What is an NFT Marketplace
If you like to keep up to date with tech and financial news, you will be aware of NFTs by now. Non-fungible tokens (NFTs) are digital representations of unique or scarce items, from art and collectibles to in-game items and more. In 2021, the NFT market reached $32 billion.
However, NFTs aren’t traded on exchanges like Bitcoin and other cryptocurrencies. After all, they wildly vary in value, meaning it’s not just a simple case of trading one for another.
No, if you’re looking to invest in NFTs for the first time, you’ll need to find a trustworthy NFT marketplace.
If you have no idea what that means, keep reading, you’re in the right place:
What is an NFT Marketplace?
NFTs are online platforms where NFTs can be stored, exchanged, and in some cases created (more commonly known as “minted”).
Think of what Coinbase is to cryptocurrencies, or what Amazon is to physical products, and you’re most of the way there.
If an NFT marketplace allows you to create your own NFTs, this will incur a fee via the blockchain network. This fee will vary depending on the blockchain being used - Ethereum is most common as it offers the biggest range of functionality and largest dApp (decentralized app) ecosystem. However, AVAX is seen by many as having the ability to deliver a better throughput, and near finality of transaction.
It is typically the most expensive too, but remains the most popular due to the range of dApps available and the options they provide.
You will of course need to sign up to your chosen NFT marketplace and have an active account to do any of the above. But typically, you will also need:
- An active crypto wallet.
- Enough coins in the wallet
Compatibility must be taken into account, so for example if you want to buy or sell NFTs based on the Ethereum blockchain, you will require an Ethereum-compatible wallet.
Which Blockchains Can be Used for NFTs?
As we already detailed, Ethereum is by far the most popular option.
Other options include:
- Binance Smart Chain
You can also buy Ethereum-based NFTs with not only ETH itself, but other Ethereum-based coins such as BNB and DAI.
What is the Best NFT Marketplace Available?
Since people can create their own NFT marketplaces, there is a large amount of them available - most of them relatively new and unproven, and many could even be considered to be scams.
As a result, it’s best to stick to the short list of best NFT marketplace options listed below - all of which are well known, highly regarded and relatively trustworthy.
SparkWorld* is a relatively new marketplace, but one that’s still pretty punchy. It offers a best-in-class NFT infrastructure solution and community hub, offering proprietary Fair Prediction Launches to maximize user experience when accessing the NFTs they want. Spark includes a launchpad, NFT Marketplace aggregator and regular predictions competitions and tournaments. It’s a great option for users and projects alike.
OpenSea launched in 2017 - the stone age by NFT standards, and is arguably the most established and well known NFT marketplace. It is best known for selling NFTs of artworks, but also offers collectibles, virtual worlds, domain names and other digital-focused NFTs.
Its name is very apt, as it supports over 150 tokens(although fiat is not an option), meaning almost anybody can use it. It's also a great introduction to NFT marketplaces thanks to its very user-friendly design.
Fees are 2.5% of every transaction, plus an additional gas fee paid to miners for completing the Ethereum transaction. You can also avoid gas fees by buying NFTs with polygon, but only specific assets allow this.
Rarible is another one of the most popular NFT marketplaces. It focuses on user generated content and allows you to create your own NFT on the Tezos, Flow, or Ethereum blockchains.
Unlike OpenSea, it uses its own token to buy and sell. This makes it a little more exclusive and closed off to those who are willing to use this RARI token. However, RARI holders can vote on company policy changes, making it an interesting collaborative community. The marketplace has partnered with some major brands from Yum! Brands to Adobe, and even Taco Bell has artworks listed on the marketplace.
Transaction fees are the same as OpenSea - 2.5% plus any appropriate gas fees,although you can also make card purchases with fiat.
If you’re looking for a large network that is well connected but still decentralized, Rarible is arguably the best NFT marketplace for you.
SuperRare is similar to the above marketplaces in that it focuses on artworks - however, like it;s name implies, it only allows 1 of 1 NFTs and does not accept “meme” NFTs. It works with a small group of concept artists to ensure everything is original, and even has its own $RARE token, although Ethereum is also accepted.
SuperRare reviews and approves every upload and sale to ensure investors can be confident of quality and reliability. A 15% fee is charged the first time an NFT is sold, and it also includes a 3% flat fee on every transaction, payable by the buyer.
NiftyGateway is another of the largest NFT marketplaces. Its focus is art by well known artists, with NFTs being created and sold by names as diverse as Steve Aoki, Grimes and deadmau5. It is also the home to some of the biggest NFT transactions ever - a world record for a single transaction was set when an artwork created by Beeple sold for $69,000,000 in early 2021. Another world record was broken when another artwork called “The Merge” by Pak sold for $91,000,000in December 2021 - although this was collectively purchased by 28,983 buyers.
