Among the several categorizations we have in the crypto world, fungibility is a key differentiator. Tokens in the crypto world are classified as fungible or non-fungible. Fungible tokens function similarly to our regular currencies:
- Regardless of the serial number on a dollar bill, one dollar is always one dollar.
- Any one-dollar bill can be substituted for a one-dollar bill.
- Similarly, most cryptocurrencies are fungible.
Non-fungible tokens (NFT), on the other hand, are one-of-a-kind and cannot be replaced by any other token. It’s not difficult to see where this concept can be taken from a commercial standpoint. We can use them to represent art, collectibles, music, or even maintain the authenticity of everyday items. NFTs are appealing because:
- Their uniqueness and ownership can be verified,
- They can be used across multiple applications developed by different companies, and
- They can be easily traded through secondary markets.
These features open the door to new use cases and business models. NFTs, like art, are a promising investment with significant value.
How NFTs Work
Typically, the process of “minting” or creating an NFT involves the use of digital objects that represent both tangible and intangible items. Among the items could be art, designer sneakers, GIFs collectibles, videos, music, and sports highlights, as well as virtual avatars. Tweets, for example, are a rare item that has gained popularity in the world of NFTs.
It is simpler to think of NFTs as physical collector’s items only in the digital space. Instead of purchasing a physical painting, the buyer can obtain a digital file with exclusive ownership rights.
Unique data within NFTs allows for easier ownership verification and token transfer among owners. For example, artists sign their artwork by including a signature in the metadata of an NFT, demonstrating an assurance of ownership data integrity.
The Modern NFT Marketplace
The concept of a NFT marketplace has emerged as a result of the recent surge in NFTs in the art and collectibles spaces. The creators, buyers/owners, and the online platforms that connect the two are the primary players in the NFT marketplace.
Individuals who make art are known as creators. Tokenizing their art first creates a unique NFT, which they can then sell on the marketplace, either through a platform or directly to the buyer. In order to sell their NFTs on online platforms, creators must typically make representations about them. The creators may be required to demonstrate that:
- They are the creators of the work, and
- The work is unique.
Buyers need these representations to ensure that their NFT is legitimate and rare, as rarity is one of the most valuable characteristics of these assets.
Why do we need NFT Marketplaces?
It goes without saying that blockchain technology and NFTs can enable artists and content providers to be paid fairly for their work. Artists no longer have to sell their art through auction houses or galleries. An artist, on the contrary, may simply sell their work to a buyer through an NFT. This also helps the artists get a larger cut of the profits. NFTs also include the possibility of royalties, which entitle the original creator to a percentage of subsequent sales of the artwork.
Many are interested in discovering the best NFT marketplaces, eager to learn how they can begin an NFT collection. Let’s look at what goes into making NFTs available for selling and buying — a service delivered by NFT marketplaces:
- To pay for transactions on your selected blockchain platform, you’ll need a digital wallet to store NFTs and cryptocurrency.
- Purchase cryptocurrencies, such as Ether, or the currency supported by your chosen NFT provider.
- Credit cards can be used to purchase cryptocurrency on various platforms.
- Users could transfer cryptocurrency from exchanges to wallets of their choice.
NFT marketplaces play a critical role in connecting buyers and sellers of these tokens. In some cases, NFT marketplaces may also provide additional tools for quickly creating NFTs. Artists can sell their NFT artworks through specialized marketplaces. Buyers could search the marketplace for NFTs and then bid on the item of their choice.
As a result, any NFT developer or enthusiast should check out a list of the best NFT marketplaces to ensure that they are getting the best deals on the artwork, collectibles, and other digital assets.
How NFT Marketplaces Have Enabled NFT Growth
According to tech-tracking company L’Atelier BNP Paribas and nonfungible.com report, the NFT market will be worth $250 million in 2020. The report also projects a 299% growth rate in NFT markets by 2020. CryptoSlam claims that NFT marketplaces have successfully generated more than $1 billion in sales.
With new revenue streams, creators can find new ways to offer something unique and rare to their supporters, as the majority of NFTs are now digital. Popular examples of NFTs besides Beeple’s $69 million NFT include Jack Dorsey’s first tweet and the animation ‘Nyan Cat.’
GameStar.Exchange delivers a gamer-focused NFT P2P trading market. Artists or game developers can publish auction information for collections, and collectors can advertise needs and sell corresponding work. Mining incentives are awarded for all creations and transactions made by artists and collectors on the platform. Based on Polkadot, the platform supports multi-chain transactions on BTC/ETH/BSC, enabling a truly democratized marketplace for NFTs.
Tokens are digital objects that represent the right to perform a specific operation. Utility tokens are often one-of-a-kind codes or identifiers that grant their owner access to a digital service. A utility token is more versatile than a coin. Utility tokens have value, but they cannot be considered money in the same way a coin is. They can add value to investors in a variety of ways. Instead, the primary intention is to provide users with early access to a future product or service.
Utility tokens provide access to a specific service or platform. Their utility could be that tokens can be used on a platform to redeem a special service or to receive preferential treatment when purchasing services. They also reward loyal users and discourage fraud, as a result of enabling a calibrated, moderated ecosystem for the NFT marketplace.
The majority of tokens issued in the context of IDOs are utility tokens. Platforms primarily use them to generate interest in their products and for application and value creation in services provided by blockchain ecosystems.
GameStar.Exchange’s token — GMS, for example, enables a 25% discount on all trading fees on the platform, while simultaneously delivering crucial liquidity for the platform’s operators and investors so they can continue to deliver a positive customer experience.
Utility Tokens in NFT Marketplaces
NFT marketplaces are unsurprisingly gaining popularity as new ideas and methods for making the marketplaces more interactive emerge. After all, utility tokens guarantee future access to a marketplace’s product or service, and are reflective of its value. The value of utility tokens rises in tandem with the growth of the NFT marketplace.
In other words — if NFT marketplaces do well, utility tokens will do well as well.
Bottom line — utility tokens in your portfolio — like GameStar.Exchange’s GMS token — are an obvious chance.
The NFT market is booming, and amazingly high prices are being paid for NFT artwork. These prices, combined with the promise of new technology, raise ambiguity on how the industry will navigate concerns for artists and buyers. Mature marketplaces are likely to show us the way as they take into consideration licenses, terms, and conditions associated with NFT art transactions, pioneering the industry to new heights.