A how-to guide (not a ‘should-you’ guide)
But is it art? Photo by Timon Klauser
Recently I wrote a piece intended to unpack the mysterious world of NFTs — Non Fungible Tokens. I wanted to understand what they were and how they worked.
My interest was prompted by the news that artist Beeple (aka Mike Winkelman) had sold an NFT — essentially a digital token of ownership to one of his artworks for over $69 million in a Christie's auction. This happened around the same time that Jack Dorsey auctioned the token representing his first Tweet for over $4M.
In the aftermath of that article, a reader (thanks, Živković!) reached out, sharing his impressions on NFT and art. He pointed me towards an NFT that was currently for sale on OpenSea — what appeared to be a kids drawing of a Tesla Crypto Truck painted in desert camouflage. Here it is in all its glory — you can snap it up for $5,501 in Ethereum tokens:
While I’ve since looked into Beeple’s work a little and have to admit, it’s actually pretty cool (all art is subjective, right) — my first reaction that $5k to own the above might be a little bit of a stretch?
My second reaction was of curiosity (and greed). How I might sell an NFT myself?
Much as was the case in early January this year when I decided to explore how to buy some Bitcoin it seemed that the best way of learning would be to try and do it for myself — to create an NFT, to list it for sale and to learn what’s involved in completing a transaction. This story shares how I’ve done just that (although it hasn’t sold — yet!)
Whether to sell NFTs or not?
I feel obliged to touch upon the debate over the merit and ethics (for want of more appropriate terms) of NFTs, for just a moment.
His perspective seems to be that as creators and artists our focus should be on making art, and that NFT shifts the perspective on what ownership of it really means. The emergence of NFTs as a ‘thing’ has the potential to distract those who should be pouring their creativity into what they make, to instead focus on how to sell them as NFTs to monetise their creations.
Seth also raises the concerns that many voice over the energy usage of the blockchain technology that’s used to mint and exchange NFTs once they exist — both the token and the smart-contract that irrefutably records its ownership once sold.
Environmental concerns are often cited by those who are critical and skeptical of blockchain technology as a whole. I’ve addressed these concerns in a separate story which will hopefully help you to reach your own conclusions (or at least feel a little better informed).
From what I can gather so far, my interactions with blockchain as a new seller of NFT are now largely complete having verified myself as a new participant in the ecosystem. I realise that-that’s akin to saying that my lightbulb is only one of billions on the planet therefore it doesn’t matter much — if I’m not part of the solution, then by some definition I’m part of the problem.
Some might say that NFTs are entirely unnecessary — to a degree, is not all art potentially unnecessary? And all music? We don’t need either to live?
It’s a rabbit-hole for sure. As far as my motivation for writing this piece is concerned:
NFTs exist and people are selling them, and in some cases very successfully;
I’m keen to explore what’s involved and how it works so that I can make an informed decision on the subject;
Whether you choose to do the same is up to you.
On with the ‘How-To’ guide.
What to sell
An NFT can be minted on the basis of pretty much any art-form that can be digitised — an image, a piece of text, a video or audio clip or a piece of code. I went with an image.
I’m not (entirely) mercenary about this — I have a little creative integrity and I want to feel like I’m offering value for money. It seems from the Crypto Truck example that there’s a market for NFTs because of what they are and as those buying them are doing so in search of status. NFTs are perhaps being treated as a speculative investment rather than because buyers are particularly keen on them as works of art?
That said, I wanted to offer something with some innate visual appeal (by my own subjective judgment). I’m keen on photography and recently won a contest (well, third place) at work for a photo of a sunrise taken on my morning walk — I can legitimately describe myself therefore as a prize-winning photographer!
In the spirit of respecting that I’m selling something unique, I decided that I’d list one of my photos for sale — one that hasn’t been shared elsewhere.
Where to sell
Having first discovered NFTs for sale on OpenSea and given that Christies are unlikely (yet, at least) to accept my photos for sale, I decided to go with OpenSea. It describes itself as: “the first (and largest) peer-to-peer marketplace for crypto goods. Like an eBay for crypto assets.”
If you do a quick search online you’ll find a few places where you can sell NFTs. I’m prone to going with reputable organisations of scale as a means of limiting chances of getting ripped off and maximising reach — it makes sense to me to go large.
