What is NFT Marketplace? How does the NFT marketplace work?
An NFT marketplace is an online platform where you can buy, sell and mint NFTs. To find out where to buy or mint NFTs, visit the NFT Marketplace first.
NFT's marketplace can be thought of as a huge online store where users can browse and purchase a selection of items for sale. Since NFTs are hosted on the blockchain, most NFT exchanges and NFT selling sites require users to have a cryptocurrency wallet to store NFTs after purchase.
Marketplaces for NFTs tend to represent listed assets in digital currencies, with Ethereum being the most widely used. Purchasing an NFT transfers ownership from the seller to the buyer and incurs network transaction fees.
Thanks to the phenomenal rise in popularity of NFTs, new NFT marketplaces are popping up regularly, each trying to find a 'niche' within the wider market. This article reviews many of the recommended NFT markets, but more continue to be developed.
How does the NFT marketplace work?
Because NFTs are digital tokens, these marketplaces work a little differently than other assets. As mentioned above, it is essential to have a cryptocurrency wallet set up in advance to store NFTs after purchase. Some wallets support both NFTs and cryptocurrencies, but NFT-only wallets are also possible.
Also, to purchase NFT, you need to own virtual currency, separate from your wallet. Most marketplaces utilize NFTs in ETH, but some use Solana (SOL), Tezos (XTZ), FLOW, or other digital currencies.
As a marketplace mechanism, we mainly provide three services.
- Buying NFTs: Investors can buy NFTs at auction or at a fixed price. After purchase, ownership of the NFT is transferred to the buyer.
- Minting NFTs: Many NFT marketplaces allow users to mint their own NFTs. This means turning user-created things into digital assets hosted on the blockchain.
- Selling NFTs: Finally, the NFT Marketplace allows sellers to list their NFTs. Once sold, the seller is typically required to pay a portion of the amount received as a commission to the NFT selling platform, although many platforms offer royalties for secondary market sales.
Casting NFTs is costly, and amid growing concerns about climate change, many investors question whether NFTs are bad for the environment.
Types of NFT marketplaces
A comprehensive understanding of the different types of NFT marketplaces is important when deciding where to buy NFT tokens. The main types are introduced below, so please choose the one that best suits your needs.
NFT Art Marketplace
As the name suggests, it is a marketplace specializing in NFT art. OpenSea and Rarible are representative marketplaces where creators can cast digital art NFTs and sell them to collectors.
NFT Music Marketplace
A recent Forbes article said that NFTs could shape the future of music, and that songs, albums, lyrics and sounds could all be NFTs. The NFT Music Marketplace specializes in this field, where you can purchase NFT music provided by top artists.
Ethereum NFT Marketplace
These marketplaces are built on the Ethereum blockchain and offer digital assets denominated in ETH. Currently, the largest Ethereum marketplace is OpenSea, recently estimated to be worth a staggering $13.3 billion.
Solana NFT Marketplace
The Solana NFT Art Marketplace is hosted on the Solana blockchain, a fast alternative to Ethereum. In addition, Solana is highly scalable, so network fees can be kept low. Solanart and Solsea are the two largest marketplaces, but currently there are not many significant marketplaces hosted on Solana. If you want to use this cryptocurrency to invest in NFTs , check out our article on how to buy Solana.
Algorand NFT Marketplace
Algorand is also a recently released NFT-related blockchain network, spawning multiple Algorand NFT marketplaces. Since Algorand is a pure Proof-of-Stake (PPoS) blockchain, the entire investment process is believed to be greener and more scalable than the current Ethereum structure.
Tezos NFT Marketplace
Tezos is an open-source blockchain that works with its native token, XTZ. Marketplaces for Tezos NFTs have grown in popularity over the past year, with major marketplaces such as Rarible now offering Tezos-based NFTs.
BNB NFT Marketplace
Finally, the BNB NFT Marketplace leverages the popularity of Binance Coin, the native token of the Binance cryptocurrency exchange. The most prominent marketplace is the Binance NFT Marketplace itself, where users can buy NFTs denominated in BNB.
NFT Marketplace gas fee
When using the Ethereum NFT Marketplace, you need to pay attention to gas costs. Simply put, these fees refer to the amount of computer energy required to complete a particular transaction. In relation to NFTs, gas costs occur when an action takes place on the blockchain network (e.g. transferring ownership of the NFT to another person).
These fees apply because the Ethereum blockchain uses a “Proof-of-Work” consensus algorithm similar to Bitcoin. This means that “miners,” which are basically powerful computers, process and approve specific blockchain transactions. This process requires a lot of energy, so market participants have to pay for gas.
It should be noted that gas prices are not constant and can fluctuate greatly. Gas prices fluctuate depending on network congestion, so the more people using the network, the higher the cost. Additionally, if you want to close the deal quickly, gas prices can also be high. For example, depending on the platform, you can "slow down" the minting speed to get cheaper fees.
When using the NFT Marketplace, there are two main types of gas costs that you should be aware of.
Gas fee (one time only)
Some NFT marketplaces (such as OpenSea) require users to pay a one-time fee to initialize their cryptocurrency wallet. This fee applies to users who have never previously sold NFTs on the marketplace. Again, there is no fixed fee, but it tends to be quite expensive, ranging from $50 to $300 depending on how busy it is.
Gas fee (every time)
You also incur recurring charges for common network tasks. This includes accepting offers for NFTs you have posted, transferring ownership of NFTs to others, purchasing NFTs, and withdrawing bids placed in NFT auctions.
