NFTs, or non-fungible tokens, are quickly becoming one of the hottest digital commodities. While not exactly new, the typically Ethereum-based tokens are quickly breaking into the crypto mainstream.
One of the more compelling platforms out there for buying and selling NFTs is OpenSea.
The site acts not only as a marketplace and auction site, it also offers an intuitive and code-free way to create your own NFTs – or even an entire series of them.
NFTs – A Basic Introduction
If you’re already familiar with NFTs, feel free to skip ahead. For the rest of us – what are NFTs and why are they suddenly becoming popular?
In the simplest terms, NFTs are Ethereum tokens that can’t be split up. They can only be held or traded in whole units. Every NFT is uniquely identifiable and some of them have only one total unit in existence.
Today, they are being used to represent ownership of something. It could be a digital item like a piece of art or a song, it could be an in-game item like a weapon or house, it could be a license to reproduce something (such as an intellectual property), or it could be proof of ownership of a real-world asset like real estate or a car. NFTs can exist on other blockchains but for now we’re going to focus on Ethereum-based ones like those offered at OpenSea.
With that out of the way, let’s dig in to OpenSea and how buying, selling, and minting works.
Buying NFTs on OpenSea
OpenSea is a user-friendly, eBay-like platform that allows anyone to buy, sell or create their own NFTs. Like many DeFi platforms, OpenSea works with most modern Ethereum wallets like Meta Mask.
To start, visit the OpenSea platform’s official website and select the blue explore button. From there you can begin browsing collections, items up for sale, recently sold items, and more.
By default, prices are listed in ETH, but some items have an alternate price such as USDC or DAI.
The site works in either auction or buy it now. Potential buyers can make an offer and the seller decides whether or not to accept the offer and complete the sale. Alternatively, buyers can pay the full asking price and get the item by choosing the buy it now option.
When using buy it now, trades are paid for in ETH or any compatible token the buyer is asking for. For auctions and making offers, buyers need to use WETH – wrapped Ether. In the official FAQ, the OpenSea team explains it this way:
Auctions are held in WETH because, unlike ETH, WETH can be instantly transferred using ERC20’s “transferFrom” function.
ETH can be wrapped into WETH directly inside the OpenSea platform.
Creating and Selling NFTs On OpenSea
Already own some NFTs and want to sell them? First you’ll set up your account and connect your wallet that holds the keys to the NFTs. Next, you’ll need to run a few transactions and pay gas “in order to give the exchange contracts access to your items” per the FAQ. After that, listing items for sale doesn’t require gas – just a digital signature from your wallet to approve the listing.
When selling NFTs you’ll need to choose the type of sale you want for your listing. Currently, the choices are fixed price, declining price, and auction. Fixed price and auction are just how you would imagine them. Declining price is a more competitive style of auction where the price of the item drops periodically until a deadline is reached and the listing is removed.
If you’re an artist, content creator, musician, or just about anyone with a digital item they want to mint into an NFT and sell, OpenSea’s mint feature might be a good match. To get started, head over to the OpenSea Collection Manager and set up your account. Just like with becoming a seller of existing NFTs, setting up for minting does require some gas. The minting process costs gas as well. If you have a lot of items to mint, it would be smart to wait until gas prices are low.
The $82,500 Pixel Art Avatar
One of the earliest NFT projects is an art collection called CryptoPunks. Launched in 2017, CryptoPunks is a set of 10,000 pixel art avatars. Some of the CryptoPunks are in high demand. At press time, we found a sale of CryptoPunk #7746 – a pixelated fellow with what looks like a cowboy hat and blue eyeshadow – sell for 55 ETH.
At today’s prices, that’s around $82,500. That’s on the high end of the price spectrum for these NFTs. According to the OpenSea page for the collection, the average trade price for a CryptoPunk item is just over 18 ETH.
Is a piece of digital art really worth 55 ETH? In some ways, owning NFTs could be like owning any other type of art. It has a market value that could move in any direction. Take CryptoPunk #7746 as an example. Three years ago it was acquired for just 0.1 ETH.
Of course, not all NFTs are in such high demand or command such astonishing prices. For instance, a Memecash trading card featuring “CZ Binance” is currently listed for just 0.0001 ETH, or about $0.14. Some items don’t even appear to have a price such as a crudely drawn MS paint-style black and white sock called “ALT SOCKS 3”. While not judging the artistic merit of any given NFT, it’s clear that some items will be in demand and others will not.
Consider the Blunders
OpenSea is not perfect, however. Our main complaint for the platform is that it’s difficult to discover NFTs unless you know exactly what you are looking for already. The categorized search needs a lot of polish. As such, it can be difficult to find items of a specific type.
For example, let’s say you want to buy a NFT version of a song. Currently, there isn’t a music category to search through. Typing words like ‘music’ or ‘song’ will only yield results that contain that word. It’s also difficult to differentiate which NFTs are just representative tokens and which are licenses of ownership.
Another issue is the misuse of copyrighted material. A quick look at the art section reveals a plethora of examples of potential copyright abuse. We found copyrighted characters from franchises like Star Wars and Harry Potter, images and animated GIFs of celebrities, and more. It is unclear if the copyright holders allowed these NFTs to be created or were compensated for them.
Finally, as with any new technology the platform is loaded with low-quality submissions that likely no one will ever want. This isn’t necessarily a problem, but it could make it a lot harder to find the gems amongst the chaff – especially without better search features and filtering.
NFTs are truly a new frontier. As such there are bound to be bumps along the way. OpenSea thankfully takes a very friendly, low-jargon approach that is welcoming to newcomers and experts alike. Just be sure before buying anything that you understand what it really is and what it’s value is – or isn’t.
Is OpenSea the best platform for trading NFTs or is there a better choice? Let us know in the comments below.