Things Creators must Consider About NFTs

Knowing how much some NFTs sell for, it’s no surprise everyone wants to get out there and start selling their artwork. People are even searching the keyword NFT more than they are searching Ethereum.

However, there are a couple of things all creators must know before dabbling in the NFT world. As with any type of business or investment, NFTs come with their own restrictions, rules, and loopholes that creators should be aware of before jumping ship. And that’s not even starting on taxes and intellectual property rights!

Let’s find out what creators must consider about NFTs:

Become part of the NFT community

First things first, how does a creator stand out from the NFT crowd?

Building a community within the NFT world is one of the most important first steps to make a name for yourself out there in the digital world.

To do so, join NFT Discord groups, subreddits such as r/nft and participate in Twitter giveaways. Maybe host one yourself with your own NFTs to promote yourself as a creator. 

Make sure you know what you can offer to stand out. Following crowds will only make your NFT blend in. On top of that, NFTs will not be an overnight success. As with real-life painters, it might take months or years for artwork to catch on. Establishing relationships will be important in the long-term as a digital artist.

Creators should have IP rights

Creators and sellers of NFTs must have the intellectual property rights of the artwork to sell it to you, lest they infringe the law. Since the seller of an NFT isn’t a physical person and rather an ETH address, it’s difficult to tell if they are who they claim to be. 

Beware of gas fees

Understanding the gas fee is crucial to understanding how NFTs work. It’s not uncommon for a buyer to go on OpenSea seeking to purchase some art for $30 and end up paying $200 in total because of the gas fees. While Ethereum is moving away from the mining model with time, this still applies and uses a lot of energy. Since the network is so congested, gas fees rise up. The more bids an NFT receives, the more energy it requires. It requires so much energy that one NFT sale could potentially heat up several swimming pools for a long time. This is because smart contract transactions are more expensive than a bank transfer, involve computer resources, storage and will consume energy to be done. 

NFTs are URLs

Many NFT creators aren’t aware that most NFTs are URLs that host pieces of data that allow the owner to interact with the digital asset. NFTs grant you access to the URL and the right to interact with it, but not the right to the artwork. 

Counterfeit NFTs exist, and while the Blockchain makes it impossible for an NFT to be duplicated, let’s remember that the content associated with the URL you’re purchasing could infringe intellectual property rights violations.

NFTs don’t last forever. While being digital assets spares them of physical degradation, NFTs are dependent on the maintenance of their blockchain and also the marketplace where it is hosted. At least Ethereum claims that their website never goes down, so you can count on them being available there.

NFTs might have royalties

Finally, NFTs can and most likely will have a royalty percentage. This means is that if you purchase the NFT and sell it, the creator will receive a percentage of that sale, including that of future sellers. This allows creators to compensate for their artwork being resold, but some might set the percentage to a number so high that you won’t be really making any profit from selling it. Some creators even sell these royalty NFT pieces to unsuspecting buyers, essentially robbing them of the possibility of actually making a profit, due to how the fees would most likely eat away at the remaining income.

As a creator, you can use royalties to your advantage, but don’t be a scammer and damage your reputation.

Getting into the NFT business can be a very risky adventure if you don’t know how to navigate the waters of digital fungible tokens. Understand intellectual rights properties, marketplace fees, and taxes to get the basics out of the way.