NFT Marketplace: What do you need to know before investing in NFT Tokens
NFT marketplace: what you need to know before investing in NFT tokens
The NFT marketplace is the place where NFTs (non-fungible tokens) are sold that have conquered the world. Probably only those who decided not to use the Internet at all in 2021 have not yet heard of this new class of digital assets.
But what are non-fungible tokens? Where can I buy them? And most importantly, what are the critical details you need to understand before becoming a part of the growing economy of these digital goods?
What exactly are NFTs?
NFTs are cryptographic tokens on the blockchain that represent “unique” assets. These assets can exist in both the real and the digital world. NFTs allow holders to prove not only their authenticity but also the origin of the underlying asset. Together with them, the concept of scarcity came to the world of digital assets.
In June, we already announced the launch of the Bitxmi NFT Platform, which facilitates the transition of digital assets to the blockchain. By creating NFTs on the blockchain, authors establish direct interactions with their fans without any platform-related risks. Regardless of their location, all entities interact with NFT contracts on the same terms while remaining free from proprietary platforms and related restrictions.
NFTs created on the blockchain cannot be changed. It gives a sense of ownership and security. Open NFT standards lead to network effects, interoperability, interoperability, and ultimately, we believe, to many exciting innovations in digital goods.
As the NFT industry develops, you are likely to be faced with a tremendous amount of updates and information every day. To help you figure it out, here are four things to look out for in a nutshell before buying anything on the NFT market.
The type of NFT and how does it affect where to buy it NFT?
Before diving into the world of NFT, it is important to understand which type of NFT might interest you the most. Fortunately, there are a limitless number of NFT categories, with digital arts, games, and music dominating today.
There may be further subcategories within these categories, including NFTs that can be considered premium (created by recognized artists/contributors) and more basic (created by any other contributor). Where you decide to buy your NFTs will depend a lot on the type of NFT collection you want to collect.
Various marketplaces host different types of NFT collections. These sites target audiences in a wide variety of niches, from general categories to specific industries such as games or art.
Liquidity and market size
In the early days of NFT, most of what was on the market could be categorized as collectibles. These types of NFTs are usually bought and then held by the buyer in the hope that the asset will eventually rise in value.
However, as with physical paintings, the ability to resell an asset in the market can be difficult, especially if the underlying asset is not currently popular. Therefore, it is important to remember that buying NFT is significantly different from buying bitcoin, which is always liquid, due to the large market volumes on cryptocurrency exchanges. Depending on the type and popularity of the acquired NFTs, you may face long-term low liquidity and low demand for the asset in anticipation of their value growth.
Imagine that you found what you were looking for on the NFT marketplace, go to the payment page, keeping in mind the initial price, and we see that now a huge transaction fee has been added to the total amount. Since NFT prices vary widely, it is extremely important to know in advance the amount of transaction fees on the platform and the amount of gas fees on the token’s blockchain.
Transaction fees vary significantly, and even the term “transaction fee” itself can have different meanings on different platforms. However, if by the transaction commission we mean all the additional expenses on the sale, allocated to the platform or the author, then on average it turns out that the commission on NFT platforms is on average from 2.5% to 15%! That is why you should carefully consider what additional costs may arise in connection with a particular NFT transaction.
Many NFT marketplaces are ordinary marketplaces, just platforms for exchanging digital assets on the blockchain. In the meantime, the experience with NFT can and should be much more extensive. NFTs open up many opportunities in both the real and the digital world. Not only do they bring creators closer to their audiences – they create a stir that the digital asset industry has never seen before.
So far, we have talked about NFTs mainly as collectibles, but their scope is much wider. With the help of NFT, platforms such as Decentraland and Axie Infinity have introduced a type of utility that was previously not available in the virtual world. These utilities allow members of the mentioned platforms to trade and exchange valuable items with each other regardless of the platform itself.
This is just the beginning
The NFT sphere is only gaining momentum. And today is the best time to start working with a new asset class. There are great prospects for those who want to become a part of this field or simply engage in collecting NFTs. As this area develops, more and more participants are involved.
Disclaimer: Bitxmi News is a news portal and does not provide any financial advice. Bitxmi's role is to inform the cryptocurrency and blockchain community about what's going on in this space. Please do your own due diligence before making any investment. Bitxmi News won't be responsible for any loss of funds.