NFT Marketplaces: What you should know before buying or selling NFTs
At a Christie’s auction, someone paid $6.6 million for a 10-second video. Isn’t that unbelievable? Okay, now read this out loud. Mike Winkelmann, better known as Beeple, produced ‘Everydays: The First 5,000 Days,’ a collage of 5000 digital pictures with an accompanying Non-Fungible Token (NFT) sold for $69.3 million at Christie’s in 2021. A digital collage comprising the first 5,000 pictures from Beeple’s “daily” project, Winkelmann has created a new piece of digital art every day for the past decade. This has to have made your jaw drop. And you may already be aware of this, which is why you’re here.
You’re probably scratching your head because of the article’s title. You may be thinking right now that you have heard the term NFT before; after all, it is mentioned by nearly every popular figure and major brand. So it’s only natural that this new craze has piqued your interest. But hold on! Are they genuinely new? Allow us to break it to you. NFTs are not new; instead, their popularity is. If we trace their origins back to 2012, they did not enter the mainstream until 2017 with blockchain-based Cryptokitties. The first NFT was released in 2014. In 2014, NFT’s total sales value was $250 million. According to nonfungible.com, despite being in business for less than a decade, it has achieved $2 billion by the first quarter of 2021.
If those statistics drive you insane for whatever reason, don’t worry, we’ve got your back. Things will make complete sense to you by the end of this article. We believe it is one of the “just pandemic things” that provided people with enough time and boredom to learn about and invest in assets like this. So, before you get into the latest investment craze known as NFTs, make sure you understand what they are and how they function.
Introduction to NFTs
It is an abbreviation for “non-fungible token.” Okay, we all know that. What about them, though? To put it simply, they are used to demonstrate the purchase of digital commodities such as a rare work of art, first editions, or a picture, video, GIF, audio file, TikTok, digital home, or even a tweet.
You weren’t expecting the last one, were you?
But, if it’s difficult for you to believe, why are you following this trend in the first place? Tweets fit into this category and have already acquired popularity as popular digital collectibles. What makes a tweet so unique? A tweet made by Twitter CEO Jack Dorsey, the first-ever sent on the platform, was sold for roughly $3 million.
Anything that exists online has the potential to be acquired as an NFT. The Ethereum blockchain is used by the vast majority of NFTs, with a few newer options. You can resale the NFT for a profit in the future. An NFT is a form of a cryptographic token; however, they vary from cryptocurrencies. They are not convertible, meaning you cannot trade one NFT for another, even if they are classified as NFT assets.
As a result, they are non-fungible. Do you still find it difficult to understand? To illustrate, take a bitcoin and trade it for another bitcoin because they both belong to the same asset class, and you will still be left with a bitcoin; this is fungibility.
On the contrary, if you take one tweet and trade it with another, well, you’re on your own. They cannot be exchanged in some general market-determined terms. Their values are distinct. One cannot replace the other. This is referred to as non-fungibility.
What are the things you should think about before diving into the world of NFT?
NFTs can provide the ideal chance for artists and content providers to get financial compensation for their labor. Artists no longer have to rely on auction houses or galleries to sell their work. On the contrary, an artist could sell their work to a buyer via NFT. This also helps the artists earn a more significant cut of the income.
The procedure differs depending on the platform. And there are several platforms. Buyers become more interested in the ‘collectible’ element of the item rather than the possibility to resale it for a higher price. NFT marketplaces play a critical role in connecting buyers and vendors.
As a result, it is crucial to verify that you are receiving the finest and most profitable bargains on the artwork, collectibles, and other digital assets.
Things to consider before selecting the best NFT platform
- Liquidity and market volume: Unlike Bitcoin, which is liquid and readily swapped given its prevailing market conditions, the case with NFTs is a little different. Even if the NFT market is on the rise and widespread, the majority of its volume depends on the type of NFTs purchased. With all of this to consider, you would not want to invest in a poor market, hoping that things will improve. That is why, at Fusible, we provide increased liquidity to your NFTs by fractionalizing them and creating pools on AMM. Fractionalizing your NFTs into FT tokens will bring more liquidity and price movement to your creations and collections.
- Transaction fees: This is a variable that varies from platform to platform. It is always a good idea to be aware of the transaction fee because it is crucial for newcomers and those who are actively engaging in it. Users are responsible for paying for the processing resources necessary to process and validate transactions on the blockchain on most NFT trading platforms.
Many prominent services charge customers a gas cost as well as a fee for trading and purchasing tokens. Because most sites need digital wallets, users must consider conversion costs between different types of ether.
3. The platform experience: In terms of the difficulty that a newbie may confront in the NFT marketplace, platform experience is essential. Lack of technical expertise, time-consuming processes, underlying infrastructure such as scalability, latency, and transaction cost, inefficient price discovery method, and auction limitations are some of the hurdles that might influence the platform’s user experience. Fusible believes that an improved pricing structure may help both producers and collectors. For creators and collectors, auctions are a suboptimal tool for determining values. Curve-based pricing systems are more effective at achieving supply-and-demand equilibrium points.
Buying & Selling NFTs: Conclusion
You might locate the appropriate marketplace if you have a comprehensive understanding of the NFT and instructions on how they function. NFTs and cryptocurrency are not the same things. If you do decide to participate, keep it to a modest amount of your portfolio. Also, only invest money that you can afford to lose. These are some of the most important aspects to consider while selecting a good NFT marketplace.
Fusible is the ideal platform for fractionalization and price discovery. Traders can successfully liquefy their NFTs and establish pools using NFT liquefactions. This enables a curve-based price discovery, allowing the market to be adequately liquid while also attracting additional participants. Read on to learn more about how to get started in the world of NFTs.