December 06th 2022

NFT Marketplaces: Everything You Wanted to Know

NFT Marketplaces: Everything You Wanted to Know

If you have been following the news over the past couple of years, you’ve probably seen a lot about NFTs and NFT marketplaces. But what exactly is an NFT marketplace? An NFT or Non-Fungible Token is a unique digital item that can be stored in the blockchain. An NFT marketplace is a type of e-commerce website where unique digital items, rather than physical items, are sold.

How It All Started

March 2021 was a major month for the artwork, with a piece of art entitled ‘Everyday: The First 5,000 Days’ sold for $69m at auction by Christies. While paying this amount of money for art these days may hardly be surprising to some, this artwork in particular got a lot of attention as it was sold as an NFT, or a unique digital certificate that is tied to an image that only exists in the digital world.

Since then, the market for NFTs has only gotten more and more popular. They’ve been featured on a range of celebrity social media accounts such as NBA player Stephen Curry and rapper Snoop Dogg, along with being on Saturday Night Live as the subject of a parody. Currently, NFTs are being traded for hundreds of millions of dollars every week on NFT marketplaces such as OpenSea, Foundation and more. You can check out what’s for sale on the NFT Marketplace at OKX.

You may be wondering, though, how somebody can buy an intangible image if it’s freely available online, and why are they worth so much? What value do NFTs actually have? The original is assigned to the NFT token, and any pictures on the internet are simply copies. For example, the famous ‘Mona Lisa’ painting by Leonardo da Vinci is freely available online, and there are lots of copies of this painting around the world. However, the original can only be seen by visitors to the Louvre Museum in Paris. 

What is an NFT?

NFT art, also known as crypto art, is digital art with objects that can be seen using gadgets. One of the most interesting things about this type of art is that the object can be sold using blockchain technology, for cryptocurrency. Each work is assigned a token, or NFT, which is a digital virtual unit with a certain value.

In blockchain, a token is what each record is referred to. If they are interchangeable, tokens can also be used as currency. They are commonly used to confirm ownership of a digital object. Put simply, an NFT is a special digital ID that tells you everything you need to know about a piece of art including where and when it was created, and who currently owns it.

What is an NFT Marketplace?

Unlike platforms that offer unlimited digital content when you pay a subscription fee like Netflix or Amazon Prime Video, an NFT marketplace is built on a similar basis to selling physical goods. They exist for the purpose of selling digital content that can be scarce and meaningful.

An NFT marketplace will use blockchain technology to maintain the digital provenance of the art, in a similar way to how a physical art store or auction house will be able to spend time examining a piece of art to ensure that it is the original, rather than simply a copy. Some NFT marketplaces also provide the option to burn items, which only serves to reinforce the scarcity of the digital products even further.

Types of NFT Marketplace

There are several different types of NFT marketplace to choose from. Art-oriented and universal platforms are some of the most popular, but you can also find more niche NFT marketplaces that list certain NFT types such as digital collectible cards, in-game items, and even real estate.

1.     Open Marketplace NFTs: These platforms are places where users are able to create, buy, and sell artwork on the platform in the simplest way to generate huge profits. With an open marketplace, any user can take part in the NFT market with full access to a wide variety of NFTs.

2.     Curated Marketplace: These marketplaces tend to offer the option to buy certain types of art that have been curated from famous creators. Users will usually need to be invited by other community members in order to participate.

3.     Collectibles Marketplace: These marketplaces are designed for the purpose of selling various collectible items. They’re usually centred around a specific niche, such as the NBA.

Which Blockchain is Used?

Ethereum is the most popular blockchain platform where you can buy, sell, and trade unique digital items or NFTs. However, there are more competitors appearing each day including Solana, Poligon, WAX, Tron, Waves, Tezos, Flow by Dapper Labs and Binance Smart Chain.

What You Need to Use an NFT Marketplace

If you want to buy an NFT through an NFT marketplace, there are three main things that you will need. These are:

1.     Cryptocurrency wallet: You’ll need to ensure that you are using a crypto wallet that is compatible with the blockchain network that you want to use. For example, if you are going to be using the Ethereum blockchain platform to buy or sell NFTs, then you’ll need a compatible Ethereum crypto wallet.

2.     Funding: Before you can buy, list, or mint NFTs, you will need to ensure that your wallet has been pre-filled with some funds.

3.     User Account: Prior to getting started, you will need to create an account for the marketplace on which you want to buy or sell NFTs. Bear in mind that, depending on the marketplace you choose, there may be a short delay as your ID is verified through Know Your Customer verification processes.

Listing and creating NFTs for sale will involve paying some transaction fees on the blockchain platform, so it’s also worth being ready for this if you are interested in selling as a digital artist. The fees can vary depending on which blockchain system you decide to use.

How to Create an NFT Marketplace

Whether you are an entrepreneur, student, or simply a crypto and NFT enthusiast, creating an NFT marketplace can be an ideal business idea to start today, with the popularity of these digital items only growing over time.

NFT marketplaces perform in a similar way to the shopping apps that we know and love like eBay and Amazon, allowing users to sell, purchase, and trade non-fungible tokens and other crypto products. Some of the main features you will need to include in an NFT marketplace include:

1.     Storefront: This is an important feature of any NFT marketplace. It offers all the information that a user might be looking for including details on the items, art owners, bids, and other relevant information about the platform.

2.     Search Items: Every NFT marketplace should support the management core of the NFT items for customers. Managing the NFTs is a crucial feature to have, and it’s important to offer a user-friendly experience to customers with the support of item searches.

3.     Filters: Filters are a crucial tool for any kind of digital selling platform to have. In general, most NFT marketplaces are filled with a wide range of tokens available for sale, so a filter tool allows users to quickly and easily find what they are looking for.

4.     Purchasing and Auctions: An auction model is a popular choice for an NFT marketplace. It’s important to provide a simple auction that allows customers to easily place bids and buy the NFTs they want. You should make sure that it is clear to users when the bid will expire or when the auction is going to end.

5.     Listing: This provides users with the power to choose NFTs to buy and sell. The customer needs to start the process of searching, sorting, and filtering to choose the NFT that they want. Listings allow users to explore the marketplace effectively.

6.     Digital Wallet: It’s important for all NFT marketplace platforms to incorporate a digital wallet. This feature is designed to store and transfer NFTs and cryptocurrencies onto the platform. Each buyer who purchases an NFT should have a crypto wallet where the non-fungible token can be stored until they decide to transfer it from the marketplace to their own wallet.

Why NFT Marketplaces are Growing

NFT marketplaces are growing rapidly thanks to increased interest in crypto, a high demand for digital items, and the fact that starting a marketplace is not difficult today. Some of the main reasons behind the growth include:

1.     A new niche: NFT is quite a new concept in the world of crypto, promoting the cryptographically verifiable and safe features. The NFT marketplace works similar to an e-commerce store for buying and selling digital items.

2.     Easy for beginners: NFTs exist on blockchains and use blockchain technology, which makes for easy access for beginners. Purchasing an NFT often leads to people trying out other DeFi instruments like crypto trading.

3.     Amazing gains: The NFT trend has been governed by massive gains made possible by crypto.

NFTs have only been getting bigger and bigger over the past few years. NFT marketplaces work in a similar way to eCommerce stores, allowing users to buy and sell their digital items.

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