Building NFTs with Ethereum: Learn how to create, deploy, and sell NFTs on Ethereum (English Edition)

By Yattish Ramhorry

NFTs are the new way to collect and trade digital assets. With Ethereum, you can create your own NFTs to sell, trade, or use in games and applications.

This book will guide you through the basics of NFTs, including how they work and the tools used in their development, such as Truffle, IPFS, Ganache, Hardhat, Pinata, Ethereum, Web3, and Solidity. You will learn how to set up and deploy your own NFT project on Ethereum. The book also explores different types of smart contracts and tokens. Additionally, the book will cover different types of NFTs and processes such as enumerating, metadata, minting, and transferring. Lastly, you will learn how to upload your NFT to a marketplace.

By the end of the book, you will have the skills necessary to launch your own NFT projects on Ethereum.

• Language: English
• Publisher: BPB Online LLP
• Release date: Feb 6, 2023
• ISBN: 9789355513410

Book preview

Part - I

Introduction to NFTs and Digital Assets

CHAPTER 1

Basic Concepts of Blockchain, Web3, and Digital Assets

Introduction

In recent years, the world of cryptocurrency has been booming, and one area that has seen particular growth is the use of Non-Fungible Tokens (NFTs). NFTs are unique digital assets that cannot be replaced and are often used to represent real-world assets in the digital world.

This makes them ideal for collectibles, digital art, and other one-of-a-kind items. NFTs are still a new technology, so there is much to learn about how they work and what they can be used for. This chapter will cover the basics of NFTs and the Ethereum blockchain.

One of the most popular platforms for creating and using NFTs is Ethereum, and in this book, we will show you how to use Ethereum to create your own NFTs. We will also explore how NFTs can be used and how they are changing the world of digital assets.

A book about NFTs and Blockchain would be incomplete without diving into the details of Blockchain, Web3, cryptocurrencies, digital assets, and NFTs. If you are new to Web3 and Blockchain, we will do our best to explain each of these concepts in as much detail as possible.

For those who have already worked on these concepts and are familiar with them, you can just go through them in order to have the gist of the book. We will begin by explaining a few basic concepts that we will be using throughout the book.

Structure

In this chapter, we will discuss the following topics:

Blockchain and DLT

Blockchain tracking and storing data

Blockchain creating trust in the data

No more intermediaries

Properties of distributed ledger technology

Ethereum and its uses

Decentralized finance matters

Ethereum transition from proof-of-work to proof-of-stake

How Web 3.0 will change the world

The differences between Web 1.0, Web 2.0, and Web 3.0

Digital assets and its importance

Non-Fungible Token (NFT)

Objectives

The objective of this chapter is to provide the reader with a firm understanding of Blockchain and Web 3 technologies. We delve into the details of Blockchain and Distributed Ledger Technology (DLT), which the Ethereum network functions. We also look at the uses of Ethereum and how the Ethereum network is evolving to a proof-of-stake model from its current proof-of-work model.

We also touch on Decentralized Finance (DeFi) and how smart contracts play a pivotal role in transforming traditional finance. Web 3 is the latest evolution of the internet, and we will look into what Web 3.0 is and how it differs from Web 2.0. Finally, we learn about digital assets and Non-Fungible Tokens (NFTs), which are an essential aspect of the content of this book.

Blockchain and DLT

Many people might think of the Blockchain as the technology which powers Bitcoin. While this was Blockchain’s original purpose, it is capable of a lot more. Blockchain is a suite of Distributed Ledger Technologies (DLT) that can be programmed to record and track any items stored of value, either physical or digital.

According to investopedia.com, the term store of value refers to an asset, commodity, or currency that can be saved, retrieved, and exchanged in the future without deteriorating in value.

Blockchain can be used as a store for financial transactions, medical records, land ownership titles, and even priceless works of art. If you already think there are processes in place for tracking data, what is so special about Blockchain? Let us look at a few reasons why Blockchain technology is going to revolutionize the way that we interact with each other.

Blockchain tracking and storing data

Blockchain stores information in batches, called blocks that are interlinked sequentially to form a continuous sequence, also called a chain of blocks. If a change is made to the information stored in one particular block, that block of data is not rewritten; instead, a new block is created with the new change.

