NFTs, short for “non-fungible tokens,” became mainstream when a piece by digital artist, graphic designer and animator Mike Winkelmann, better known as “Beeple”, sold at Christies auction for a whopping $69 million in 2021. The piece in question was called “Everydays: The First 5000 Days.”
What a lot of people don’t know is that NFTs have been around for much longer than that. It all goes back to the 2012 concept of Colored Coins, which described a set of methods for managing and representing real-world assets on the blockchain. The limitations of Bitcoin, however, made this unfeasible.
The concept laid the foundations for experimentation, which would lead to the eventual creation of NFTs. In 2014, digital artist Kevin McCoy minted “Quantum,” the first NFT, and triggered a wave of experimentation and development. NFTs would shift from the Bitcoin blockchain to Ethereum. Later, NFTs would become more mainstream.
Below is a guide to NFT marketplaces to help you navigate your way around them.
What Are NFTs?
In case you’re not familiar with NFTs themselves, these are tokens that represent ownership of unique items. They allow tokenization of things such as art, collectibles, and even real estate. The unique properties of NFTs mean they can’t be interchanged. An NFT can only have one official owner.
What Are NFT Marketplaces?
NFT marketplaces are platforms on which you can store, display, trade, and, in some cases, mint NFTs. These are specialized marketplaces. Unlike regular cryptocurrencies, it’s not possible to buy NFTs on centralized or decentralized crypto exchanges. NFT marketplaces are places for listing and trading NFTs.
To use an NFT marketplace, you’ll need the following:
- Cryptowallet: You must use a cryptowallet that’s compatible with the blockchain network that supports the NFTs you plan to buy. For instance, if the NFTs you’re buying or selling are based on the Ethereum network, you need a compatible Ethereum cryptowallet.
- Coins in the wallet: Before you can buy, sell or mint an NFT, you must add some funds to your wallet. First, you’ll have to find out the cryptocurrencies that the marketplace you plan to use supports.
- User account: To buy NFTs on the marketplace, you’ll have to create a user account.
How NFT Marketplaces Work
There are several operations you can perform on an NFT marketplace.
The main steps of signing up to a marketplace consist mostly of creating an account and connecting a supported wallet. Often, you’ll find the button for this in the top right of the homepage. The marketplace is likely to ask you for your wallet password, when connecting your wallet, to complete the process.
You can either buy NFTs by paying a fixed price for them directly or buy them through an auction. Sometimes it’s possible to make an offer to the owner and negotiate a better price.
Selling is more complicated than buying. This is especially the case if the seller has created the NFT themselves. Setting up an NFT for sale involves:
- Uploading the asset to the platform and either setting either a fixed price or choosing to place the NFT on auction.
- Waiting for verification of the asset. The asset will be listed for sale following approval.
- Accepting a bid, in which case the marketplace then transfers the NFT from the seller to its new owner.
Ethereum is the largest system for NFTs, so when creating one, you may want to start with this. Ethereum’s token standard is ERC-721 for NFTs, so you’ll need a wallet that supports this. You should also top your wallet up with around $100 to cover transaction fees.
After you’ve completed these steps, you’ll have access to platform such as Rarible, Mintable or OpenSea. A lot of platforms have a ‘Create’ button in the top right corner of the page. This takes you to the page on which you can start building your NFT.
Different Types of Themed NFTs
NFTs have enabled creators to get truly creative and have led to many different types of digital assets coming into being. Videos, audio pieces, art, tweets and more can all be turned into NFTs.
It’s not just the types of NFTs of which there’s plenty of variety. You’ll find an abundance of different themed NFTs out there on the marketplace. Sports-themed NFTs, coffee-themed NFTs, Halloween-themed NFTs and music-themed NFTs are just some of the assets available. Are you a fan of LEGO by any chance? You’re in luck because you can even get NFTs based on the world’s most famous toy.
Reading this guide to NFTs will take just a few minutes but could have a significant impact for the better on your future. NFTs are becoming more and more popular and you may feel investing in them will be highly worthwhile.