A guide to Non-Fungible Tokens (NFTs), 2023 - Flipbook - Page 8
Creation of an NFT
Most NFTs are created, or “minted”, using a platform which facilitates
the creation of NFTs in a user-friendly way by handling the technical
side (such as coding of the smart contract and implementation on the
blockchain).
Examples of platforms that allow the minting of NFTs include Rarible and
OpenSea. Most of these use the ERC-721 smart contract standard for the
Ethereum blockchain.
The downside of this is that it is often a “one size fits all” approach, taking
control away from the creator. Therefore, many high-value NFTs have their
own bespoke smart contracts, requiring technical expertise and customised
development.
Regardless of the approach used, the key elements of the NFT need to be
identified. This will include the name of the NFT, its description, its supply
(for the asset to be non-fungible, the supply needs to be “one”, meaning there
can only be one unique copy) as well as the underlying asset or contents. It is
important to note that there is a distinction to be drawn between a “minter” of
an NFT and the “creator” of the underlying asset, and care should be taken when
assessing IP rights in the asset that the NFT represents.
Buying & Selling an NFT
Once created, an NFT can be bought and sold in the same way as any
other asset.
While some sales take place privately, or by traditional auction, the majority
are sold using an online exchange. A lot of these platforms also facilitate the
minting of NFTs, so creation and listing for sale can be part of the same process.
The buying and selling of NFTs on online platforms typically take place either
at a fixed price, by buyers making offers to the seller for them to consider, or by
way of a timed auction allowing multiple bidders to submit offers.
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