Nowadays, NFT trading is growing fast, bouncing off the successes of the game of cards in the NBA and sports. Also, the growing interest in digital art reaches an investing volume of $420million. This growth is visible in supporting industry, NFT trading markets, platforms, apps, and sites to facilitate the growing excitement. Many NFT trading-related excitement can be digital artwork, as the biggest NFTs, like music or game characters, sports trading cards, and CryptoKitties, which involves trading images of cats.
The simplest and most obvious way to get involved with NFT trading is by buying and selling NFTs by visiting a dedicated marketplace or app. Furthermore, there are many marketplaces available online, most with slightly different focuses or benefits.
To not be involved directly with NFT trading but wish to, trading NFT marketplace tokens or cryptocurrencies is the way to invest in the industry. When a marketplace grows, the value of the tokens used to make transactions rises. Some of the more significant marketplaces, such as FLOW, can be traded on cryptocurrency exchanges. Similarly, there is a possibility to trade the cryptos used for NFT trading, like Ethereum. ETH is used more for both NFTs and regular purchases so, its value would rise, and reselling tokens can make a profit.
There is news of another non-fungible token (NFT) sale with an impressive price. It’s not unusual that everyone wants to be a creator, converting an item they own into one kind of payable NFT. Nowadays, everyone with a laptop and an idea can create an NFT. Either Binance NFT or another minting platform, several factors will affect the value of a non-fungible token. As every creator is not a Beeple, and every sale is not conducted with the publicity of a Christie’s or Sotheby’s deal, most content creators offer their NFTs at low prices, usually not more than a few hundred dollars. Sometimes after minting and selling NFT, the returns are surprisingly smaller than expected. Most newcomer creators don’t realize interacting with the blockchain on which the NFT resides isn’t free.
Now let’s find how fees arise. As we mentioned interacting with a blockchain isn’t free. Ethereum and Binance Smart Chain identify a concept, gas, that measures the computational “fuel” needed for any interaction with the blockchain. Each interaction requires a certain amount of gas based on the number and type of required computations and the storage. So, NFT smart contracts tend to be more intensive and cost more gas than simple fund transfers. The variety of gas price that in its turn depends on several factors affects the actual amount. These fees are payable in Ether on Ethereum or BNB on BSC, and they refund miners who, with the computational work, approve and record sales on the blockchain. Due to the miners’ priority to have high gas prices transactions, setting too low a gas price leads to unconfirmed purchases remaining. So, this mechanism creates a demand system between users. Some crypto wallets follow the current market gas price and recommend an appropriate value to the user. Ethereum has had relatively high gas prices that have even reached $50, and in comparison, Binance Smart Chain provides much smaller fees, with simple transfers usually costing no more than $0.10.
Now let’s outline the costs for each step of the different processes: creating, recording, buying, and reselling an NFT.
Creating a crypto-wallet as the first step will hold funds to pay for gas fees and receive any sale proceeds. There are many free wallets out there to use, such as Binance Chain Wallet and MetaMask. Using the wallet as a conduit, creators can interact with NFT marketplaces.
It’s necessary to convert fiat currency or use a crypto exchange such as Binance.com to add cryptocurrency to your wallet. Also, you have to pay fees that are usually involved in the conversion exchange rate for transferring.
Describing a new NFT and the conditions for its sale requires provided tools by marketplaces. The two largest Ethereum-based NFTs at OpenSea are Treasureland and BakerySwap for Binance Smart Chain. Creating the NFT for the first time involves paying gas fees to interact with the smart contract that mints the token. Some NFT marketplaces do not charge platform fees for listing an NFT. When the NFT sells, and the buyer absorbs the cost, the mining fee kicks in. However, all the markets don’t work this way.
Besides, some marketplaces work with specific blockchains. If you want to use that chain, your wallet must have the appropriate cryptocurrency, such as BNB for BSC and Ether for Ethereum. Using a crypto exchange to convert a proper number of current holdings into the correct currency will be essential. This conversation will also have an associated fee
Selling the NFT will follow by the marketplace charging a platform service fee or commission. There is also a gas fee when interacting with the smart contract associated with the sale on the blockchain and transferring the net funds from the sale to the seller’s wallet. If the creator receives a royalty for a resale based on the initial contract, that amount is reduced by another gas fee.
It is worth noting that you can’t avoid fees when creating, selling, and buying NFTs. But to be aware of all the ways fees arise, it is possible to reduce any surprises. It will also help you price your payable better to end up with a reasonable return.
Gas fees are unavoidable when interacting with a blockchain. However, you can take some steps to cut costs:
- Picking a blockchain with lower fees like Binance Smart Chain to mint your NFT
- Understanding the fees that NFT marketplaces charge for managing your NFT listing, minting, and sale. These fees vary between platforms and are worth examining.
- Studying the variation of gas prices over a period of time to find when gas prices are less to mint your NFT.
An educated NFT creator is the best way to grow this new marketplace for collectibles. By understanding more about how fees work, everyone ultimately profits in the NFT ecosystem.