1. NFT Basics
NFT stands for ‘Non-Fungible Token’, well that doesn’t really explain much right? Don’t worry just keep on reading.
First, let’s look at what a token means. On the Blockchain, a token is a record of some type of information stored on the Blockchain itself. Ethereum, one of the most famous blockchains in the world, has its own native currency called, “Ethereum”. Like traditional cash, Ethereum is fungible, meaning you can exchange one Ethereum for another without changing the value of either coin. However, NFTs work differently, they are called non-fungible for a reason.
2. How does NFT Minting Work?
Minting an NFT can directly be associated with creating your own artwork and publishing it on a Blockchain of your choice. You can create NFTs to sell them, trade them or even learn with them! Minting an NFT means turning a digital file stored on your computer into a collectable or a digital asset stored on the Blockchain. The digital item is forever stored on the decentralized database and is impossible to modify, edit or delete. The process of uploading your item onto the Blockchain is called “Minting”.
Alternatively, it can be described as the process due to which your art or content becomes a part of the Blockchain forever where no one can delete it or edit it in any way whatsoever. Once it’s on the Blockchain it can be traded on the Blockchain itself by using the native currency of the Blockchain to which you minted your NFT, eg. if you mint your NFT on the Ethereum Blockchain it should be tradable using the Ethereum cryptocurrency. In the minting process, you can specify certain parameters like adding a commission to the digital art so that the creator can receive a small commission whenever their artwork is sold to another person or is traded on a secondary market.
3. How to Mint NFTs?
Step 1: Pick an NFT Marketplace of your choice.
This could be any marketplace where you can mint and sell your NFTs. Platforms like Opensea are very popular for minting you NFT.
Step 2: Create a Metamask Wallet.
You can create your own Cryptocurrency Wallet on platforms like Metamask.
Step 3: Load your wallet.
Load your wallet up with the cryptocurrency of your choice. For eg. If you wish to launch your NFT on Solana Blockchain, you should load it up with Solana’s native currency $SOL.
Step 4: Mint your first NFT!
Go to a website like Opensea.io, and click on the ‘Create’ button.
Opensea, will ask you to sign a transaction to connect your wallet to their website.
Upload the Image you want to mint as an NFT here.
Minting happens to be an action that brings an item into existence onto the Blockchain. Opensea uses a lazy minting feature, which means that it doesn’t mint an NFT unless its required to, for example, when someone wants to buy it or transfer it to another wallet.
Upload the details about your NFT, give it a Name, an external link to take it to a webpage you want your minted NFT to endorse and also a description to let people know more about your NFT.
Here, you can input details about your NFT if you are uploading a collection, every NFT you post in a collection can have different attributes, stats, levels, etc. At the bottom, you can see an option to select a Blockchain, this is where you can select where you want to upload your NFT to, the options available on Opensea are, Ethereum, Solana, Polygon and Klatyn.
4. Is Minting an NFT the same as buying it?
No, minting an NFT is not the same as buying it. As said above, minting an NFT means creating something new and uploading it to the Blockchain. Whereas, buying an NFT means buying something that has already been “minted” or created and uploaded to the Blockchain. The winter of an NFT can set the NFT for sale at any price they want whereas the user has to buy the NFT and can then sell it at any price they want or according to the market value.
5. Benefits of minting an NFT?
Minting an NFT allows you to sell your artwork or any digital collectable on the Blockchain at any price you want without much work. You can earn commissions on your work by adding certain parameters to it that allows you to earn a small commission whenever someone trades your collectable on the Blockchain. These items are stored forever on the Blockchain and cannot be removed by anyone, it can only change owners and the prices at which it is being traded at.
6. How much does it cost to mint an NFT?
The main cost of minting an NFT comes from the gas prices during the day you decide to mint your NFT. It depends from Blockchain to Blockchain, sometimes the Ethereum chain has insane gas prices and can result in minting costing around 1000$ or on a good day it can mint for even 1-70$. However for chains like Solana minting an NFT is very cheap, on average the cost of minting an NFT on the Solana chain is around 0.00001 SOL ($0.01).
7. How to Buy/Sell NFTs?
You can buy and sell NFTs on various marketplaces. Some marketplaces have compatibility for only a single Blockchain whereas some have compatibility for almost all major Blockchains like Opensea. Some NFT Collections come up with their own marketplace to facilitate trading/minting of their own NFT project for users who have been whitelisted so that they can gain access to these collections before they go out on any other secondary marketplace. One such popular example, was the Akuna NFT Project which went extremely viral during the start of 2022.
8. Tax Implications of Selling an NFT?
Income from NFTs has started to get taxed at a flat rate of 30%. Even if the profit from the NFT is less than 2,50,000 Rs, which is the least amount of income required to pay income tax. However, for NFTs, there is not minimum income required for it to be taxable. It will always be charged at 30%.