NFT trading appears to be taking the crypto world by storm, creating new opportunities that some find perplexing and others view as revolutionary. According to the NFT Report in 2020, the value of this exciting market had grown 299%, reaching a total volume of $250 million. It is predicted that NFT trading will surge to $1.3 billion in 2021. Learn about NFT trading in the UK in this tutorial. We also list the best NFT platforms in 2021 below.
Is this a credible new market following in the footsteps of Bitcoin, or is it just a bubble? If you’re thinking of NFT trading, we’ll cover the pros and cons, plus how to use top apps and platforms. From NFT trading cards to game characters, we’ll make sense of it all in this article.
Top NFT Trading Platforms
What Is An NFT?
An NFT, or ‘non-fungible token’, is a unique digital certificate that, similar to a cryptocurrency, is stored on a blockchain ledger. Non-fungible refers to something that cannot be replaced, such as money. As such, one of the key differences between cryptocurrencies and NFTs is that the former can be directly interchanged, whilst the latter cannot.
Furthermore, NFTs have unique properties with no tangible form. So, where Bitcoin was the digital version of currency, NFTs are considered the digital answer to collectables. Typically, they are traded as online artwork, though they can also be anything digital with very few restrictions.
This can include trading cards, sports/game characters, music, tokenised real-world assets such as real estate or cars, video footage or even virtual land. NFTs essentially allow buyers to own the original copy of these digital assets, as well as proof of their ownership.
So how do they work? NFTs are created using the Ethereum blockchain network under standards known as ERC-721 or ERC-1155. In fact, one of the first uses of the new standard was a game called ‘CryptoKitties’, which allowed traders to buy and sell virtual kittens. If you thought you loved kittens, one person paid over $170,000 for one.
Why Start NFT Trading?
From a trading perspective, ‘NFTs’ as an asset class is still in its infancy and relatively misunderstood. Collectors of such assets may buy in the hope that their sale value will go up in the future, though this concept is still down to heavy speculation.
You can also technically sell or buy NFTs in any fiat currency, though the most popular is Ethereum (ETH). Some of the most popular NFTs have sold for staggering prices. For example, to mark the tenth anniversary of ‘Nyan Cat’, a pop-tart cat meme from 2011, the owner put a signed, remastered version of the GIF on a crypto art platform. The asset sold for 300 ETH (around $560,000).
More recently, NFTs have also reached multi-million dollar heights: a digital collage created by artist, Beeple, was sold for $69 million dollars in March 2021. It’s easy to see why many are flocking to join the hype around this potentially lucrative new market. Profit aside, many buyers are likening NFTs to modern-day art collecting.
Nonetheless, critics are unsurprisingly unable to wrap their heads around the concept of paying for something you don’t ever physically receive. Whatever your view, there’s no doubt much to still learn about NFTs, which we cover below.
Choosing an NFT Trading Platform
There are numerous platforms, or marketplaces, where you can buy and sell a variety of NFTs. We’ve listed the best NFT trading platforms above, but here is a short summary of each.
OpenSea is the first and largest marketplace for NFT trading and digital items such as collectables, gaming items, arts, domain names and other blockchain-backed assets.
The company boasts over 700 projects and accepts multiple payment currencies, though the most popular is Ethereum. ‘Social tokens’ or ‘game currencies’ are also used for certain online communities or projects that use their own tokens. Note that there is a 2.5% seller transaction fee on each successful sale. The creator may also choose to take an additional fee.
Rarible is a popular platform for buyers and sellers of digital artwork and memes, with thousands of users on the marketplace. The company also uses its own cryptocurrency, RARI, which is central to the platform alongside ETH.
Owning RARI means users can vote on proposals affecting the platform or moderate artists and artwork. Rarible also conveniently integrates with OpenSea and takes a 2.5% service fee on each sale.
Founded in 2018, Nifty Gateway is a centralised USD based marketplace, offering fine art and collectables, known as Nifties. Canadian musician and artist, Grimes, auctioned her virtual artwork here, raising a total of around $6 million.
Nifty Gateway teams up with top creators and brands to create limited-edition collections available exclusively on the platform. Each collection is opened at a specific time, known as a ‘drop’, and is available for a specified amount of time.
NBA Top Shot
Vancouver-based blockchain company, Dapper Labs, have teamed up with the NBA offering digital ‘moments’ of NBA games. Fans and collectors can now own videos with 3D spatial design of gameplay snippets, purchased through ‘packs’.
Top Shot packs range from $9 to $999 for common, rare or legendary categories. Packs do not drop on schedule and each one has hundreds of thousands of potential buyers in a queue. In February 2021, a legendary moment of Portland Trail Blazers’ star player, Damian Lillard, sold for $54,000.
Pros & Cons Of NFT Trading
Before you sign up for a platform, there are various benefits and limitations that you will need to consider. Keep in mind that whilst NFT trading is rapidly gaining popularity, the concept is still very new and it may not suit everyone.
- Secure – NFTs are created on secure blockchain networks, which means their digital certificate cannot be tampered with or duplicated.
