How to buy and sell NFTs: Unlocking the NFT market

Non-fungible tokens (NFTs) are unique digital assets secured on a blockchain, each identified by distinct codes that set them apart from others. This unique identification grants specific rights to the purchaser, such as ownership, transferability, and sometimes even royalties from future sales. The term "non-fungible" indicates that these tokens cannot be exchanged equivalently; each asset in an NFT collection has its own unique value and characteristics. For instance, one piece of digital artwork may be vastly different in worth from another, even if both belong to the same collection.

Although the process of buying and selling NFTs can initially seem daunting, it becomes more manageable once you have a clear understanding of the necessary steps. Familiarizing yourself with the various platforms and tools available for these transactions is crucial. Using reputable crypto exchanges and applications can simplify the process, ensuring that you engage with trustworthy services.

Additionally, it's essential to educate yourself about potential scams that target NFT buyers and sellers. By understanding common tactics used by fraudsters, you can better protect yourself and your investments. Familiarity with the NFT market, including how to evaluate the value of different assets, will empower you to make informed decisions and enhance your overall experience in the digital asset space.

Different varieties of NFTs

Non-fungible tokens (NFTs) come in various forms and can represent a wide array of digital items, including personalized avatars, artworks, real estate, and other digitally represented assets. 

Here are some of the most popular types of NFTs across different sectors:

• Digital Art
• Collectibles: including sports moments, music, fashion, and academic items  
• Real-World Assets: ownership of tangible assets represented as tokens on a blockchain 
• Domain Names
• Licenses and Certifications
• Patents
• Event Tickets and Attendance Proofs
• Documents

NFTs signify a significant transformation in how artists protect their rights, engage with their audiences, and monetize their creations. By existing on decentralized blockchains, NFTs eliminate intermediaries, streamlining transactions and enhancing efficiency.

How to buy NFTs

Once you've funded your wallet, you're ready to buy NFTs while covering any associated transaction fees. Most NFT marketplaces offer two methods for purchasing: fixed-price listings and auction sales. Buying an NFT at a fixed price is a straightforward, instant process, whereas participating in an auction can take several days until it closes.

There are two main types of NFT auctions: timed auctions, which function like traditional English auctions, and Dutch auctions, also known as decreasing-price auctions. In a timed auction, you place a bid and wait for the seller to accept your offer. To secure the NFT you desire, you'll need to outbid the current highest bidder.

In a Dutch auction, the seller sets an initial price that decreases at regular intervals. For example, an NFT might start at 10 ETH and decrease by 0.01 ETH every five minutes. The auction concludes when a buyer places a bid at the current price.

Before purchasing an NFT, ensure you have enough cryptocurrency to cover both the price of the NFT and any gas fees. Insufficient funds may result in failed transactions, preventing you from acquiring the desired NFT.

How to sell NFTs

There are two primary ways to sell an NFT: Minting a new one or selling an NFT you've previously acquired. Minting refers to the process of converting a digital item into a token on the blockchain. The most common protocols for minting NFTs are the ERC-721 and ERC-1155 standards, which are typically integrated into NFT platforms. Depending on your chosen platform, there may be other protocols to familiarize yourself with.

Minting an NFT

To mint an NFT for sale, follow these steps:

1. Use a PC and ensure your blockchain wallet is adequately funded with the cryptocurrency supported by the NFT marketplace where you plan to mint.
2. Create the digital item you wish to mint, such as artwork, music, or documents.
3. Check the specific upload requirements for the type of digital item you’re creating, as each marketplace has its own standards.
4. Log into the NFT marketplace and locate the “create” or “add new item” button.
5. Upload a high-quality version of your digital item, along with an engaging title and description.
6. Choose whether your NFT will be a single edition or part of a collection, then click the create button to mint your NFT.
7. Before finalizing, double-check all the details you've provided, and then click the final “create” button.

Reselling an NFT

Many NFT marketplaces enable creators to set royalties on their NFTs, allowing them to earn a commission each time their work is resold. When an NFT is purchased, ownership is transferred to the new buyer, but the original creator continues to receive a percentage of sales through royalties.

Listing an NFT

To sell an NFT, locate it within your collection and click the “sell” button. You’ll be taken to the listing page, where you can specify how you want the NFT to be listed and define the sale terms.

Be aware that some marketplaces may charge a listing fee when you put an NFT up for sale. To avoid transaction failures, ensure you have enough cryptocurrency to cover any applicable fees during the listing process.

Examples of NFT marketplaces

NFT marketplaces come in various forms, but they all share a common feature: the ability to list NFTs for sale. Users can purchase NFTs either at a fixed price or through auctions. The key differences among these marketplaces lie in the types of NFTs available, the fees they charge, and the operational aspects of their platforms.

