NFTs by Tiana Laurence and Seoyoung Kim, PhD NFTs For Dummies® Published by: John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, www.com Copyright © 2022 by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the Publisher. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.com/go/permissions. Trademarks: Wiley, For Dummies, the Dummies Man logo, Dummies.com, Making Everything Easier, and related trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc. and may not be used without written permission.
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at 877-762-2974, outside the U. at 317-572-3993, or fax 317-572-4002. For technical support, please visit https://hub.com/ community/support/dummies. Wiley publishes in a variety of print and electronic formats and by print-on-demand.
Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http:// booksupport. For more information about Wiley products, visit www. Library of Congress Control Number: 2021948877 ISBN: 978-1-119-84331-3; 978-1-119-84332-0 (ebk); 978-1-119-84333-7 (ebk) Table of Contents INTRODUCTION.
1 About This Book. 2 Icons Used in This Book. 2 Beyond the Book. 3 Where to Go from Here.
3 PART 1: GETTING STARTED WITH NFTS. 5 CHAPTER 1: Introducing Non-Fungible Tokens. 7 Beginning at the Beginning: What Is a Non-Fungible Good?. 9 Exploring Uses for NFTs.
10 Finding Out How an NFT Works. 14 Why buy NFTs. 15 NFTs as investments. 15 Proceeding on Your NFT Journey.
16 CHAPTER 2: Owning Your Own NFT. 17 Where It All Began: Non-Fungible Kitties. 18 Blockchain for the masses. 18 Not just a passing fad.
20 The impact of NFTs. 20 The game mechanics of CryptoKitties. 23 What’s In Your Wallet? Setting Up MetaMask. 24 Setting Up Coinbase.
26 Creating your Coinbase account. 27 Verifying your phone number. 27 Adding your personal information. 28 Verifying your identity and adding your bank account.
28 Adding funds to your wallet. 29 Collecting, Breeding, and Selling Your Very Own Non-Fungible (Crypto)Kitties. 30 Buying your first CryptoKitty. 30 Table of Contents iii Using the Offer function.
31 Breeding your kitties. 31 CHAPTER 3: The Future of NFTs. 33 Dissecting the Anatomy of a $69 Million NFT. 33 Redefining Property Rights (NFTs Are Not Just about Digital Art and Kitties!).
36 NFTs and Digital Property. 37 Music, movies, and books. 37 Photos and other digital art. 39 NFTs and Real Property.
39 Homes, cars, and nondigital pets. 40 Art, jewelry, wine, and other collectibles. 41 Imagining the Possibilities. 41 PART 2: BUYING AND SELLING NFTS.
43 CHAPTER 4: Getting In on the NFT Game. 45 Knowing the Ins and Outs of Buying NFTs. 46 Examining the success of early NFTs. 46 Thinking about NFTs as an investment.
47 Understanding the Risks of Hot Wallets like MetaMask. 49 Comparing hot wallets. 50 Weighing the pros and cons of hot wallets. 50 Uncovering Your MetaMask Wallet.
52 Securing your MetaMask wallet for Chrome and Firefox. 55 Buying Ether for Your MetaMask Wallet. 55 Exploring NFT Marketplaces. 56 Navigating the OpenSea of NFTs.
57 The Nifty Gateway. 62 Rarible’s decentralized governance. 64 CHAPTER 5: Investing In NFTs. 69 Understanding NFTs Are Not Cryptocurrency.
70 Introducing NFT Investing. 71 Deciding Whether NFT Investing Is for You. 72 NFT Investing Strategies for Beginners. 73 Valuing your NFT.
74 Choosing your strategy. 76 Discovering the Best-Performing NFTs. 77 Exploring Popular NFT Types. 79 iv NFTs For Dummies Digital art.
80 Reporting NFT Gains and Paying Taxes on NFTs. 81 PART 3: DEVELOPING YOUR KNOWLEDGE: A STEP-BY-STEP GUIDE TO PROGRAMMING YOUR OWN NFT. 83 CHAPTER 6: What Is Ethereum?. 85 Revealing the Ethereum Virtual Machine.
86 Ether: The Gas That Fuels Your Transactions. 88 The journey of a transaction. 89 Compensating the (proof-of-) workers: What’s in it for the miners?. 91 From happy hour to surge pricing: Determining a reasonable gas price.
92 Setting your budget: Is the sky the (gas) limit?. 96 The Blockchain: Where It’s All Stored and Secured. 99 Ethash and proof of work: What makes Ethereum tamper-proof?. 100 Miners and nonces and bears — oh, my!.
102 How many “confirmations” until I’m actually confirmed?. 102 Uncles and orphans. 104 Hard forks: Updates to the underlying protocol. 105 Smart Contracts Make the EVM Go Round.
106 The nascent life of a smart contract. 109 Oracles: How to Connect to the “Outside” World.109 Shining a Light on Ethereum’s Fundamental Structure. 111 The big picture. 111 Nuts-and-bolts of the blockchain.
