The most popular NFTs are tokenized reproduction of music, pictures, memes, video, logos, and computer code.
At the same time, the main beneficiaries of the NFT market are the sites that provide opportunities for quick purchase and sale of NFTs. In this article, we briefly review what NFTs are and where they can be used, as well as how to develop your own NFT marketplace.
What is NFT?
A Non Fungible Token, or NFT, is a digital token that acts as an electronic certificate of ownership of physical or movable assets such as photos, videos, tweets, computer code, etc. Each NFT is a non-fungible, undivided digital asset. This means that, unlike Bitcoin or Ether, NFTs are not identical, therefore, they cannot be traded or exchanged for an equivalent basis, and they cannot be used as a means of payment in a transaction.
For example, NFT CryptoPunk 7260 is a character ownership certificate that exists digitally and is described as a pixelated image of a punk woman with messy blond hair and red lips. This item is listed for sale on the Larva Labs marketplace for $335,000.
Another example of NFT is a picture of a cute girl smiling in front of a house on fire, which has become a disaster girl meme. 21-year-old American Zoe Roth sold this meme for $500,000.
As it turned out, NFTs can bring excessive amounts of money. Some NFTs, of course, are a bigger piece of pie as people are willing to pay large sums for them, while other NFTs are sold for pennies. The principle of value formation in this business is simple: the more famous (more in demand) the lot is, the more expensive it is.
Here are some more examples of using NFT lots:
- Beeple’s digital collage “Every Day: The First 5,000 Days” was sold at Christie’s auction for a $ 69 million.
- The Twitter CEO’s first tweet was sold for $2.9 million.
- The animated film Nyan Cat was sold for $590,000.
- A kitten from CryptoKitties was sold for $172,000.
How does the NFT marketplace work?
Unlike Bitcoin or Ethereum, you cannot directly trade non-fungible tokens on regular crypto-exchanges. To buy and sell NFTs, you need dedicated eCommerce platforms that allow you to issue, hold, and trade non-fungible tokens. Now this market is dominated by large marketplaces Axie, OpenSea, Rarible, Superfarm and Mintable.
They generate NFTs using special smart contracts that add a set of unique information (metadata) to each such token and prescribe its main parameters (name, immutability, inseparability, address/ID, etc.). After that, non-fungible tokens can be bought and sold on the site at a fixed price or through the bid system.
How smart contracts work in NFT marketplaces.
From the client side, NFT marketplaces work like regular online stores. The user needs to register on the platform and create a personal digital wallet to store NFTs and cryptocurrencies. The user can then either use the listing to purchase NFTs or create their own token. Launching an NFT is usually simple and similar to creating an eBay listing. You need to specify the name, price, give a description and an image, photo, video, gif, and the like.
Niches and applications of NFTs
Most NFTs are used to commercialize all kinds of digital art, from digital copies of real paintings to memes. For example, on the OpenSea marketplace, you can buy, sell, and transfer images, videos, gifs, and music. This platform runs on Ethereum and issues NFTs using the ERC721 and ERC1155 protocols.
But fine art is not the only area of application for non-fungible tokens. They can also be used to trade collectible cards (NBA Top Shot), game characters (CryptoKitties), real estate (Mintable), virtual worlds (Metaverses), investment offers (Spencer DINVIDDI contract), and any other area where ownership is involved. The main thing is to create a marketplace that will be able to work with the right of ownership you need.
For example, if you want to develop an NFT marketplace for fine art trading, then you essentially need to create a regular online store, the back end of which should be able to issue, store, sell, and exchange NFTs. It’s relatively simple. If you need an NFT platform for real estate trading, then you will need to create an analogue of Zillow or Trulia. Such sites should be able to work with MLS and state register databases, determine the user’s location, etc.
And so it is with every area. Here are some more examples:
- Online education. Such marketplaces should provide a full range of services for remote education – from selling a course to tracking the progress and communicating with teachers.
- Investment projects. This kind of NFT marketplace should function like a stock market for trading equities. That is, they must provide the possibility of issuing legal equities with the right to property, dividends or a share in profits.
- Security. Non-fungible tokens can act as access keys to a content, program, database, operating system, or event. In order to sell such NFTs, the marketplace must be as secure and reliable as possible, as well as support popular buyer-side security tools (Touch ID, Face ID, Eye ID, etc.).
- Video games. The sale and purchase of NFTs being unique game items or characters, usually takes place either inside the game (for game money) or on external online platforms that guarantee a safe exchange of real money for a game asset (like on Steam). This implies very close integration with the video game.
Main features of an NFT marketplace
The NFT marketplace combines the functions of an online store, an auction, and a blockchain platform for issuing non-fungible tokens. Administrators should be able to create their own NFT products and sell them. In addition, these marketplaces should offer some features to attract and retain customers, as well as improve the quality of their service. When developing your own NFT marketplace, it is better to start by implementing the following things.
- Storefront. This function provides the visitors of the platform with all the necessary information about the lot: name, price, description, preview, owner (vendor), purchase method, rating, etc. Some NFT marketplaces also provide information about the blockchain and protocol of the token so that users can verify the authenticity of purchased NFTs.
- Search. Make sure your users can easily find the item they are interested in. It would be nice to split all assets into several categories such as art, photography, videos, domains, memes, and music to make it easier for users to navigate the store listing. Filters also make navigation easier, especially if there are a lot of similar items on the platform.
- Registration and Login. To be able to buy or sell NFTs on the platform, the user must create an account. Typically, the registration process occurs through an email, phone number or social media accounts. In addition, the user is also usually prompted to provide their cryptocurrency address. If it is not there, then the possibility of registration is offered using links to cryptocurrency wallets, such as Coinbase Wallet, Metamask, or MyEtherWallet.
- Create a listing. This process should be simple and not take much time. Ideally, it should be the same as on Ebay. To achieve this, you need to think about the optimal user path and implement something like the OpenSea collection manager. It helps to quickly upload a product to the site and specify the properties of the token, such as name, price, description, tags, external link, and so on.
- Wallet for NFTs. Users need a wallet to send, receive and store non-fungible tokens and cryptocurrencies. The easiest way to do this is to provide integration with popular crypto wallets. The main thing is that such wallets support the NFT protocol you need. Usually these are wallets such as Metamask, MyEtherWallet, Coinbase Wallet, and WalletConnect.
- Purchase history. Usually, an NFT marketplace should have a tab where the user can view their purchase history. So you can understand how popular the site is, what they sell on it and at what price. For example, on Rarible, the history includes the following data: event, product name, bid, buyer, seller, and date.
- Reviews and ratings. Show how much the lot or the seller/buyer is liked by the visitors. This information helps users evaluate contractors and specific lots. Typically, the rating is implemented in the form of a numerical rating of the product or likes. Reviews can be implemented both in the form of comments that all registered users can post, and in the form of reviews that counterparties leave to each other after the transaction is completed.
- Notifications. You can implement a push notification system to inform users about new bids in a selected category or from a selected seller, a status change on a featured item, a new message, a sale of your own lot, or an update to the NFT trading platform.
The Multi-Vendor platform can be used as the foundation for your NFT marketplace. It has all the features of a marketplace with handy storefronts for customers, functional dashboards for vendors, smart search and filters. You can additionally ask us for integration of any crypto-wallet via API to handle payments. Using a ready-made platform with little customization is the fastest and cheapest way to create your own NFT marketplace.