Here are some well-known NFT marketplaces:

OpenSea  

Promoted as the world's first and largest NFT marketplace, OpenSea offers a wide range of NFTs across different categories, including digital art, collectibles, domain names, photography, music, utilities, trading cards, and virtual worlds. Primarily built on the Ethereum blockchain, OpenSea also supports the following networks:

• Polygon
• Avalanche
• Solana
• Klaytn
• Arbitrum
• Optimism
• Zora
• Blast
• Sei
• Base

This peer-to-peer NFT platform charges a 2.5% fee on secondary transactions, while fees for primary drops on new mints range from 2.5% to 10%.

Magic Eden  

Magic Eden is a Web3-ready NFT marketplace based on the Solana blockchain. It positions itself as a community-driven platform, rewarding users with Magic Ticket tokens for access to the MagicDAO. The marketplace features thousands of NFT collections and has a 0% listing fee, with transaction fees that vary depending on the situation.

Rarible  

Rarible is another community-oriented NFT marketplace, offering interoperability among multiple blockchains, including Ethereum, Solana, Tezos, IMX, and Polygon. It hosts a diverse array of NFT collections and allows RARI token holders to participate in Rarible DAO, granting them governance rights within the project. 

Rarible employs a regressive fee structure based on the price of the NFT, as follows:

• $4,000+: 0.5% fee for both buyer and seller
• $2,000 - $4,000: 1% fee for both buyer and seller
• $400 - $2,000: 2.5% fee for both buyer and seller
• $100 - $400: 5% fee for both buyer and seller
• $0 - $100: 7.5% fee for both buyer and seller

Binance NFT  

Launched in 2021, Binance NFT aims to connect artists, creators, and crypto enthusiasts on a secure and diverse platform. It provides an NFT marketplace, events, and mystery boxes, charging a flat transaction fee of 1%. Additional fees may include:

• Gas fees: Applicable when purchasing NFTs from other platforms
• Platform fees: A 1% fee for selling NFTs on Binance
• Naming rights fees: Charged to NFT sellers

Other potential fees on Binance include:

• Platform fee: 1% for using the service
• Naming rights fees (royalties): Paid to creators by sellers if the seller is not the creator
• Deposit fees: Charged for depositing an NFT to the marketplace for sale
• Withdrawal fees: Gas fees for transaction validation
• Burning fees: Charged if you delete an NFT

Minting fees may apply for:

• Minting: Fees determined by the network used for NFT creation
• Smart contract deployment: Automatic fees for creating smart contracts for NFTs
• Collection removal: A fee of 0.50 ETH or 1.00 BNB for creating an NFT collection

Niche Marketplaces  

NBA Top Shot

Managed by the National Basketball Association, NBA Top Shot is the leading NFT marketplace for basketball fans, allowing users to buy, sell, and trade official NBA and WNBA digital collectibles. The platform offers opportunities to earn rewards through challenges and drops, charging sellers a 5% fee.

NFL All Day

Similar to NBA Top Shot, NFL All Day is an NFT marketplace created by the National Football League. It primarily incurs blockchain network fees, with only an $8 ACH withdrawal fee and foreign transaction fees charged to users.

Funding your crypto wallet

Once you've created your cryptocurrency wallet, the next step is to fund it with crypto tokens that are compatible with the platform you've chosen. Most Ethereum-based marketplaces primarily use Ether (ETH) or other Ethereum-based tokens as their main currency. In contrast, platforms like NBA Top Shot, which operates on the Flow blockchain, utilize payment tokens that are specific to their blockchain environment.

To fund your wallet, start by purchasing cryptocurrency from a reputable exchange. You can easily acquire crypto using various payment methods, including bank transfers, credit cards, or debit cards. It’s advisable to choose regulated exchanges such as Coinbase, Binance.US, or Gemini for added security and reliability. 

Here’s a step-by-step guide to funding your crypto wallet:

• Choose a reputable exchange: Sign up for an account on a well-known cryptocurrency exchange that supports your desired tokens.
• Deposit funds: Use fiat currency (like USD) to deposit money into your exchange account. This can usually be done through bank transfers, credit cards, or debit cards. 
• Purchase cryptocurrency: Once your funds are deposited, navigate to the trading section of the exchange and buy the cryptocurrency you need, such as ETH or any other token supported by your NFT marketplace.
• Transfer to your wallet: After purchasing your crypto, find the wallet address for the wallet you created earlier. Transfer the crypto to this address by entering it in the exchange's withdrawal section. Make sure to double-check the address for accuracy to avoid losing your funds.
• Confirm the transaction: Once you've initiated the transfer, check your wallet to confirm that the funds have arrived. Depending on the network congestion, this may take some time.

By ensuring you have a well-funded crypto wallet, you'll be prepared to engage in transactions on your chosen NFT marketplace, allowing you to buy, sell, and trade digital assets seamlessly.