Benyamin Ahmed, a Year 8 student from London, is not your average 12-year-old. So far, he has earned about $500,000 from the sale of his second non-fungible token (NFT) collection earlier this year and also recently collaborated on another NFT project that made $5 million in total sales, giving him $600,000 in cumulative earnings so far.
Benyamin's interest in technology dates back to when he was five years old. Intrigued by his father Imran Ahmed’s computer programming work, Benyamin and his elder brother, Yusuf, started learning how to code.
“My father set us up with some old laptops and we started playing with HTML/CSS and making very simple web pages,” says Benyamin. “Initially, it was just a bit of fun but my dad soon realised that we were enjoying this and started teaching us formally. I now do coding exercises every day.”
Lately, NFTs and the smart contracts, or collections of code, that power them have captivated Benyamin. Excited by the technology, he decided to create an NFT collection of his own.
NFTs are digital avatars of artworks and collectibles. Ownership of these digital assets is recorded on a blockchain, which is a digital ledger. But, unlike currencies, in which every token is of equal value and can be swapped for any other, NFTs have unique qualities that stop them from being interchangeable or fungible.
The NFT market is booming as people with additional liquidity after Covid-19 channel cash into these digital assets. Mike Winkelmann, the digital artist who goes by the name Beeple, made headlines in March this year when he sold an NFT for $69 million.
But NFTs now transcend art. People are spending millions of dollars on NFT collectibles that include sports trading cards, digital houses, augmented reality trainers, music and video games. For instance, an NFT of Twitter chief executive Jack Dorsey’s first tweet sold for about $3m.
NFT sales volume surged more than eight-fold to $10.7 billion in the third quarter of 2021, up 704 per cent over the previous three-month period to the end of June, according to data from market tracker DappRadar.
Sales volumes recorded on OpenSea, the largest NFT trading platform, hit $3.4bn in August, according to DappRadar. In January 2021, the monthly volume recorded on the platform was more than $8m.
“Contrary to common belief, one does not necessarily require coding or programme development skills to make an NFT. If one does, it is a major plus, considering that it increases the chance of getting sales with higher bids,” says Devesh Mamtani, chief market strategist at Century Financial in Dubai.
“Notably, NFT leverages art in any form or medium and, as a result, creative skills may be required. As a graphic artist, for example, you will be required to work with such graphic editing tools such as Photoshop, MS Paint or CorelDraw and their likes.”
Benyamin launched his first Minecraft-inspired NFT collection earlier this year. Called Minecraft Yee-Haa, it comprised 40 pixelised avatars of Minecraft characters.
“I did not sell any but gave one away on Twitter; it was a great learning experience,” he recalls.
In June, he began coding his second NFT collection. This time, he drew inspiration from a well-known whale meme image and a popular digital art style.
“My second collection, Weird Whales, was inspired by a common pixelated whale meme seen in Minecraft, other channels and CryptoPunks, the most expensive and successful NFT project. I was also closely following projects such as Bored Apes,” Benyamin says.
“I created all the base layers and traits for the whales using pixel art and watching YouTube videos. I then used an Open Source Python programme to programmatically generate 3,350 whales, each unique and with a different rarity score.”
Although he initially invested just $300 in the project, the thread went viral after he tweeted about it in July, he says.
“People really connected with my story as I was so young and they loved the whales and the meme aspect. I have so far made about $500,000 from the collection."
He sells his NFTs on OpenSea's marketplace and keeps the money he earns in Ethereum and Bitcoin. He also uses a combination of hot and cold wallets to store his earnings. However, he does not have a bank account but may have to open one for tax reasons.
NFTs are typically held on the Ethereum blockchain, although other blockchains support them as well, Mr Mamtani says. While it is possible to purchase NFTs with fiat money, most NFT marketplaces allow purchases to be made with existing Ether holdings, he says.
“From an investment perspective, the fortunes of this market are closely tied with the underlying boom in cryptocurrency assets and specifically Ethereum," Mr Mamtani says.
As with other collectibles, an NFT's value depends entirely on what the market will offer, he says. You do not own a physical item and there is no intrinsic value, unlike shares or mutual funds, so they are speculative investments, Mr Mamtani says.
“Retail and small-scale investors are better advised to shy away from such assets in absence of a proper understanding of the underlying market."
Meanwhile, Benyamin has just finished working on Non Fungible Heroes, an NFT collection of comic book characters, along with a team of professional designers who worked at Marvel and Disney.
The collection was released on September 18, sold out in 12 minutes and generated more than $5m in total sales.
“NFT royalties give the creators a percentage of the sale price each time the creation is sold or changes hands on a marketplace, making sure that if your work gets popular and increases in value, you will see some of that benefit,” Mr Mamtani says.
“NFT royalty payments are perpetual and executed by smart contracts automatically. With most marketplaces, the creators can choose the royalty percentage. Five per cent to 10 per cent is considered a standard royalty.”
Benyamin, who is currently helping a UK artist named Tjili, who has cerebral palsy, to digitise her artwork, says he has spent very little of his earnings so far but has invested some money on other NFT projects that he finds interesting.
He wants to continue working in the cryptocurrency space and eventually set up his own business.
“The volatility of cryptocurrencies does not discourage me. We are early, the space will mature and stabilise, but there will be lots of bubbles and crashes along the way. As a long-term strategy, it is a perfect place to be,” Benyamin says.
For now, he will continue coding in between swimming, taekwondo and playing video games such as Minecraft, while also focusing on maths and history, his favourite subjects at school.
How to create, list and sell NFTs
- Pick the artwork. NFTs can represent any digital file: this could be a digital painting, a piece of music, a video, a text.
- Once you choose the digital asset, buy Ether. That is the most popular mode of payment and most prominent NFT marketplaces support it.
- You need an Ethereum wallet with some Ether in it to mine NFTs. One of the easiest to use is MetaMask. It is a free app on iPhone or Android.
- Pick a marketplace to create and list the NFT. The most popular ones are Mintable, Rarible or OpenSea. OpenSea is free and has no moderation on the content that can be listed.
- Connect the ETH wallet to the marketplace. Confirm the Wallet Connect operation from your MetaMask app.
- Once the wallet is connected to OpenSea, create the NFT.
- Click on "Create" in the menu and create a collection. Fill in all the information needed, then save.
- Click on "New Item", then load the artwork and provide details. Usually, minting NFTs comes with file upload limitations: JPG, png and mp4 files should not be larger than 50 megabytes. Images need to have a width of 3000px, ideally. For video, 1080p or 4K is best. Once you are ready, click on "Create". Congratulations, you have created an NFT.
- To sell it on OpenSea, open the item in your collection and click on the "Sell" tab.
- You will have to market the object, possibly to an existing community of people that would be interested in your work.
- Creators set a starting price for the auction and buyers must place bids at or above this price. After the first bid is placed on the artwork at the reserve price, a 24-hour countdown for the auction starts.
Do NFTs result in more carbon emissions?
Digiconomist estimates a single Ethereum transaction’s carbon footprint at 33.4 kilograms of carbon dioxide. In contrast, artist and programmer Memo Akten estimates that an average transaction specifically for NFTs has a carbon footprint of about 48kg of carbon dioxide.
Each time an NFT is minted or sold, that is another transaction. One NFT transaction is expected to have a carbon footprint that is 14 times more than that of mailing an art print, estimated at 2.3kg of carbon dioxide. – Devesh Mamtani