In the past few years, NFT trading has made a name for itself. Especially in 2021, the headlines were flooded with NFT trades worth millions of dollars. Football star Tom Brady is ready to sell his own exclusive NFT and musicians such as Lil Nas X and Grimes have also jumped on the bandwagon. This shows that athletes, musicians, or video game-based NFTs might be worth a lot of money in an NFT marketplace. A digital artist named Beetle sold his digital artwork for more than $60 million.
Now that you read about the financial gain associated with NFTs, the question that might most certainly cross your mind would be - how to trade NFTs? To help you with this, we’ve unraveled the process in this article. But before we jump into it, let’s have a look at some of the best places to trade NFTs.
Best Places for NFT Trading
Just like cryptocurrencies have their crypto exchanges, NFTs have their marketplaces where one can buy, sell and trade NFTs. Here are some of the best NFT marketplaces available:
OpenSea is one of the largest NFT marketplaces and it offers a wide selection of NFTs including sports, art, trading cards, censorship-resistant domain names, and collectibles. It also supports ERC1155 and ERC 721 assets.
Artists and creators can mint their own NFTs on the blockchain by leveraging OpenSea’s item-minting tool. In the marketplace, you can create a collection of NFTs without any cost and without writing a single line of code.
Also known as the NFT marketplace, it has sold artworks by famous digital creators such as Beeple, Daniel Arsham, Grimes, and Pak. This marketplace is managed and maintained by Gemini, a regulated crypto exchange.
Creators are attracted to Nifty Gateway as it allows creators to receive royalties. It handles all the technicalities associated with the creation and sale of NFTs, making NFT sales easier.
Rarible is a community-owned NFT marketplace focusing mainly on art assets. Holding the ERC-20 RARI token makes you a part of the Rarible community and makes you the owner as well.
The marketplace distributes 75,000 RARI every week. Moreover, active traders who buy or sell on the platform, get rewarded with RARI tokens. Artists and creators can use Rarible to mint and sell their digital artwork, such as music albums, books, or movies. The categories available on the Rarible marketplace are photography, art, metaverses, games, memes, domains, music, and more.
SuperRare is different from every other NFT marketplace. You have to fill out an application to get accepted to sell in the marketplace. If you get rejected by SuperRare, you’ll not hear back from them. Therefore, it is a unique, single-edition digital artwork marketplace.
Each artwork is a digital collectible and authentically created by an artist on the network. Later, it is tokenized as a crypto-collectible that people can buy and trade. All the transactions on the marketplace are made using ETH, the native coin of the Ethereum blockchain. Right now, SuperRare is working with a handful of hand-picked artists.
Costs Involved in NFT Trading
While NFT trading might be a lucrative venture, there are costs related to NFT minting and trading that you just cannot ignore, as listed below:
- Gas Fees: Most of the NFTs are Ethereum-based. So, whenever you mint, buy, sell, trade, list an NFT, or accept the bidding of an NFT, you have to pay gas fees, which is the price paid to execute transactions on the Ethereum blockchain. The gas fee depends on the demand of the blockchain at the time of initiating a transaction.
- Account Fees: It is a one-time cost that you must pay when you set up your account on the NFT marketplace and integrate your crypto wallet into it.
- Listing Fees: There are NFT marketplaces that let you mint an NFT for free, but charge you for listing it for trading, also known as a listing fee. The cost of creating an NFT on the same blockchain might be different due to the time of minting, data size, blockchain demand, transaction speed, project quality, and more.
Let’s now cut to the chase;
How to Trade NFTs?
Luckily, NFT trading is pretty easy. However, we recommend thoroughly educating yourself about the NFT market and researching the NFT you want to purchase. Here’s how you do it:
- Create a Crypto Wallet: If you are serious about NFT trading, then a crypto wallet is a must. This is where you are going to store your NFTs. As we said earlier, the majority of NFTs are Ethereum-based, so a wallet such as MetaMask is going to be perfect.
- Sign up for an NFT Marketplace and purchase an NFT: Choose from the best NFT marketplaces we mentioned above and register on the platform. This process is simple and shouldn’t take long. However, it is important to remember that you have to pay gas fees for buying and selling NFTs. So, deposit some ETH in your MetaMask wallet. Now, search for the NFT you want to purchase and complete the transaction.
- Start Trading: After you have bought an NFT, you can list it for sale. And that’s it. You are now ready to trade NFTs.
This is how to trade NFTs.
Risks Related to NFT Trading
Contrary to popular belief, NFT trading is not always a six-figure sale. The majority of NFTs are for a few hundred dollars, while some might not even get sold. Keeping that in mind, here are some of the risks related to NFT trading.
Smart Contract Risks
Presently, the risk of smart contracts is an apparent one. A few months ago, a renowned DeFi named Poly was hacked and NFTs worth $600 million were stolen due to inadequate smart contract security. The hackers exploited the tiny flaws in smart contracts and launched a successful large-scale attack.
Another risk in the NFT market is the inability to pinpoint the value of an NFT. The value of an NFT depends on uniqueness, creativity, scarcity of buyers and owners, and more. However, in the absence of a fixed standard, there are considerable fluctuations in the value of NFTs.
Currently, there is no legal definition of an NFT. Different countries, such as Japan, the UK, and others, have taken different approaches while classifying NFTs. Therefore, NFTs need an international regulatory body for legalization and to set regulations for NFTs.
Cyber Threats and Online Fraud Risks
With the popularity of NFTs, the risk of cyber threats has also increased. There are plenty of replicas of authentic NFT stores on the internet. They have the exact same logo and content on their website. They might sell you an NFT that is not even on the market or sell you a fake NFT.
Another risk is someone posing as a popular artist and selling you a fake NFT. There’s a risk of fake giveaways, fake airdrops, copyright theft, and more.
Intellectual Property Rights
The ownership of an NFT is another risk to consider. Sometimes people sell a replica of an original NFT. When you buy such NFTs, you have the right to use them, but you don’t have intellectual property rights. Therefore, it is important to have an international governing body that imposes trademarks, the right to publicity, copyrights, and moral rights for decentralized blockchain technology.
It cannot be denied that NFTs have grown to be a huge market. People have become millionaires through NFT trading, but it has a lot of risks. The price of the NFT might tank overnight, the marketplace can get hacked, or someone might sell you a fake NFT. We advise you to perform thorough research on the NFT marketplace and the NFT before making a purchase decision.