- Accessible – NFTs are not only available to purchase by anyone but anyone can also sell an NFT. They are also flexible; sellers can ask for whatever currency or price they wish.
- Profit potential – Though still heavily speculated, many collectors buy NFTs in the hope that their value will surge on day.
- Unique and exciting – There’s no doubt that NFT trading is a unique, new and exciting market that might appeal to crypto fans looking for something a bit different.
- Longevity – NFTs are based on digital file formats, such as jpg, png or mp3, which can deteriorate over time. As such, NFTs are not immune to technical issues or human error, for example, if someone forgets their wallet password.
- “Unique?” – Technically, every NFT is a unique token. However, it is still possible to have multiple ‘unique’ copies of the same artwork (similar to a trading card).
- Wash trading – Wash trading occurs when someone who owns a significant amount of digital currency (crypto whales) sells an NFT at a higher price than it’s worth. This causes the price to artificially inflate.
- Environmental impacts – NFTs use the same blockchain technology as cryptocurrencies and therefore consume a lot of electricity. The concern of greenhouse gas emissions has led some artists to stop selling NFTs.
How To Start NFT Trading
Once you’ve got to grips with the concept, NFT trading is actually fairly straightforward. Unlike traditional derivatives trading, which involves contracts for difference (CFDs), leverage and spreads, ‘trading’ an NFT simply involves buying and/or selling.
People from any background can take part in auctions or make purchases as they would with any product; all you need is a few tools. Let’s take a look at how to buy and sell NFTs below.
1. Choose A Marketplace
When choosing an NFT trading platform or marketplace, note that certain NFTs, such as cards, are only available on certain platforms. So, if you’re after digital artwork only, Nifty Gateway might be a good choice, but if you’re a die-hard sports fan, NBA Top Shot would be ideal. For a good all-rounder, you might want to consider a platform like OpenSea.
2. Sign Up For A Wallet
Next, you’ll need to download and sign up for the wallet used by the platform. This is where you can fund your account with the supported currency options. For example, NBA Top Shot uses Dapper wallet and primarily supports the USDC stablecoin, as well as a range of other fiat currencies.
Note that packs and art drops can be over in a matter of seconds to minutes, so it’s best to fund your account beforehand so that you don’t miss an opportunity.
3. Start Buying Or Bidding
You can now browse the marketplace and choose from a vast selection of digital assets. It’s also worth taking note of any NFT drops or packs, release dates or durations to keep on top of your chosen token.
Top tip: set your computer clock to seconds if you need to keep an eye on the time of a live drop or pack release. Be warned that due to large numbers of users during drops, NFT trading sites may operate slower than usual.
1. Decide & Select Item
To make a sale, go into your marketplace account and select the token you want to sell. You may need to check for any additional selling terms and conditions with your marketplace, such as seller time periods.
Top tip: If you’re selling multiple NFTs, you can keep costs down by selling during the weekend when Ethereum gas fees are significantly lower.
2. Determine Selling Conditions
Once you’ve selected the item you want to sell, you’ll then need to determine your price and conditions of the sale. Will you be running an auction or selling at a fixed price?
Note that Ether and other ERC tokens are the most commonly used currencies, though some platforms may only support the native token of the blockchain on which they were built. Depending on the platform, you may also need to pay a service fee for each successful sale.
3. Set Up Royalties (Optional)
Depending on your platform, you may also want to set up royalties for your sales. This allows NFT creators to earn a commission every time the asset is sold, creating lifelong passive income for artists automatically.
Final Word On NFT Trading
Despite mixed views, the hype of NFT trading is undoubtedly gaining momentum in the digital world. From the trading card frenzy among NBA sports fans to multi-million dollar celebrity artwork, it’s easy to see why NFTs have become so attractive to crypto-savvy market participants.
Before you start NFT trading, though, take into consideration how various apps and sites differ, including the fees charged and assets on offer.
What Are NFTs?
NFTs (non-fungible tokens) are digital assets that can be bought and sold on a specialised online marketplace. NFTs are created and stored on a blockchain ledger. They can be virtually anything digital, such as gaming characters, sports trading cards, fine art, collectables, videos or music.
What Is The Difference Between NFT Trading And Cryptocurrencies?
NFTs and cryptocurrencies are similar in that they are both developed using a blockchain ledger. However, whilst NFTs are unique and are not interchangeable (non-fungible), cryptocurrencies can be mutually exchanged.
How Can I Buy NFTs?
To start buying NFTs, you’ll need to sign up for a marketplace or platform that sells the kind of products you want. You may also need to download and fund a crypto-based wallet in order to join auctions or make a purchase.
What’s The Best NFT Trading Platform?
The best NFT marketplace will depend on what sort of digital asset you want to own, as some platforms only sell specific products, such as sports collectables. One of the best all-round platforms selling a wide range of NFTs includes OpenSea.
Who Can Trade NFTs?
One of the main benefits of NFT trading is that anyone can sign up to a marketplace and participate by buying and selling products. Many platforms offer a range of NFTs at different prices and all you need is access to a wallet in the supported currency.