What are NFT marketplaces and what can you use them for?
If you have heard of NFT, but are not exactly sure what they are and what they can be used for, then this article is for you.
We will help you get the hang of this, and even if this means an introduction to a lot of new words and concepts then don’t worry. It is not as tricky as it might seem.
Why do we need NFT and how do they relate to blockchains and bitcoins?
The easiest way to understand NFTs is to start on the conceptual level. You know bitcoins, and they are used as a cyber currency. So they can be traded with a value that is set on auctions that run on the bitcoin trading places. Bitcoins are based on blockchain technology.
NFT is also based on blockchain technology, but the aim here is not value and trading, but ownership. NFT is designed to register who owns assets. Such assets can be anything both physical and digital. However, the nature of the NFT makes them most relevant to be used for registering digital assets such as digital artwork, music, smart contracts, and other digital-based elements.
So NFT, or non fungible tokens as they are also known are great at storing ownership of an asset. And this makes the technology ideal as a backbone for trading such assets. The places you trade the asset are on NFT marketplaces. Much more on them later. For now, we go one step closer to how NFTs are designed.
What is the technology behind NFTs?
All you need to know here is that all mainstream NFTs are a part of the Ethereum blockchain on the top level.
Ethereum is a cryptocurrency similar to bitcoin. However, the design of Ethereum also allows storing the information you need to make the work as an infrastructure component for NFTs.
Other blockchains have similar features, but Ethereum is the most popular.
What can be an NFT?
Anything that can be digital and owned can be an NFT. The most popular areas are:
You trade the assets on an NFT marketplace, also known as an Non-Fungible Tokens exchange platform. . An NFT marketplace is a platform that lets you store, sells, and buy NFTs. You do this using tokens, and for this, you need a crypto wallet. Here is how they work and how you get started.
How to get started on an NFT Marketplace
It usually only takes a couple of minutes to get started on an NFT marketplace. Here is what you need to do:
Step 1. Sign up
First, you must log in by creating an account for the platform that you have selected.
Steps 2. Download a digital wallet
Then you must download a digital wallet, where you can store your NFTs. If you have already traded crypto, such as Bitcoins, then you would already have a wallet.
Step 3. Upload NFTs if you have any already
If you have created NFTs, you can then upload them to your account.
Step 4. Start selling or buying
You can now place your products on the market. There are different auction types, depending on the platform you have selected. All of them will offer regular auctions and the ability to sell directly at a specific price. Some platforms have offered limited timeslot sales where NFTs are sold at a special price for a short period.
Step 5. Get contracts of your ownerships
Regardless of how the NFTs are sold, the platform will generate a smart contract where the transfer of ownership from you to the buyer is registered.
Step 6. Pay fees
The platforms take a transaction fee for their service. Most charge both buyer and seller, and the range is between 2% to 10% of the transaction cost.
What assets can you trade and manage using Non Fungible Tokens?
The assets that you can trade using NFT are many and diverse, and they are not limited to what can be sold at an NFT marketplace. Here is a list of the best use cases.
The most common asset you can trade is digital artwork in all possible digital shapes and formats, such as; photographs, movies, and GIFs.
Swapping means the transfer of ownership of anything digital that you can own. This could be collectible such as trading cards like NBA tops Shots, investment opportunities, or the very popular animated characters like the CryptoKitties.
Video games are expected to be big in the NFT sphere. It is possible both to buy games and items in the games on the tech that is based on NFTs. Platforms like Steam are already using this with great success.
Quite a few marketspaces specialize in trading e-learning services, such as online courses.
NFTs can also be used as an infrastructure component to save and manage security components such as TuchID and FaceID features.
NFT are proof of digital ownership, and this makes it logical to use the technology as a trading component to hold information such as share ownership, dividends, and property rights.
NFt and the technology behind is opening a new range of opportunities to how to manage ownership in its broadest sense. For now, the technology is still in its mature state, but the potential is huge with many relevant use cases.
If you are more interested in NFT and the specific marketplaces, we suggest you read this comparison guide that reviews the seven most popular platforms.
Canecto is a tech blog that specializes in the newest trends and use cases from the Web3 world