What are NFTs
Non Fungible Tokens are digital assets that are unique and cannot be directly interchanged with other assets. Every NFT, which is sort of like an autographed item, is made of metadata, which gives them their individuality. Its digital content is linked to the blockchain. NFTs are a form of cryptocurrency like Bitcoin, where instead of money, they host assets like tweet, text, image, MP3, artwork, domain names, trading cards, game items, etc. It all began in 2017, when CryptoPunks, developed by Larva Labs, released one of the first NFTs. It consisted of around 10,000 collectables which were unique and based on the Ethereum blockchain.
NFT tokens can be transferred between various decentralized applications. Creating the tokens depends on the ERC-721, ERC-1155 and a few other standards. ERC-721 is a standard that represents the ownership of a unique NFT. It is a smart contract standard where developers follow the same template or format, which makes the code more universal. The ERC-1155 allows the creation of fungible, semi-fungible and non-fungible tokens in one single token standard. This changes the face of trade and recolonizes the financial segment by giving people a great sense of digital item ownership.
Why NFTs are so popular?
Although this concept is just in its nascent stages, in 2018 the market cap for global transactions of NFTs was $40.96, and in 2020 it grew manifold from $141.56 million (2019) to $338.04 million in 2020. Token-based sales have reached a new height of success in the recent past. And the launch of the NFT marketplace is making dreams come true for many. The number of active buyers in 2020, has increased by 57 percent, from 51,861 in 2018. The year 2021, is a year where almost everyone is talking about NFTs. OpenSea, a peer-to-peer marketplace for rare digital items and crypto collectables, recorded a monthly sale of over $95 million. And the trading volume on Ethereum amounted to more than $400 million. The icing on the cake is, for the consequent trades, the creator gets a royalty payment. So, what makes NFT special?
- Unique and authentic
As information about the NFT and the owner can be easily verified, it makes them unique. This is by far the most crucial feature of NFT where information is secure and legitimate.
Most tokens cannot be divided into smaller units. It is like a mark on the stone. However, if you can buy the complete cost of the item from the owner, maybe then.
- Easy to work with
Marketplaces are a hub where you can buy and sell NFTs. Within a matter of minutes, you can create a profile. Buying and biding operations are pretty simple. Not just that, due to their versatile nature, NFTs can be traded on different crypto markets. The trading opportunities are truly beneficial.
- Open to all
Owing to this instant tradability nature, it can act as a host to a variety of audience, enhancing its liquidity.
All the records pertaining to the trade – transfer, token issuance, and other activities can be authenticated before getting into it.
NFT Marketplace, now what is that?
In literal terms, a market is a place, area, composition of systems, institutions, social relations, etc., where people can sell and purchase good or where parties engage in exchange. Taking inspiration from this concept are NFT Marketplaces. It is a platform for one all – creators, artists, and buyers. This software allows people to trade in NFTs and crypto collectables. The crypto assets here come with digital ownership. Some of the top NFT Marketplaces are OpenSea, Rarible, KnownOrigin, SuperRare and AtomicMarket.
Attributes that make for a great marketplace
- Less traffic congestion and a high level of security.
- Provide secure transactions.
- Seamless wallet integration.
- An authentic and long list of digital items and sections to explore.
- Nominal transaction fees.
- Elegant and aesthetic graphics.
- Quick transaction.
How does an NFT Marketplace work?
Technically, most marketplaces function in the same way. However, their uniqueness is what gives them an edge over others. Here is how the client-side of the NFT Marketplace works:
- The user creates an account on their favoured NFT platform.
- Before stepping forward, the user needs to create a digital wallet to store the NFTs.
- After deciding their niche, the user then uploads their assets and showcase their work. On the other hand, the buyers put a pin on their preferred item.
- Once the item is listed for sale, they can be bought it at a fixed price or opt for an auction.
- As soon as the item clears moderation, people can bid or buy the item. And the owner can accept bids.
- The transaction is closed when the owner and seller come to terms.
- The platform will screen the deal and transfer the digital assets to the buyer and funds to the owner.
How to create a marketplace?
The foundation of the marketplace strengthens once you have decided on the domains that will feature on your storefront. One should also understand why they are developing the platform, who are its potential buyers and seller, what problems will the platform solve and the desired outcome.
- Smart contracts
A marketplace is known for its smart contracts, which is a self-executing contract. As each token is unique, subsequent metadata is recorded in its smart contract. So, if you wish to create a marketplace, you ought to create a valid smart contract that admins the deals between buyers and sellers.
In simple terms, a storefront is like a shopfront or entrance to your store. It essentially displays your USP, something that will give an overview to your customers. The storefront should offer everything that the user is looking for.
- Explore and trade
These options are the gateway to any transaction. This panel should contain information on all the domain-wise collectables. Allowing the user to sort these items at their convenience is a great feature. Bid, sell and auction are the basic features at the offing. Users should also know the bids’ current status.
- Ranking, stats and activities
Give an overview of how the collectables are functioning. Analyze their smart contracts and read the data on the blockchain as to how much worth of sales is being made. It will give an idea to the user of how the projects are working and which collectable to invest in. In essence, provide the volume, average price, and other crucial stats.
- The NFT Bible
OpenSea, one of the top-ranking NFT marketplace, is known for its NFT bible. Devin Finzer, their CEO and Co-founder has given an in-depth overview of the NFT ecosystem. On the similar lines, if you could provide your research material on NFTs and its aspects, users will find it appealing.
It is an essential feature that allows the user to store, send and receive NFTs. Allowing the user to integrate their preferred wallet, seems to be an easy task. MetaMask is one of the favoured wallets and the oldest in this game. It is flexible has a peerless power browser extension.
To make it easy for the user and profitable for the seller, provide filters. It will help users navigate and select the items. These filters are just like the feature which are available on any other retail app. Filters like highest and lowest price, recently listed and popular items enhance the purchase significantly.
- Create listings
The process of uploading a collectable should be smooth. Include information such as name, description, and tag.
- Help center
Right from creating an NFT to buying and auctioning it, all the details should be provided to the user. In case of any hindrance, they should be able to contact your effortlessly. Providing in-house articles will make the journey of the user worthwhile.
Technology required to create the marketplace
- IPFS: As per their website, they are a peer-to-peer hypermedia protocol designed to make the web faster, safer, and more open. IPFS provide a great file sharing and storing system. It depends on the hashes which can easily be stored on the blockchain.
- Filecon: It is designed to store critical information. It is a decentralized storage network.
Apart from the essential ERC 721 and 1155, you will also need:
- ERC-998: It provides a template by which NFTs can own both fungible and non-fungible assets.
- TRC 721: It is completely compatible with ERC 721 and is a set of standard interfaces for using NFT on TRON, which is a blockchain-based decentralized operating system based on a cryptocurrency native to the system network.
Ethereum is the most popular platform for NFT marketplaces. Second is, Tezos. As per their website, they are an open-source blockchain network that can execute peer-to-peer transactions and serve as a platform for deploying smart contracts. Lastly, Flow is also widely used to create a marketplace using Cadence programming language.
Love it or hate it, but you can’t ignore NFTs. It is said the current version of NFTs will continue to evolve, and for it, even the sky is not the limit. Although NFTs are now mainstream, it is claimed that they have been around 2012. And since they have grown leaps and bounds. They have gained importance owing to their nature of the options they provide.
Hope this article has cleared all your doubts. Has it left you curious and wondering ‘how can you set up a marketplace’? Well, don’t worry our team has got you covered.
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