The current hype with the non-fungible token (NFT) which started in January 2021 has been enabled by the advances made in the NFT marketplace platforms. Thanks to these platforms, many individuals have been able to make their products available as NFT.
The NFT craze has most significantly affected the content creation and arts field. Various content creators and artists have found a highly efficient way to get payment for their contents and artworks: by selling their artworks as NFT, they allow buyers to unlock a digital certificate of authenticity to their creations and pay for these works.
Thanks to the way the NFT works, nowadays not just artists or content creators, people have also begun to make their physical properties available as NFT. For instance, someone in Germany has made his home ownership certificate available as an NFT. The home’s ownership status will automatically shift to the buyer once the buyer finalizes payment.
Some of the best-known NFT marketplaces include OpenSea (the first NFT platform ever and offers a diverse range of products), as well as Super Rare and Rarible (which specialize in visual arts and content creation).
How do these marketplaces work?
So, to answer that question, let’s start by talking about the marketplaces’ features… a very good place to start.
Because these marketplaces are decentralized (they run on the peer-to-peer network), they do not require you to give away your email address or phone number to set up an account. Instead, you will have to install a digital wallet first and align your account with that digital wallet of yours. The digital wallet is where you store your cryptomoney to finalize all transactions on the decentralized marketplace platform (buy a product, pay platform maintenance fee, etc.)
For those who would like to make their products or properties available as NFT, the marketplace also has a feature/function called “minting”. Simply put, the feature allows the sellers to turn their properties, including digital art, into a part of the Ethereum blockchain. The Ethereum blockchain is a public ledger which serves as the inventory of the products being sold in the NFT marketplace.
So, to start selling or buying, all you need to do is just set up your account and familiarize yourself with the platforms’ features!
The NFT marketplace platforms are also embedded with smart contracts which allow them to automate the transaction processes, including storing the transaction record in the Ethereum ledger (or whichever blockchain cryptocurrency platform the marketplace happens to use).
Although transactions in the NFT marketplaces are more cost-efficient because they are automated and involve no extra costs associated with different middlemen, sellers still need to pay money to the node operators who run the NFT marketplace platforms. In this sense, the NFT marketplace is the middleman in the transaction.
The platforms’ cost efficiency becomes their most obvious quality which distinguishes them from the conventional, centralized marketplaces. Yet, some articles circulating online also espouse these platforms’ supposedly greater security and data privacy compared to the conventional, centralized marketplaces.
Also, some of these articles also say that the NFT marketplaces offer fairer compensation to the content creators compared to the conventional, centralized systems. Are these claims true?
Well, as much as I’d love to tell you that these claims are true, unfortunately, they are false.
If you follow the educational videos we’ve published on our YouTube channel, you’ll fast become familiar with the idea that all the great qualities that people keep saying on and on regarding the decentralized blockchain technology (greater privacy, greater security, greater equality) will heavily depend on how its platforms are being coded.
To repeat the idea again, poorly coded blockchain platforms can cause bugs to infest the system, making it more vulnerable to cyberattacks. Furthermore, not all the blockchain-based peer-to-peer apps protect the privacy of the users. Although the system can make sure that individual transaction data are “disguised” from undeserving parties through cryptography, not all these platforms are programmed in this way.
Finally, not all NFT marketplaces apply fair compensation schemes. So, before you decide to put your stuff out there as NFT in these platforms, make sure you study each platform’s terms and conditions carefully, so in the end, you will pick the one which best suits your needs and expectations.