Crypto

Making Sense of NFT Marketplaces

Non-fungible tokens (NFTs) are all the rage just now, but they look like they’re coming to be around for a long, long time, rather than a passing trend. This relatively new market is going from strength to strength, and NFTs offer an exciting new asset in which to invest if you’re wishing to do something different with your money.

Boom times look to be ahead for the NFT sector, with some huge growth predicted. According to a market report by Verified Market Research as discussed on the cryptocurrency news website Coin Telegraph, the value of the NFT market could grow to $231 billion by 2030. In 2021, the value of the global market was around 11.3 billion, so the prediction shows this is set to skyrocket.

With all this in mind, you might be considering whether an NFT marketplace should be the stage for your next investment. Investing in NFTs isn’t something you do lightly, however, so here’s a guide to understanding NFT marketplaces so that you can make a good investment.

Understanding NFT marketplaces

Before you sign up to an NFT marketplace, you have to know what one is. In this case, an NFT marketplace is a platform on which you can store, display, buy and sell NFTs. On some platforms, it’s also possible to mint them, “mint” being a commonly used term in the industry that means “create.”

To buy or sell on an NFT marketplace, you’re going to need a few things:

  • A cryptowallet: to make purchases on an NFT marketplace, you’ll need a cryptowallet. This wallet must be compatible with the blockchain network that supports the NFT(s) you wish to buy.
  • Coins: if you’re going to conduct any activity, whether buying, selling or minting an NFT on the platform, you’ll have to credit your wallet with some cryptocoins. Before you choose your marketplace, it’s important to find out which cryptocurrencies it supports.
  • A user account: as you might expect, you’ll have to create a user account for the marketplace if you plan to use the platform.

Be aware that creating and listing an NFT on a marketplace is likely to incur a blockchain network free. This fee will depend on the blockchain network you’re using. Ethereum has the largest ecosystem of decentralized apps, but the fees are also the most expensive.

Different types of marketplaces

NFTs are a growing market. As the market has grown bigger, different types of marketplaces have materialized. Universal marketplaces and art-oriented ones tend to be the most popular. Naturally, just as there are universal sites, some marketplaces go in the opposite direction, niching into items such as digital collectible cards and real estate. 

Where you choose to buy or sell your NFTs is up to you, of course, but it’s better to operate on a more popular platform. Marketplaces that have more active users on them are more likely to reward you with more competitive prices when you’re buying. If you’re selling, you’ll have more prospective buyers than if you were on a less active platform.

Buying and selling on an NFT platform

Before you do either of these, you’ve got to sign up to a platform. Normally, this involves creating an account or connecting a digital wallet, or both. Often, you’ll find the button for connecting a digital wallet towards the top right of an NFT marketplace homepage. To complete the process, the homepage is likely to ask you to enter your wallet password.

Buying on an NFT platform

Buying on an NFT platform is relatively straightforward. There are two main options when it comes to buying: paying directly for a fixed price, or through an auction. Sometimes, it’s possible to make an offer to a seller and negotiate a better price. Given the growth of NFTs, this is an opportunity worth taking, as your investment could really pay off down the line.

Selling on an NFT platform

Whereas it’s possible to buy NFTs without too much difficulty, selling them is a different matter because of all the different steps involved, making it more complex. This is especially the case if you’re trying to sell something you’ve created yourself, such as a tweet, some artwork or a soundtrack.

When you sell an NFT, normally, you have to:

  • Upload the asset to the platform
  • Set a fixed price or put the asset on auction
  • Wait for the platform to verify the asset
  • Watch the asset get listed once the platform has approved it
  • Wait for the marketplace to make a transfer from buyer to seller once you’ve accepted a bid.

NFTs have become an exciting asset into which to an asset. There’s lots of variety, so take your time, study NFTs and the market, and decide which types of NFTs would suit you as an investor and whether the investment would be worthwhile for you.

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