t mint associated with their content. With the rise of NFTs also come hackers and scammers who use artists’ works without their permission and put it up for sale on various platforms. One of the most problematic aspects concerning NFTs, shares Bijan Stephen, is that the system doesn’t require its users to own to copyright of a work in order for them to be able to mint the work, making the system conducive for fraud. Keep in mind that Ethereum claims that once a transaction is confirmed, there’s a very slim chance that an NFT’s data can be manipulated in order to steal ownership of the work. There’s even news of a hacker trying to make copies of Beeple’s famous NFT in an attempt to shed light on the issues of security surrounding NFTs, which are supposedly unique and secure.
5. Buyers “Expect” Their NFTs to Last Forever
Nothing lasts forever, technically, but perspectives tend to differ when it comes to anything digital or conducted online. There’s no denying that NFTs are considered collectibles, much like how we view artworks and trading cards. Unlike these physical assets, however, there’s little to no risk of NFTs degrading in quality. This “preservation”, according to Perry and Konko, largely depends on third-party maintenance of the NFT’s blockchain and the platform used to host the content. While NFTs and the various platforms can be preserved, there’s still the pervading question of whether or not they’re here to stay. Note that Ethereum, according to their website, “never goes down”, so you can expect your NFTs to always be available.
6. Navigating the Muddy Waters of Business Regulations
Existing business regulations may have to be altered to accommodate NFT contract negotiations, posit Perry and Konko. To put things into context, you have to remember that cryptocurrencies and NFTs, while seemingly similar, are still two separate entities. There are a number of issues that need to be taken into account, including whether or not NFTs can be considered as securities, whether or not the platform they’re on can cause issues with securities laws and intellectual property rights considerations, among other issues. One of the more pressing issues concerning NFTs is who will be held responsible for NFT-related issues. There’s still a lot of work to be done when it comes to regulations involving NFTs.
7. Know the Risks
Go into the industry with the right mindset. As with any other industry, whether it’s in the real world or online, engaging in NFTs comes with its own set of risks. According to Peter Yang, anyone who’s looking into creating, buying, or selling NFTs should have the right expectations and should be aware of the abundance of speculation that pervades the market. For the former, tempering your expectations means being aware that if you don’t already have a large following, chances are your creations won’t earn you large amounts just yet. It may also take some time to market them. For the latter, you have to be aware that the market is riddled with speculation that can easily affect average market prices. You’d also have to factor in the price changes in ether, which leads Yang to caution against purchasing expensive NFTs whose values may become unstable over time. There are many other risks that are present when you’re dealing with NFTs. Aside from their volatile price, there’s also the risk of a work decreasing in value due to price-fixing, fear, uncertainty, and doubt or FUD. There’s also the fact that blockchain technology is taking its toll on the environment. The process of creating blockchains is complicated and consumes a lot of power. Computers all over the world run calculations to solve complex problems in a process called “mining”. In the case of Ethereum, this process can consume as much as 26.5 terawatt-hours, which is equivalent to powering the whole of Ireland and its 5 million residents. More cryptocurrency operations have popped up around the world, consuming larger amounts of electricity to power super computers and air conditioning units in relatively large spaces known as “mining rigs”. A study shows that the projected emissions created by mining bitcoin alone could result in enough carbon dioxide to push global warming above 2°C in less than 30 years.
8. How to Protect Yourself as a Creator
One of the best things you can do for yourself as a creator is to know how to protect yourself. NFT valuations continue to rise and with this can come several legal issues such as intellectual property considerations, according to Amy Madison Luo, a general counsel of Centre. Luo shares that NFT creators themselves face a unique set of issues, which includes having to be fully capable of protecting yourself and to not unintentionally violate intellectual property laws. Be informed of the possible legal ramifications that come with NFTs. Luo advises that creators should carefully read the terms of the NFT marketplace they’re working with. To avoid issues of ambiguity, she encourages creators to check and ensure that their rights are reserved. You also have to be mindful of fair use policies, which gives creators some leeway to use copyrighted work but only within stipulated limitations.
Final Thoughts
NFTs are a relatively new online phenomenon. Its inception has greatly democratized the act of creation and marketing. They’ve greatly altered how we come to view, consume, and engage with digital content. While they may seem like a promising prospect for creators who want to explore a new digital terrain, keep in mind that NFTs come with its own set of unique risks and challenges. Equipping yourself with the proper knowledge and taking the time to do your research and know the market well will prove to be advantageous, especially if you’re just starting out in the industry. Happy minting!