113 Things that make the EVM an interesting place. 114 CHAPTER 7: Creating an Ethereum Account. 115 Understanding Externally Owned Accounts. 116 What it means to create an account.
117 Private versus public keys. 121 Table of Contents v Discovering Contract Accounts. 123 Knowing the Difference Between Public Networks and Private Environments. 126 Local development environments.
127 Preparing Your Accounts (on MetaMask). 128 Renaming accounts on MetaMask. 129 Adding different ETH to different accounts. 131 Funding your testnet account.
132 Exploring the Ropsten testnet blockchain.136 CHAPTER 8: Setting Up a Development Environment. 139 Exploring Your Ethereum Solution Stack. 140 Elements of the Ethereum stack. 140 Here a stack, there a stack: Pre-made stacks.
142 Put On Your Hard Hat: Constructing Your Environment. 143 Setting up your local blockchain test environment. 143 Connecting a custom (Ganache) network to your MetaMask wallet. 147 Adding local (Ganache) accounts to your MetaMask wallet.
150 Synching the Remix IDE to your MetaMask wallet. 158 CHAPTER 9: Deploying Your First Smart Contract. 163 Working with Smart Contract Languages. 164 Starting with the Solidity version pragma.
165 Going from source code to bytecode. 166 Key Elements of a Smart Contract. 170 No Need to Reinvent the Wheel: Using Smart Contract Libraries. 171 Ready for Takeoff: Launching Your Smart Contract.
171 Beginning with a simple template. 173 Compiling before takeoff. 176 CHAPTER 10: Discovering Token Standards. 185 Introducing Ethereum Development Standards.
185 Ensuring interoperability and composability. 186 Learning the ABCs of EIPs and ERCs. 186 vi NFTs For Dummies Understanding Standard Token Interfaces. 189 ERC-20 token standard.
190 ERC-721 non-fungible token standard. 192 Other token standards on Ethereum. 194 CHAPTER 11: Building an ERC-721 Token. 197 Writing and Compiling Your NFT.
198 The play-by-play. 201 Deploying Your NFT. 205 Deploying on Ganache. 205 Deploying on Ropsten.
208 Deploying on Mainnet. 217 Nurturing Your NFT. 219 Following your NFT on the blockchain. 220 Interacting with your NFT.
222 PART 4: THE PART OF TENS.225 CHAPTER 12: Ten Marketplaces for Your NFTs. 227 The OpenSea Marketplace. 228 The Axie Infinity Marketplace. 229 The CryptoPunks Marketplace.
230 The NBA Top Shot Marketplace. 231 The Rarible Marketplace. 233 The Alcor NFT Marketplace. 234 The Binance NFT Marketplace.
235 The Foundation NFT Marketplace .com NFT Platform. 237 CHAPTER 13: The Ten Most Expensive NFTs. 239 EVERYDAYS: THE FIRST 5000 DAYS. 246 World Wide Web Source Code.
251 Table of Contents vii Introduction W elcome to NFTs For Dummies! If you’re curious about NFTs — their origin, use cases, and underlying technology — this is the book for you. In this book, you can find helpful information and advice for exploring the world of NFTs. You can also find useful step-by- step guides that teach you how to set up a hot wallet to store NFTs, how to navigate NFT marketplaces, and even how to code up your very own NFT. You don’t need a background in programming, math, contract theory, or economics to understand this book.
We do, however, incorporate these elements to convey a full appreciation of the multidisciplinary nature of NFTs and what they represent. About This Book Naturally, this book explains the basics of NFTs, but we also touch on smart contracts and blockchain technology to explain how NFTs are secured and how they operate. Additionally, we touch on various economic and legal themes to convey the rich possibilities of what might be achieved through NFTs. This book is written to satisfy a diverse array of interests — ranging from lighthearted games to thought leadership in future NFT use cases to more technical explanations that cover the inner workings of the smart contracts that power NFTs and the blockchain technology that secures them.
You don’t have to read the book in its entirety to understand the separate topics. This book intends to provide a customizable journey for all audiences — whether you’re simply curious to learn the NFT lingo, interested in buying and selling NFTs, or filled with a burning desire to code up and deploy your own ERC- 721 non-fungible token. Introduction 1 Foolish Assumptions The biggest assumption we make about you is that you’re interested in learning about NFTs. We mean it! We do make additional assumptions in writing our how-to guides that are peppered throughout this book.
Although we assume no prior knowledge or experience in programming, blockchain technology, or cryptotrading, we do assume that you »» Have a computer and access to the Internet. »» Know the basics of navigating your computer and the Internet, and know how to download, install, and run programs. »» Recognize that some web addresses or long hashes may be split across two lines of text. Keep in mind that these web addresses and large numbers should be copied verbatim as though the line break doesn’t exist.
»» Understand that things move quickly, especially in the world of crypto, and that some of our illustrated guides may no longer represent ongoing conditions on the ground by the time you read this book. Finally, we assume that you know we are not fiduciaries, and we do not provide investment advice.
