Advancements in the Fintech world have to lead to a two-fold expansion, first in the Crypto market and then in the ‘NFT’ or a Non-Fungible Token world. Currently, NFT transactions have reached an absolute high of $250 million compared to the transactions in 2021, increasing 299%. This accounts for a rise in the total active wallet count and transactions by 97%. The fact that NFT’s have just been introduced only in 2015 and do not have an upper limit to grow is scary! It’s time to think about adapting the same. And hence, we have gathered all that we could on creating an NFT marketplace for your business.
Everything to know about NFT Marketplaces
Before we start further, let’s revisit the definition of an NFT or a Non-Fungible Token. An NFT or a Non-Fungible Token is a digital asset that is impossible to exchange or trade at an equivalent rate/unit. Usually, these are pieces of art, video games, and digital assets.
Some specific properties of an NFT are:
- Indivisibility: Dividing these tokens into different denominations is not possible.
- Authenticity: Each NFT that people own is easy to verify.
- Non-interchangeability: NFT’s are never interchangeable or equal to one another, so there can’t be any barter system.
- Programmability: NFT’s involve crafting, generating, and forging. This makes it have an endless amount of chances and variations.
- Scarcity: Various particular characteristics of an NFT can be impossible to alter once launched.
What is an NFT Marketplace?
Next comes an NFT Marketplace, a decentralized platform allowing users to create, buy, sell and store NFTs. For instance, the Valuables NFT marketplace enables users to buy and sell tweets. Before moving to the development part, you should think about the platform to be launched, the technology, and the idea behind an NFT marketplace.
The Growth of NFT Marketplaces
One of the most popular NFT Marketplace platforms is OpenSea. Let’s analyze its growth in recent years to understand the development of NFT Marketplaces as a whole. Only during the second half of 2020, Open Sea grew from the equivalent of US$1 million per month to over $20 million per month. This is an increase of 20 times in just six months, which is extraordinary!
The number of artist-sellers grew 500% from 1,395 in June 2020 to 8,770 by the end of the year. The artist-sellers on OpenSea continue to grow exponentially. Another famous platform, SuperRare, garnered tens of millions in new sales in recent weeks and has just raised $9 million from investors. There is huge scope in NFT Marketplaces at the moment!
How does an NFT Marketplace work?
An NFT Marketplace requires users to sign up for the digital wallet. Users can upload their assets/ work onto these platforms and exhibit them throughout. They can also select the payment tokens they prefer working in. The next step in the workflow is to put these items under a bid or for a fixed price. A smart contract and transaction need to be set up while listing an item.
a. Crypto wallets:
Crypto wallets are used by both the buyers and sellers, wherein they have all the information about a particular NFT. These apps/wallets do not store an NFT but only contain the owner’s digital asset/file location.
b. Operation Costs
A myth about digital currency is that there are no hidden costs involved, unlike the banking and payment card industry. Users often forget the operational costs involved with digital transactions. The price of NFTs may also include the energy costs of brokering the transaction on the network and converting money into cryptocurrency.
c. Smart Contracts
Smart contracts spell out the terms and conditions between buyers and sellers. The agreement validates itself once the buyer meets the seller’s terms and the transaction becomes irreversible.
Features of an ideal NFT Marketplace
Since you know how NFT marketplaces work and what types of platforms are on the market, you need to understand whom you are developing your platform for and what problems it can solve.
NFT Marketplace must have a storefront that offers users all the information required for bids, owners, preview, and price history. While artists can’t copy a particular NFT, they can release multiple NFTs of the same image. Marketplaces usually give these different number labels to differentiate.
With filters, users can easily navigate a site for their preferred collectibles. Also, there can be added features for payment methods, listing status, and categories.
Having listings on the Marketplace allows users to send relevant categorical collectibles quickly. These listings usually have a sorted description and an even better ‘tag’ system for users to scan through.
One of the major concerns for people dealing with NFTs (both buying and selling) is the security of funds. Hence, a secure platform is the need of the hour. An ideal marketplace needs to be connected with a “native” wallet instead of forcing your buyers to sign up with other online wallets. . It would help if you did not create a wallet from scratch. Think about integrating your service with options like Formatic or Coinbase. Usually, the technology applied to create these marketplaces are -Ethereum, Flow, Tezos, Cardano.
How can we help you build one?
If you’re looking to build an NFT Marketplace, we can take care of everything from setting up tools for you to work through smart contracts. Once we understand the project’s scope, we can develop a user-friendly front-end that works for buyers and artists. For more information, contact our experts here.