NFTs (Non-Fungible Tokens) have taken the art and collecting world by storm, and while many people rush to purchase NFTs, other people are wondering how to create an NFT marketplace. NFTs are digital assets used to prove ownership of digital art, in-game items, videos, and more. While NFTs are most famously associated with digital objects, these tokens have also been used to prove ownership of material things, but NFTs are not widely used in this way yet.
Non-Fungible Tokens are a HiTech innovation that represents the bright future of blockchain technology. There is a lot of information you should know about NFTs and their development before you continue reading about creating an NFT marketplace. This post will explore what an NFT marketplace is and what things you need to consider if you want to create your own NFT marketplace.
If you’re not sure what NFTs are or how they are developed, check out our resource on NFT development before you read more about NFT marketplaces.
What Is an NFT Marketplace?
An NFT marketplace is like Amazon or Etsy, but the main difference is that NFT marketplaces only sell NFTs. An NFT marketplace is a platform that allows users to buy, sell, trade, and display their NFTs. NFT marketplaces run on blockchain technology. As a result, to use one of these platforms for NFT transactions, users must have a crypto wallet and the appropriate cryptocurrency.
Most NFT marketplaces run on the Ethereum blockchain, so users interested in buying NFTs on these marketplace platforms need to have Ether tokens, also commonly referred to as Ethereum. However, several other blockchain networks are used by NFT marketplaces, so it is crucial to understand which network is being used and which cryptocurrency you need to make purchases.
NFT marketplaces utilize smart contracts to execute sales. Smart contracts not only contain all the identifying information of the NFT being sold, but they also regulate the connection between buyers and sellers, ensuring that the seller gets paid the appropriate amount and the buyer receives the item they agreed to buy. In addition, these smart contracts are also used to help NFT marketplaces collect their transaction fees from the seller.
NFT marketplaces can be geared towards anything. However, many of the most popular NFT marketplaces today serve a particular niche. For example, NBA Top Shots is an NFT marketplace created by the NBA that only sells NFTs of player highlights. Since NFTs can be many different things, the marketplaces that narrow their focus tend to be more successful.
Creating an NFT Marketplace
Are you interested in creating an NFT marketplace? If the answer is yes, then there are some features that you must have on your marketplace platform if you want to succeed, including:
- Blockchain network
- Crypto wallet
- Smart contracts
Your NFT marketplace has to run on a blockchain network. Without a blockchain network, users can’t buy, sell, or even display their NFTs. The most popular blockchain network globally is Bitcoin, but the most popular blockchain network used to power NFT marketplaces is Ethereum.
The blockchain network you choose to power your marketplace platform will affect which type of cryptocurrency your users can use and accept. This decision will also affect how much it costs to process transactions. For example, NFT marketplaces typically cover blockchain transaction costs and profit by charging buyers a transaction fee and sellers listing and/or commission fees.
If you choose a blockchain network with high transaction costs, you might drive potential buyers and sellers to marketplaces with more affordable rates. On the other hand, if you use a blockchain network that isn’t very popular, you risk pushing potential users away from your marketplace because it is too niche.
Besides the blockchain network, you can’t create an NFT marketplace without including a crypto wallet for your users. Crypto wallets, a recent FinTech innovation, give users the ability to buy, sell, store, and trade NFTs. While you must have a crypto wallet feature for your users, you do have options about how to provide this feature.
You could create your own crypto wallet specifically for your NFT marketplace, or you could allow users to integrate their current crypto wallets with your marketplace platform. For example, several popular crypto wallets from Coinbase, MyEtherWallet, and Formatic are simple enough to integrate into your marketplace.
While creating your own specific wallet gives you more control over branding and the User Experience, integrating popular options into your platform makes it easier for users to use your marketplace. Remember, the easier it is for users to use, the more users you will attract to your platform.
If you want your users to be confident that they will receive the proper amount of cryptocurrency for their NFT and the specific NFT they bid on or paid for, your NFT marketplace should use smart contracts. There is a lot of consumer skepticism surrounding NFTs, even though they are very popular. Smart contracts help ensure that both buyer and seller are satisfied and protected from fraud.
Smart contracts also rely on blockchain technology, so this is an important consideration to take into account when you are choosing a blockchain network for your marketplace to run on. Ethereum is widely used for NFT marketplaces because it offers good smart contracts, and it has a popularly traded and widely used cryptocurrency. There are options beyond Ethereum, but there is a reason that it is the most popular network for NFT marketplaces too.
Besides the main features listed above, there are several other considerations that you will need to take into account when creating an NFT marketplace. Ideally, your users should have a simple, intuitive User Interface to use on your marketplace. They should also have the ability to create buyer and seller profiles, rate products and sellers, leave comments about products, filter product searches, easily reload or withdraw cryptocurrency from their wallet, and see the status of products.
Basically, any eCommerce feature that you see on Amazon, eBay, or Etsy is a good idea to add to your NFT marketplace. Yes, the NFT marketplace has a few more considerations to take into account, but at the end of the day, an NFT marketplace is just like any other online marketplace when it comes to the features users want and need.
Creating an NFT marketplace is not all that different from creating any other online marketplace. First, you need to understand your target audience and make sure that you offer products specific to them. If you need help getting started, reach out to an app development partner. A partner can help you create an NFT marketplace using their industry experience and technical expertise.