What’s NFT & GameFi? A Look Into How They Are Related (Part1)

NFT & GameFi are both new terms in the blockchain ecosystem. These are important innovations in technology, finance, fashion, sport and the arts. As expected, NFTs and GameFi have experienced impressive growth since hitting the mainstream in 2021, which makes people interested and encourages them to invest. So how do they work? What are the advantages and disadvantages? Read the article below to find out more!

What is NFT?

NFT Definition

To begin with this section, we will start with NFT definition. NFT stands for Non-Fungible Token. It is a unique and irreplaceable data unit. More than that, it is stored on a ledger using blockchain technology, which aims to establish proof of ownership.

The data that NFTs contain can be tied to digital images, songs, videos, avatars, or access to exclusive merchandise, tickets to live events, and more. In particular, NFT allows any individual to create, buy and sell items easily through blockchain technology.

Read more: A beginner’s guide to NFTs

How NFT Works

The way the NFTs work will usually be in the following sequence:

• An individual or entity selects a single asset to sell as an NFT.
• Users add objects to an NFT-enabled blockchain through a pre-established process called “minting” to generate it.
• The NFT represents that item on the blockchain, verifying proof of ownership in an immutable record.
• Once the NFT is created, the owner has the right to keep it in his personal collection or sell it on the NFT marketplaces and auction it off.

How to Create and Trade NFTs

Step 1 – Create a crypto wallet

A crypto wallet is a place where you can store and transfer digital assets. As a matter of fact, there are 2 main types of cryptocurrency wallets: software wallets and hardware wallets. Specifically, each type of wallet has the following features:

• Software wallet (also known as hot wallet): This is an app that can be downloaded and installed on your device. Software wallets are easier to use than hardware wallets because they only need an internet connection. On the other hand, this wallet is susceptible to attacks by hackers, and as a result, its level of security is lower.
• Hardware wallet (also known as cold wallet): This is a physical device that looks a lot like the USB you use to store files from your computer. Importantly, these wallets can’t connect to the internet at all. This is why crypto assets and NFTs are very safe when they are stored in hardware wallets.

Step 2 – Buy cryptocurrency

Currently, you can trade NFTs with traditional payment methods in some NFT marketplaces such as Nifty Gateway and MakersPlace. Meanwhile, other NFT marketplaces, such as SuperRare and OpenSea, only accept cryptocurrency as a form of payment.

As we all know, Ether (ETH) is the most popular cryptocurrency used for NFT transactions. It is also the main currency of the blockchain of Ethereum. You can buy it on major exchanges like Binance, Coinbase, KuCoin… Besides, if you don’t like ETH, there are many other cryptocurrencies to choose from, such as Solana (SOL), Tezos (XTZ), and Flow (FLOW).

However, if you are just starting out, it is recommended that you invest in Ethereum (ETH) rather than other cryptocurrencies for trading purposes because ETH has a larger user base and market.

Step 3 – Select NFT marketplaces

Notably, you need to think about two options before choosing the NFT market. With the first option, you can only mint one NFT at a time and put it up for auction. The next option is to mint a collection of NFTs with different prices. For the latter, it’s best to choose one of the top NFT marketplaces like OpenSea, LooksRare, or Rarible for minting. On the other hand, if you want to mine 1/1 NFT, platforms like SuperRare, Foundation, and Zora are the best choices.

The NFTs minting process has an associated initial cost with it. Usually, you only have to pay gas fees (transaction fees) when minting, but sometimes the markets have extra costs.

Step 4A – Minting an NFT

New NFTs are created through a process known as “minting”. This is the procedure for associating a particular data set – NFT – with an asset or object. Please keep in mind that, when choosing unique content, you must own the copyright and other intellectual property rights to the product you want to mint. The reason for it is you could get in trouble with the law if you make an NFT with content you don’t own.

Of course, you can start minting NFTs after choosing a market and making an account on it. In general, each NFT marketplace will have a different minting process, but all of them have the same steps like downloading the file you want to link to the NFT and paying the transaction fee in ETH or another cryptocurrency.

Finally, when the NFTs minting are complete, you will have all relevant information about your new NFTs. Then, that NFTs will be registered to your digital wallet. Now, you can store or sell it whenever you want.

Step 4B – Buy or sell NFTs

In the instance that you have found a specific NFT that you are interested in purchasing, you may do so immediately. But there are a few situations where you have to bid on the NFT you want and wait until the auction comes to an end. So, if you are the highest bidder or if the seller accepts your bid, the transaction will go through and the NFT will be transferred to your wallet.

Since you already own the NFTs, you’re free to do whatever you’d want with it—buy, sell, or put it on display. In the same way, there is a process to follow when selling NFTs. So, before you start selling, you need to set up an auction on the NFT market of your choice, set up transaction fees, and set up auction methods.

NFT will immediately transfer ownership to the winning bidder when the auction finishes. While this is happening, the money that was gained from the transaction will be moved into your wallet.

Part 2 is coming up: What’s NFT&GameFi? A Look Into How They Are Related (Part2)

Read also: What is SwapFish? Getting started at SwapFish

Disclaimer: The information in this article is not investment advice from CryptoChill. Cryptocurrency investment activities are not recognized and protected by the laws of some countries. Cryptocurrencies always carry many financial risks. Do your own research before making any investment decisions based on this website’s information.