Despite how new and confusing the term NFT may sound, there’s no denying the fact it is one of the fastest-growing markets in the world today.
NFTs or Non-Fungible Tokens are leveraged by creators and artists alike to sell their own custom-made digital assets and earn enormous amounts of money. From celebrities selling their digital paintings to Twitter selling its first-ever tweet, NFT is the present and future of the digital world. In just 4 months, a whopping 1,785% increase was recorded in the NFT market cap in 2021.
NFTs are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other.– Investopedia.com
This recent development has left our generation awestruck with the phenomenal possibilities it has to offer.
But what is an NFT marketplace exactly? How much does it cost to create an NFT marketplace from scratch?
In this article, we’ll take a deep dive into the various elements that go into building an NFT marketplace and explore the cost of doing so.
Let’s begin with understanding what an NFT marketplace is.
- What Is An NFT Marketplace?
- What Are The Most Trending Marketplaces?
- How Does An NFT Marketplace Function?
- What Is The Cost of Building An NFT Marketplace?
What Is An NFT Marketplace?
NFT is a unique digital asset that can be directly traced down to the owner with the help of blockchain. It could be a song, a digital painting, a tweet, and much more.
Let us take an example of the world-renowned Monalisa painting. It sure can be recreated by many other talented artists, but the rights of the original painting will always be reserved with Da Vinci.
The same is the case with non-fungible token (NFT) assets. The rights of these digital products are made transparent by the blockchain, so they can always be linked back to the owner. The sole reason for these assets being so popular and marketable is that they cannot be replaced. Also, trading them requires a unique marketplace. People looking to purchase these assets have to visit NFT marketplaces and purchase them using cryptocurrencies like Ethereum or Bitcoin.
A small percentage of the sales is directed to the marketplace. Sounds pretty straightforward, right?
Let’s now take a look at the popular NFT marketplaces.
What Are The Most Trending Marketplaces?
A few examples of NFT marketplaces that make the entire selling and buying process look like a piece of cake are OpenSea, SuperRare, Rarible, and more. Each of these marketplaces charges a gas fee equivalent to paying a tax on the digital product. They register a turnover of billions every month and hold some of the costliest NFT assets in the world.
Here’s taking a closer look at these popular marketplaces:
With more than 4 million user-owned virtual assets, OpenSea is one of the largest marketplaces for cryptocurrency commodities. It holds digital assets ranging from art collectibles to in-game items that anyone can buy and sell around the world.
This marketplace targets the selling of digital products that encourage the creation of crypto art. SuperRare allows artists to make and authenticate their products themselves, making it one of the most innovative and effortless marketplaces out there.
Rarible is another NFT marketplace whose target focus is art assets. This includes photography, music, games, memes, and more. It is community-owned and awards active users with RARI tokens to acknowledge purchases and sales of digital assets. Nearly 75,000 RARI tokens are distributed every day.
How Does An NFT Marketplace Function?
To begin with, the owner or creator of the NFT product has to register themselves on a crypto-collectible selling platform, following which they are KYC/AML verified.
After the verification process, the owner of the asset can upload their digital files containing their unique assets on the marketplace. This process of putting up your digital NFT assets on the NFT marketplace is called minting. It is similar to storing products in a digital box on the marketplace, to which only the owners have access, i.e. until the time they sell it.
These files could be uploaded in GIF form, JPEG, or even in MP3 or MP4 formats. Blockchain takes care of its storage and privacy. The owner has the complete right over the product; they can either directly price these assets or start an auction.
Buyers interested in buying them place their bids, and the owner decides which bid meets his demand. Thereafter, the payment is made by the buyer.
Once payment comes through, the owner of the asset or the artist moves the NFT product into the buyers’ digital wallet. That pretty much explains the buy and sell process that takes place in an NFT marketplace.
Relevant Read: How Much Does It Cost to Build a Blockchain App
How To Create An NFT Marketplace?
Here is the start-to-finish process to follow when building an NFT marketplace:
1. Niche definition
The first step involves conducting research of your niche and analyzing the marketplace’s target market, which will hold your assets. This is how you will determine if you should go ahead with a vertical or horizontal market.
Create necessary documents to highlight the required details of the buy and sell process to ameliorate any potential disturbances ahead. Documentation for the crypto collectible selling platform is usually done by companies who develop your NFT marketplace.
3. Development stage
After the documentation phase, proceed to the development of the NFT marketplace using a software development kit that will take care of the front-end and back-end elements of the marketplace.
In this stage, unique metadata of the digital assets is to be created to differentiate one product from another. This metadata includes information like pictures or other related information of the token. Blockchains focus on the transparency of the token and can be verified anytime. If you are taking assistance from an NFT marketplace development company, they’ll handle the complicated procedures involved.
4. Smart contracts
Smart contracts ensure a mutual agreement between the buyer and seller. The company you hire for setting up your NFT marketplace will deploy smart contracts on the blockchain that is nothing but self-executed contract with a set of terms and conditions.
After ensuring optimal user performance of the token, small token generators are implemented in code lines.
Finally, the software is tested for its smooth usability, performance, and security.
An NFT marketplace functions upon three main factors: the buyer, manufacturer, and administrator.
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What Is The Cost of Building An NFT Marketplace?
The total cost of creating an NFT marketplace depends on several crucial factors involved in the development process. Some of these include:
- Fee charged by the development team
- UI/UX design
- Documentation fee
- Charges of using a white label
- Customer support
- Third-party integrations
- Cost of security and authorization
- Complexity of functions
Here is a summarized table on the costs involved to give you an idea:
The overall cost is also dependent on how you develop your marketplace. If you plan to build it from scratch, it will cost you more than usual. But if you go ahead with a ready-made solution or leverage third-party integrations, the cost will be relatively reduced.
Relevant Read: How Much Does It Cost to Hire An Ethereum Developer?
If you plan to create an NFT marketplace, it is important that you know the costs involved beforehand, so you know what you are getting into. Take note of the performance and functionality you wish to achieve and any extraordinary features you plan to add. The mode of development, self or outsourced, also plays a huge role in the NFT marketplace’s overall cost.
Hopefully, this gave you an idea of the volume of work involved in the process of building an NFT marketplace. Decide your budget accordingly, and get started already.
If you need help in developing your NFT marketplace or blockchain application, feel free to contact our blockchain experts.
Rajamanickam Rajan is the director at Skein Technologies, a leading IT solution company in India. He has 10+ years of experience in developing application using IBM Worklight hybrid, native applications for IOS and Android systems.