One potential downside for some people is that NiftyGateway stores your NFTs on its own Gemini wallet rather than allowing you to store them in your own personal wallet. This may be an immediate deal breaker for those who want complete freedom on managing their NFTs - but a potential upside for some newcomers is that this means you don’t require your own wallet and can even buy NFTs with fiat currency. Given its higher end options and fiat payments, NiftyGateway is a great option if you’re looking to make a larger investment into NFTs.
While the four NFT marketplaces listed above are the most popular mainstream options and the most general in terms of their content, there are also much more specific niche NFT marketplaces out there focused on one area or one type of NFT. Many of these are becoming very popular in their own right, and may be the best NFT marketplace for you if you’re specifically interested in the subject they offer.
These include the below, although many more are likely to pop up in the near future:
- Valuables allows you to tokenize and sell your tweets as NFTs. In March 2021, Jack Dorsey (CEO of Twitter at the time) sold his first ever Tweet from 2006 on Valuables for a massive $3 million.
- Decentraland is mostly focused on digital assets for video games, such as virtual land, in-game weapons and outfits, etc.
- NBA Top Shot sells collectible digital basketball cards and recordings of major NBA and WNBA moments. In 2021 a LeBron James dunk video sold for $208,000. The NBA built and manages this marketplace and has full rights to the video clips. This is a rather unique NFT marketplace but likely a type we will see more of in the future, as GameStop, DraftKings and Associated Press have all either launched a similar marketplace, or have confirmed plans to do so. NBA Top Shots accepts fiat card payment along with Bitcoin, Bitcoin Cash, Ethereum, USDC or Dai.
What to Do On an NFT Marketplace
So what can you actually do on an NFT marketplace, and how difficult is it?
You might be surprised how simple using them actually is.
Let’s take a look:
Make an Account
This is a simple process, comparable to signing up for an account on most websites. However, you will likely need to enter the password for your crypto wallet in order to make payments. This is a big reason why it’s important to stick to trustworthy reliable marketplaces.
NFTs are typically auctioned off, allowing you to make a bid - although they are often sold for a specific fixed price, too. You can also make offers directly to the seller in the hopes of getting a better price.
In order to sell an NFT, you will first need to create and upload it. You will then need to either set a fixed price for the sale, or set a starting point for an auction.
Usually the NFT won’t immediately go up for sale, but will first be submitted to the marketplace to verify its authenticity.
Assuming this is approved, your NFT will then appear for sale on the marketplace. Once somebody purchases your NFT, the marketplace facilitates the transfer of tokens directly to your wallet.
Most NFT marketplaces have a “mint” button that allows you to create NFTs.
You will need to first ensure your linked wallet has enough tokens to cover any transaction fees.
How to Choose the Best NFT Marketplace for You
The most important thing to get your head around first is NFTs themselves, and the way that they simply represent ownership of one specific asset.
The first decision you’ll need to make is which sort of NFT you’re interested in buying - whether it’s digital real estate, artworks, written content, video content, video games, rare collectibles, or anything else. Narrowing down your interests is important because this will inform which NFT marketplace is best for you. And besides, the NFT market is so broad that starting without doing this will likely get you sucked into a rabbit hole pretty quickly.
You will also need to consider which tokens a marketplace accepts. Some are very open and have hundreds of options, making them great choices for either beginners who aren’t sure which tokens they will stick with, or seasoned crypto investors who hold large amounts of numerous different coins.
Somewhere in the middle there will also be enthusiasts of specific tokens with little interest in others, who will likely prefer to choose specialist platforms focused on their own choice of currency.
Whichever route you choose, you will need to fund your wallet once you have set up your NFT marketplace account, to ensure you have tokens available to bid or purchase NFTs.
This would be a great time to research the past of the marketplace in terms of security, as if it’s leaked people's information in the past you may choose to opt for another marketplace.
Investing in NFTs
Once you’re signed up to an NFT marketplace, you have the option to invest in NFTs such as digital assets and collectibles in the hopes of making a future profit. You should ensure that you choose a relevant one based on the tokens available to you to use, your storage capabilities, and the type of NFT you’re interested in.
Before doing so, be extremely confident in what you’re doing. It’s crucial to be aware that while some NFTs can rocket in value and provide a positive return on investment, this is relatively rare and the industry remains highly speculative.
The value of digital art and collectibles works in a similar way to physical ones and can go up and down based on factors that are very difficult to predict, including uniqueness, the artists’ reputation, and global events.
If you do decide to make a purchase, ensure you can afford it - NEVER lend money to invest or use funds that would otherwise be used for bills. Also ensure any purchase is in line with your investment strategy, available funds, investment time horizon and perhaps most importantly, knowledge.
What is an NFT marketplace: Roundup
There you have it, now you’ve got an idea about what an NFT marketplace is and how to find the best NFT marketplace out there. You might even feel ready to invest. As always, at Sparkworld* we endeavor to provide our users with best in class functionality, as well as great industry news and advice which you can find on our blog. Any questions about our app? Reach out (contact us on the app, just click the envelope in the bottom right corner).