Jack Dorsey, Elon Musk and others have been selling NFTs based on notable tweets on another platform — Cent. I’ve not explored that thoroughly but imagine the process of setting up on Cent is similar to doing so on OpenSea.
The process of selling
There are a few simple steps to sell your NFT. I won’t walk through these in tortuous detail, other than to describe the main steps.
Think of it as coming to eBay for the first time and listing something to sell — you need to register an account, list the item and set up the mechanism for receiving payment (and paying seller fees).
It’s basically the same on OpenSea except that it all happens in the blockchain, not the conventional system of bank accounts and PayPal.
Set up an account (hint - you need an online crypto wallet)
Getting started on OpenSea was quick and easy — mainly because the process demands integration with a crypto-wallet (an online one, not an offline hardware wallet such as the popular Tresor One model).
OpenSea treats your wallet address as the ‘endpoint’ for your NFT sale, and for you as a user of its infrastructure. The smart-contract that will ultimately be created once a sale is made, is between buyer and seller but the digital asset, the collectible will move between the unique encrypted addresses of the respective crypto wallets. The funds and the tokens move between these, and the contract is recorded in the blockchain.
I had some Ethereum tokens in cold-storage on a hardware wallet and moved some of these into my Coinbase Wallet App on my smartphone.
Once I’d linked my CoinBase wallet to my OpenSea account (by scanning an on-screen QR code using my smartphone that prompted me to accept the connection between it and OpenSea), OpenSea then prompted me periodically to digitally sign and accept changes that I was making on their website — verifying they were initiated by me at each step. Here’s what it looks like (taken from my smartphone):
Source: Author Photo
Account setup activities included:
Adding my email address for notifications
Updating my account details as a seller (updating descriptions, adding a profile picture, adding my crypto wallet address and so-on).
Add your item (to mint the NFT)
Having set up and configured your account and having connected it to your wallet, you now need to list an item for sale. This is the process by which your NFT — the unique token representing your art is minted (created).
I’m selling a photograph, and in addition to uploading a high resolution image I needed to
add descriptive information and give it a name. Having chosen a sunrise picture I toyed with concocting a pretentious name or a simple number (a nod to Mark Rothko). In the end I chose something a little flowery and with a number too — it’s my art, right?
I again had to validate and ‘sign’ activities via my phone at many stages in the process. This doesn’t signify that I incurred a cost each time I clicked ‘Sign’, but rather that I was confirming my identity and agreeing the updates at each step. Think of it akin to clicking a validation link in your email when you update personal information on an online account — except this is all done securely via the crypto wallet and the many layers of authentication and security within that.
The NFT was now minted. It’s held as a collectible in my crypto wallet and the foundations are laid for its representation on the blockchain as part of a smart contract between me and the eventual buyer (should one be found).
Time to sell it!
List it (to to find a buyer)
OpenSea offers a number of options for selling your NFT. It’s listed on their marketplace either way, but you can opt for a number of styles of sale:
To sell for a fixed price for an unlimited duration (what I’ve chosen to do). With this, the NFT is listed for sale indefinitely and the price can be adjusted manually at any stage.
To offer for sale at a gradually reducing price. You start it out at a particular price (e.g. 1 Eth) and set a duration for the listing (e.g. 1 week) as well as an ending price (e.g. 0.25 Eth). Over the duration of the listing the price will gradually reduce. Offers can be submitted throughout.
To offer for auction (with a reserve price). This can be a Dutch auction or an English auction. Either way, bids are received for the duration of the auction.
As with eBay, the most critical factor in listing an item is setting the price. The seller's fear is to list something at a price and it gets snapped up straight away, indicating that it was priced too low. If it’s too high however, it’ll likely put buyers off from the beginning.
To work out the price of my NFT I
decided to base it on market intelligence and the fact that all art is subjective — why anyone would pay millions for a block colour painting is beyond me but Rothko art sells for millions of dollars — who am I to say!
Going off the price of Beeple’s ‘First 5,000 Days,’ a collage of 5000 separate images, and since I’m selling a single photo I decided to work backwards from the $69M he got paid:
$69M / 5000 = $13,800 per image
$13,800 / $1,775 (the price of Ethereum at the time of writing) = 7.77 ETH
Taking into account that I’m not a famous artist (not that I’d heard of Beeple either, previously) and given that I’m not greedy but nor do I want to sell myself short, I thought I’d start out listing it for 5 ETH.
