With NFT season taking a bit of a breather (kinda), I thought this would be the perfect time to lay out a few things to consider before minting an NFT.
If you missed the frenzy, well, welcome. "NFT" stands for non-fungible token and these digital tokens represent real world ownership and provenance of a particular asset. NFTs are minted (i.e., produced), stored and transacted (bought/sold/traded) on a distributed ledger like blockchain. Some NFTs represent ownership of tangible assets and some NFTs are digital/virtual assets (yes, a digital piece of art was purchased for $69M). "Non-fungibility" is a scary word but it essentially means that the asset is unique, cannot be interchanged with another asset, and cannot be replicated. Think of NFTs as either collectibles, like artwork and trading cards, or title to tangible/real property, like real estate and cars.
- Do You Actually Own What You Are Minting? This may sound like a silly question but the age of social media and digital (re)production has blurred the lines when it comes to perceptions of ownership and intellectual property. Before you create a NFT of a video of you showcasing your original choreography to Prince's "Raspberry Beret," you want to make sure you have the proper permissions/licenses for the copyrighted music (ideally, memorialized in the code). Similarly, just because you really enjoyed Moana's Maui character does not mean you can create a prequel film and tokenize it without the proper permissions.
- Platform Selection & Marketplace Transferability. Not all platforms are created equally and some platforms are better for certain things. You want to make sure the platform you use to create your NFT has, or will be compatible with, the platform that houses your ideal marketplace. You may be tempted to use some obscure platform because they have low gas fees (i.e., the cost to create the NFT) but you may also find that you're unable to find a market for buyers for your NFT. You also want to be sure that the platform you select has an NFT ecosystem that will allow you to sell or transfer your NFT and build in rules and conditions, such as royalties, if that's what you desire (see #3).
- Make Your "Contract" Smart. One of the most popular benefits of NFTs in the collectible/creator space is the ability to automatically collect royalties on subsequent sales of the NFT. The story of the starving artist that dies penniless but leaves behind artwork that sells for millions of dollars is not an uncommon one. The starving artist (or her heirs) gets very little while the happenstance purchaser gets the lion's share. If something feels off about that scenario, NFTs are capable of righting the scales (at least a little bit). Creators can code the NFT to automatically remit a portion of subsequent purchases of the NFT to the creator (or to some other wallet address) which ensures she will benefit from any increase in value of the NFT. There are many other rules or events that can be built into the NFT using smart contracts which makes NFTs attractive in a range of contexts from sports to finance.
- Build Your Buzz. Assuming you are creating an NFT to make money, you should think about how this asset fits into your brand and how you will market it at creation and beyond. NFTs are still foreign to many people and you will likely need to ease their concerns about something that is still commonly associated with cryptocurrency. There are soooooo many creative marketing opportunities here so you should embrace the challenge.