EZ Wallet 101: A detailed look at the 3 types of NFT Marketplace
This article will help you understand what an NFT Marketplace is, what specific types of NFT the different marketplaces sell, and how to sell on one.
NFT have become one of the most viral, complex, and misunderstood terms when it comes to the crypto market and blockchain technology. At its core, NFT are simply unique digital tokens that store information. This information is considered more secure and verifiable due to the decentralized nature of the blockchain. NFT are therefore used for a variety of reasons including; music, art, collectibles, fashion, medicine, commerce, and any industry that can benefit from providing verifiable goods or information. But how exactly does one enter the NFT market, and what are the differences between specific marketplaces?
3 types of NFT Marketplace
💡 What is an NFT Marketplace?
Ultimately NFT have to be looked at in two ways; as a vehicle for investment and as a technological tool. As a tool, NFT have proven to have real world value in a variety of industries and applications. No matter how controversial the NFT market is, the truth remains, the use of NFT as a store of verifiable data and record is a game changer. The more controversial aspects of NFT come from their use as a store of value, often for art which is by its nature, subjective and prone to fluctuation.
An NFT marketplace is simply any platform that users can create, trade, and collect NFTs. Much like the crypto market, users need to look at the total value of the market (TVL), trading volume, and community to help determine the value and demand for certain types of NFT. In addition, what is the source of the NFT, is it related to NFT gaming, the product of a famous or upcoming digital artist, or simply a viral NFT collection that is getting hyped by the crypto community as a whole.
👀 How to use an NFT Marketplace?
Anyone can enter the NFT marketplace by:
- Creating a new account on the specified marketplace
- Connecting your crypto wallet to your account
- Creating NFTs that you want to list in the marketplace
- Listing your NFT for sale
🤩 What type of NFT Marketplace is right for you?
There are 3 types of NFT Marketplace; General NFT Marketplace, Exclusive NFT Marketplace, and Specific NFT Marketplace. Any NFT creator or investor needs to understand each market and how they are different, both in terms of what type of NFT each marketplace is used for, as well as which specific platforms within those 3 categories is the best place to list your NFT.
💥 General NFT Marketplace
Most NFT will be sold on General NFT Marketplaces, since all types of NFTs can be sold on this platform. General NFT Marketplaces have large volumes and cater to the majority of users so they are the most popular type of NFT marketplace. The advantage of listing on this type of market is that your NFT will get the most exposure, thus a variety of users can use it including NFT creators, game studios, and NFT collectors/buyers.
OpenSea, the most popular NFT market, is an example of a General NFT Marketplace. Other examples include; MagicEden, Binance NFT, and ImmutableX.
🎨 Exclusive NFT Marketplace
An Exclusive NFT Marketplace is a market whose NFT are exclusive to a particular artist or limited by a low quantity on release. Think of it like a fancy auction that anyone can join, but whose audience is mostly wealthy investors and speculative buyers. Whereas a General NFT Marketplace is the Walmart of the NFT space, where every type of NFT is sold to a mass audience at a variety of prices, Exclusive NFT Marketplaces look for niche markets and buyers looking for rare and highly collectible NFT released in limited quantities.
The main problem that arises with this market is the lack of liquidity. The limited nature of the NFT collections creates value, but the target audience will therefore also be smaller. For example, if you are Apple and make iPhones, you make a product for a global market that is trying to sell to as many customers as you can. The item is common and generally affordable, so the market is bigger. Now if you own the Mona Lisa and are trying to sell it, the market is completely different. You’re looking for someone who can spend 500 million USD to buy one painting, so the market will be very small, but since the Mona Lisa is so rare, the investment will hold its value better than an iPhone. Exclusive NFT markets work in the same fashion.
SuperRare, KnownOrigin, and Foundation are a few examples of popular Exclusive NFT Marketplaces.
🎮 Specific NFT Marketplace
Specific NFT Marketplaces sell to a specific market exclusively. It can be used for any specific type of NFT including music, videos, or gaming NFT. NFT gaming is the best example of Specific NFT Marketplaces, as they often have enough users focused on one specific game to create a viable and sustainable market. By limiting the market to one specific form of NFT, Specific NFT Marketplaces are more convenient for users to trade assets. This type of market also allows users to track the shifts in the market more easily as the market economics deal specifically with one ecosystem of NFT.
The main disadvantage to Specific NFT Marketplaces is that since it is the most niche form of NFT market, the game or community it is centered around needs to have enough users to generate a free and healthy market system.
NFT continue to be one of the most misunderstood aspects of Crypto. Whereas newbies and non-crypto enthusiasts often portray them as overpriced pieces of digital art, NFT is simply a technology used to verify digital goods. Truth is just like art, there are markets that are overpriced, some are undervalued, and everything in between. And just like art, the value is hard to truly determine, ultimately being at the will of the market the NFT is being sold in.
Determining where to sell your NFT can be just as important as the item itself. If you had an antique that was an important part of Asian History, you might not choose to auction it off in South America, for it might not fetch its true market value. Understanding NFT marketplaces is just as crucial for NFT creators and game studios in maximizing their sales and creating long lasting value by targeting the correct market and audience.
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