The new value is recorded on the block along with a timestamp of the date and time the change was made. If this process sounds familiar, then you will be correct in assuming that the Blockchain resembles the centuries-old general financial ledger.

It is a non-destructive method to track data changes over time. Here is a hypothetical example to demonstrate the process. Assume there was a dispute between Partner A and Partner B over who owns a piece of land that has belonged to their company for several years.

Since Blockchain technology uses the ledger method, an entry in the ledger will show that Partner A first owned the property in 1985.

When Partner A sold the property to Company X in 1992, a new entry was made in the ledger. Every change of ownership of the property is recorded as a new entry in the ledger. We will be able to see the history of every sale and ownership transfer in the property ledger.

But here is where things get a lot more interesting! Unlike the age-old ledger system, originally a hardcover ledger book, then a database file stored in a centralized system, Blockchain is designed to be decentralized and distributed across an extensive network of computers.

This decentralizing of information reduces the ability for the data to be tampered with and ensures that all copies of the data remain consistent.

Blockchain creating trust in the data

Before a block of data is added to the chain, a few things need to occur. First, a cryptographic puzzle must be solved, thereby creating the block. The computer which solves the puzzle shares the solution with all the other computers on the Blockchain network. This is the process known as proof of work.

The network of computers verifies the proof of work, and if it is correct, the block of data is added to the chain. The combination of these cryptographic math puzzles and verification by the network of computers ensures the trust and validity of each block on the chain. Since the network of computers on the chain does the trust verification for us, we can now interact with the data in real-time.

No more intermediaries

When we do business with each other in the modern world, we do not show our financial or business records to the other person. Instead, we depend on trusted intermediaries such as a lawyer or bank to view our records and maintain the confidentiality of that information.

These intermediaries build trust between all relevant parties, and we can verify whether Company XYZ is the rightful owner of a building or a piece of land.

This approach of having an intermediary limits the risk and exposure but adds additional complexity to the business transaction, which means additional time and money are spent. If Partner A’s land title information was stored on a Blockchain, she could remove the intermediary, like her lawyer, who would naturally confirm her information with the next party.

As we know, every block added to the chain will be verified to be true and tamper-proof. So now, Partner A can show their land title information to Partner B, securely stored on the Blockchain. Partner A will save considerable time and money by removing the middleman.

This type of trusted peer-to-peer interaction with the data will revolutionize how we access, verify and transact with each other. And since Blockchain is a type of technology, not a single network, its possibilities and uses are endless!

Some Blockchains are public and open for everyone to access and view. Others can be closed for a select group of authorized users, such as your company, a group of banks, or even government institutions; these Blockchain networks are called private Blockchains.

In addition, there are also hybrid Blockchains, which are a combination of a public and private Blockchain. In some hybrid chains, those with private or restricted access can see only their data selections, whereas, on a public Blockchain, they can see all the data. Everyone can see all the information in others, but only some will have access to adding new data.

A government organization can use a hybrid system to record the boundaries for Partner A’s property and the fact that they own it while maintaining the confidentiality of her personal information. Or, it could allow everyone to view all property records but reserve the exclusive right to modify them.

While many people and organizations have created several variations of Blockchain, they all share the previously mentioned characteristics. It is a combination of all the factors mentioned; decentralization of the data, building trust in the data, and allowing us to interact with each other directly without an intermediary. It gives Blockchain the potential to strengthen how we interact with each other, as shown in figure 1.1:

Figure 1.1: Properties of Distributed Ledger Technology

Bitcoin was the first cryptocurrency to be established that operated on the Bitcoin Blockchain network. Since the Bitcoin Blockchain network rolled out, the Ethereum Blockchain appeared in 2014. Its creators were; Vitalik Buterin, Gavin Wood, Charles Hoskinson, Anthony Di Lorio, and Joseph Lubin.

Interestingly enough, Charles Hoskinson, one of the original co-founders of Ethereum, has now gone on to create the Cardano Blockchain. This network functions on the proof of stake model. If the concept of proof of stake is foreign to you, I will explain the details of that in further sections as follows.

Ethereum and its uses

Bitcoin is one of several hundred applications that operate on Blockchain technology. Until recently, building decentralized applications (dApps) required a coding, cryptography, and mathematics background. But now, Blockchain applications are being developed and deployed faster than ever. Ethereum provides developers with the tools to build decentralized