What are NFTs?

NFTs are in limited supply, unique, and valuable due to their scarcity. They are easy to authenticate and cannot be duplicated. They can be seen as a certification of ownership and proof of authenticity of physical or virtual assets recorded on the blockchain.

Some of the potential NFT use cases include in-game collectables, digital art, sports, fashion, academia, tokenization of physical objects, decentralized finance (DeFi), patents, licences and certificates, documentation, domain name ownership, and others. . NFTs can also be used to improve event ticketing, track metadata, and transform the real estate industry.

What are NFT Marketplaces?

An NFT Marketplace is a digital platform to buy and sell NFTs. NFT marketplaces allow their users to store and display their NFTs and sell them to other people in exchange for cryptocurrency. Some NFT marketplaces also allow their users to mint their NFTs on the platform itself.

A Market Place NFT user can transfer their NFT to another person, although this incurs some fees. NFT markets work differently. They differ in terms of the types of NFTs accepted, the fee amount charged for various transactions, the blockchains supported, payment options, and more.

NFT marketplaces can execute horizontal or vertical transactions. Horizontal trading is where an NFT marketplace sells different types of NFT assets to a generic audience. Vertical trading is where an NFT marketplace sells specific NFT assets that target a niche audience.

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NFT marketplaces require you to have the following items to use them:

A cryptocurrency wallet

You need cryptocurrency to buy and sell NFTs on an NFT marketplace. The crypto is stored in a crypto wallet. There are many crypto wallets available in the market today. Examples include Metamask, Binance Wallet and Coinbase Wallet.

Some coins in the wallet

Crypto wallet is ready, but what do you use to buy and sell NFTs? Crypto. Therefore, your crypto wallet must be funded with some crypto coins. However, you need to do some research and learn about the cryptocurrencies that are compatible with the NFT market.

a user account

NFT marketplaces require you to create an account to use them.

How does an NFT marketplace work?

Although different NFT markets require a guide on NFT markets. Users need to go through different steps to perform various tasks, the steps are almost the same. Here is the workflow of how NFT marketplaces work:

Step 1: Register

Most NFT marketplaces require their users to first register for an NFT marketplace account. This applies to both buyers and sellers of NFTs. They must also connect their crypto wallets to the NFT market.

Step 2: Create NFT

Sellers should create NFTs to help support their digital assets. The digital file that will be converted into an NFT must be uploaded to the NFT marketplace. The seller must describe their NFT and give details about its name, price, benefits, and more to make it stand out from its competitors.

Step 3: List NFTs

The NFT asset will be reviewed and moderated by the NFT marketplace administrator, and if it adheres to the rules and regulations of the NFT marketplace, it will be listed on the platform. Some NFT marketplaces may list your NFT on the homepage, even for free.

Step 4: Sell NFT

Potential buyers will look at the NFT and make their offers or decide to pay the amount you have quoted. The amount is deducted from the buyer's crypto wallet.

If the seller accepts the offered offer or the deadline is reached, the offer is accepted and the NFT will be released to the buyer. The amount paid by the buyer is transferred to the seller.

The transaction will attract some fees. Examples include gas fees and transaction fees. Additional fees may also be incurred when buying or selling on an NFT marketplace. The money helps maintain the NFT market and run its operations.

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How exactly do NFT marketplaces make money?

NFT marketplaces charge a 2-5% transaction fee for each sale. Some NFT marketplaces charge gas fees in addition to the gas fees miners pay to transact. The following are other ways through which NFT marketplaces make money:

Transaction fees

The primary way NFT marketplaces generate revenue is by charging transaction fees. The fee ranges between 2-5% per transaction.

Some NFT marketplaces charge the transaction fee to both the buyer and the seller, but it is mostly charged to the buyer or deducted from the listing price.

List of commissions

Some NFT marketplaces charge fees to mint, list, exchange, sell, or remove an NFT from the NFT marketplace.

Tokens

Some NFT marketplaces, such as SuperRare and Rarible, use native crypto tokens as governance tokens on the platform or to reward users for holding NFTs or transacting on the platforms. NFT marketplaces sell these tokens to generate income.