I’d be delighted to sell it for that price (equivalent to $9,000 right now).
I’m realistic though that I may need to drop the price (a little) — I’ll see what happens!
OpenSea take 2.5% of the final sale price. You can also specify that the creator of an NFT artwork receives a cut of the selling price which seems to imply that you can sell other people’s artworks (presumably with consent) as an NFT. I’m only selling mine, but within the settings for my ‘collection’ I’ve awarded myself a 4% commission from the final sale price too.
The other fee to mention which applies to your first listing, is the Ethereum ‘Gas’ fee — essentially the network costs of adding your first item and to set up the smart contracts on the blockchain associated with your creation as an authenticated seller.
This is the final approval and prompt that is sent to your crypto wallet in the listing process, and it details the fee to be paid in Ethereum for your first NFT to be listed.
The fee is significant (compared, say to an eBay final valuation fee or a listing fee). It’s also important to note that it is dependent on demand for the network and varies with the time of day, significantly.
I’m in the UK and trying to submit a listing in the evening time quoted a price equivalent to $140 (but in Eth). The same listing at 6am the following day cost the equivalent of $94.33.
Here’s the confirmation request screenshot from my crypto wallet:
I’ve since listed a second NFT as a test, and there’s no further up-front payment to make. I believe that all future listings on OpenSea will be free of Ethereum ‘Gas’ charges and subject only to seller fees.
Revel in the success (and then publicise your listing)
My NFT is now listed for sale. Here it is: February Sunrise Number 1 - Original Photograph - TZH Creations | OpenSea Original JPG Photo of a winter sunrise in Staffordshire, UK Taken Feb 23rd 2021 Longitude -2.037608, Latitude 53.083343 opensea.io If it’s no longer for sale when you get there, then I’m sorry but you missed out! Here’s a screenshot of what the listing looked like in OpenSea shortly after it went live:
I felt a brief moment of joy and relief as I got confirmation of my listing when the transaction was verified in my crypto wallet. The NFT is now online and searchable on OpenSea ready to be discovered by a willing buyer.
Taking a moment to celebrate having figured out another technical conundrum is fine of course, but the next thing is to market the thing in the hope of finding a buyer rather than passively waiting for someone to find it.
I have a few ideas on how I’ll do this, mainly trying to capitalise on social media buzz that’s still fresh after the Beeple sale.
Complete the sale (to create a smart contract)
I can’t report on how this works out since my NFT has not yet sold!
As I understand it, at the point that I accept an offer or someone agrees to pay the asking price then OpenSea will transfer the requisite funds (in Eth) from their crypto wallet to mine, less fees. There is no Escrow of payment.
The transfer of the NFT will be processed automatically and the smart contract associated with the sale will be created and locked into the blockchain forever more. It will automatically move from the collectibles on my crypto wallet, to the buyers.
If and when that happens, I’ll be a happy guy! The buyer will presumably also be delighted to own my first NFT!
It’s up to each creator to decide for themselves how they feel about NFTs and what they represent. With it all being new and fresh, it seems that the wider world is still deciding how it feels too.
Articles are rife in the media that decry NFTs as the next crypto bubble with the hype akin to the flurry of activity around initial coin offerings in 2017, which led to the creation of Dogecoin (amongst others).
Others seem more bullish in their assessment — maybe this is the future of art, or the future means by which creatives can monetise their art in the face of a changing world? It feels to me like we all have a choice to either get involved or to ignore it. Or, we can observe from the sidelines and decide later.
I was undoubtedly a latecomer to crypto myself — my first Bitcoin investment in January 2021 was late by most standards and I regret not taking action much earlier. My venture into NFTs is (mostly) a tongue-in-cheek experiment. But it’s also part of a bid to learn and to educate myself and if I make some money in the process then I won’t complain.
I write to create, to entertain and inform — so does Stephen King.
I take photos to capture beauty that others can enjoy — so does Annie Liebowitz. I create NFTs and sell them online — so does Beeple.
Am I not as entitled as they are to try and monetise my creations? That, for me is the essence of the question. Art is in the eye of the beholder and NFTs are a means of monetising art. It’s a space that I’m watching intently.
Note: This article is for informational purposes only. It should not be considered Financial or Legal Advice. Consult a financial professional before making any major financial decisions.