Do you still have no idea what exactly lies behind the NFT abbreviation, why is it worth millions, why is its price rising rapidly or where you can buy or sell it, then read carefully below!
Digital images, photos, 3D models, podcasts, music, lyrics, video content or unique domains can all be turned into NFT (non-fungible token) and auctioned off. Owners of these items earn hundreds, thousands and even millions of dollars.
According to a survey published by NonFungible.com, the total value of NFT transactions increased by 299% in 2020, compared to the same period last year, exceeding $250 million.
NonFungible.com also found that the total number of active wallets performing NFT transactions increased by as much as 97% in 2020. Experts predict that NFTs will become the driving force of the virtual economy in the next decade. The non-fungible token market is expected to continue to grow, and it is time to think about how to profit from it. One of the biggest opportunities is to create your own NFT marketplace. We have therefore compiled a detailed guide that will answer questions about how to develop your NFT marketplace and succeed.
What is NFT?
Let’s start by talking about NFTs (non-fungible tokens) and what distinguishes them from common cryptocurrencies. An NFT is a unique unit of data housed in a blockchain, a decentralized database most commonly used to store cryptocurrency transaction history. Unlike cryptocurrencies, each NFT is one of a kind and cannot be interchanged, replicated, replaced, or divided into parts.
For example, if you lend 10 euros to someone, it does not matter if you get the same banknote back. You want any 10-euro banknote back. But when it comes to collector coins, each of which is unique and has its own value, the situation is changing dramatically. The NFT is like this unique coin, the only one of its kind.
The NFT is used to represent real art objects, intellectual property, digital art, images, music, game characters, etc. Here are some key aspects that define NFTs:
- authenticity – the NFT must have an owner and the ownership should be verifiable,
- originality – each NFT is unique and contains its own set of metadata,
- uniformity – you cannot divide the NFT into parts, as in the case of cryptocurrencies,
- unique value – one NFT is not equal to any other and cannot be exchanged as Bitcoin or Ethereum,
- place of existence – NFTs exist in a blockchain and can create new markets and forms of investment.
What is the purpose of NFTs?
NFTs allow you to acquire, collect and rightfully own digital objects. If you buy something in the form of a token, you will receive a special smart contract that contains all the identifying information about the NFT, including its unique value and originality.
When you buy an NFT, you buy a digital record of the token’s ownership, which can then be transferred to a digital wallet. In the case of a work of art, an NFT represents the right to own the original work of art. However, the actual copyright remains with the original artist or owner.
How to create your own NFT?
NFTs can only be created in special marketplaces, where they are later sold. In order to create your own NFT, you need to have not only a digital product, but also a digital wallet with several Ethereum coins.
The “tokenization” procedure is very simple and requires minimal effort. Just add all the required information, upload your artwork, song, domain, photo or whatever else you might be trying to monetize, and wait for people who will be interested in buying your NFT.
You can read more about how NFT marketplaces work later in this article.
What is the success of NFTs?
Awareness of the NFT and its popularity have grown enormously over the past 3 years. In 2020, the global profit of transactions involving NFTs was $338 million, which is more than impressive considering that in 2019 it was only $141 million. To help you imagine this development, we’ll show you what the year-on-year growth of the NFT market looks like through a chart:
This trend of super rapid growth is forcing people to consider investing in the development of the NFT market. Why is this a promising business opportunity? First of all, it seems that the NFT is currently very popular and attractive to people all over the world who are ready to actively participate in auctions and purchase digital works of art. What does it mean? Just that the NFT marketplaces benefit greatly from sales.
As an example, we will mention the OpenSea market. Monthly sales of NFTs on OpenSea reached $95.2 million in February, compared to only $8 million in January. The NFT is not just a trend, it is a phenomenon that will remain on the market.
Like, what you’re reading?
Many people buy artwork, unique collections of music videos or pictures, video game characters, short clips, collectible sports cards, and even memes and gifs like “Nyan cat”. They are ready to invest a huge amount of money to own something unique of their kind, something that attracts attention and is actively discussed.
NFTs are an excellent opportunity for authors of digital works as well as for people who buy them. While the former are given the opportunity to monetize their work, the latter more easily assert their ownership status of a valuable investment or property.
NFT marketplaces, in turn, make money by charging various fees, such as a “gas” energy fee to make transactions or a standard fee for placing a digital work of art for sale (approximately $70-100 or more depending on the marketplace).
Where and how to buy/sell NFTs?
NFTs can be stored and purchased on NFT marketplaces. There are so many that you can even find specialized ones, such as Valuables, where people auction tweets, or Neuno, where you can buy fashion collectibles. The most popular markets include OpenSea, Rarible, Nifty Gateway and MarkersPlace.
For example, the very first tweet of Jack Dorsey (Twitter co-founder) sold as NFT this year for $2.9 million.
just setting up my twttr— jack⚡️ (@jack) March 21, 2006
If you want to buy an NFT, just go to the appropriate online marketplace of your choice, find the item you want to buy and pay.
However, fees can be treacherous. First of all, some marketplaces will charge you the energy needed to complete blockchain transactions. You should also not forget that most NFTs cannot be bought for dollars or euros, but for Ethereum – the second most popular cryptocurrency. Thus, the conversion may require an additional fee, not to mention an unfavorable exchange rate due to the ever-increasing value of the cryptocurrency.
So, if you have a crypto wallet, it’s easy to buy an NFT. However, even more interesting, and just as easy, is to sell it. Although different marketplaces have different rules, the general procedure is the same. If you own a creative digital product of unique value, visit a marketplace, upload your product, and then follow the instructions to turn it into a unique token. Add an attractive description and set a starting price (if it’s an auction) or a fixed price.
How does an NFT marketplace work?
To use any of the NFT marketplaces, you must register and link your crypto wallet to your account. After creating your account, there are still a few steps left:
- create an NFT and specify all required parameters (price, description, etc.),
- list your digital items for sale,
- an auction where buyers place their bids,
- after the auction is completed, the digital product and cryptocurrency will be transferred by the NFT marketplace.
All NFT marketplaces use smart contracts, which are special transaction protocols governing the relationship between the two parties involved – buyer and seller. These smart contracts are generated in the form of code which is placed in a blockchain. They also contain identifying information regarding the NFT. The process of selling and buying tokens is therefore really simple and user-friendly.
Successful NFT markets
Now that you have an overview of the key principles of how the NFT works, let’s look at some great examples of such platforms and where their success lies.
One of the largest NFT marketplaces, Opensea, is a place where you can buy art, domain names, collections of world sports brands, collection cards, virtual worlds and much more. The choice of digital goods is versatile. What makes this NFT marketplace special is the section, which contains information on volume, average price and other statistics related to each category of tokens. It is updated every hour.
Rarible is the first community trading platform to buy and sell NFTs. There is even a native management token in this market called $ RARI to reward active users. It is an innovative approach that contributes to the further development and improvement of the platform. You can buy music, playing cards, domains, or art at Rarible. You can also track the most successful buyers or sellers and look at their token collections.
NFT trading cannot be called a new phenomenon, it appeared a few years ago and since then the market has started to develop really fast and has significantly contributed to global digital sales. This segment is not yet crowded, so it’s just about time to enter it with your own solution for selling NFT digital objects.
We have a lot of crypto enthusiasts at Altamira. If you are considering entering the exponentially growing NFT market, do not hesitate to contact us, we will be happy to help you.