A non-fungible token (NFT) is a unique token of data that is held on a blockchain and can be sold and exchanged. NFTs can be associated with digital files such as creative photos, audios and videos. NFTs, like traditional works of art, are collectable digital items and they hold value as any piece of art. And while these have been around for a decade, their popularity has skyrocketed these days. The year 2021 proved to be a big year for the NFT market space. According to CoinMarketCap, a crypto research website, the sales of NFTs have hit over USD 19 billion in value.
With many NFTs selling for thousands of dollars, people are excited about selling them. While creating an NFT is not very difficult, the cost associated with creating and selling them is a little difficult to understand. That’s why in this blog post, we will discuss these issues in detail.
It Starts With NFT Minting
Individual works of art and collectables must first be registered on a blockchain which is called minting. The art, or collectable, is encoded with a unique code that is NFT and stored on the blockchain, which enables the creation of individualised ownership records. You can read in detail about creating and registering NFT here – How To Make & Sell A Digital Piece Of Art? Here, we will continue our discussion on the costs associated.
The Cost Of Creating And Selling NFTs
The cost of creating an NFT is determined by the size and quality of the artwork being used. Nevertheless, while the process of producing an NFT may be as low as a dollar, the process of selling it might cost as much as a thousand dollars or more. However, it is very dependent on the platforms you are using, as each platform has a different payment system than the others. These platforms include NFT marketplace such as OpenSea and Rarible and blockchains such as Ethereum, Polygon and Solana
The costs generally include:
1. Account Fees
This is the amount of money you must pay in order to open your account. The price of this will vary depending on whatever NFT marketplace you choose to sell your NFTs on.
2. Transaction Fees
This is associated with the blockchain that you use and is generally referred to as the gas fees. Blockchain operations necessitate the execution of at least a single transaction on the chain, which incurs the expense of gas fees. Blockchain transaction costs are determined by the supply and demand of the network. When there is a lot of demand, the gas fee goes up. It is generally reflected as a sum of various other fees and is affected by a variety of factors such as time of minting, project quality, data size, transaction speed, and so on.
3. Minting Fees
The fee is related to minting your NFTs on a blockchain. The minting on most platforms may be of two types:
Regular minting: In this, your artworks are minted like normal on the blockchain and your NFT is generated. The fees may be around 100 dollars but may vary a lot by tens of dollars on different platforms and at different times.
Lazy Minting: It is possible for NFT artists and developers to mint their NFTs with much fewer expenditures through lazy minting. When you choose lazy minting, the procedure of registering the NFT on the blockchain does not actually happen. It is only when the NFT is purchased that it is registered on the blockchain. The net effect of this is that the fees that you are required to pay are not charged initially, but it is later deducted from the sales revenue that you generate by selling your NFT.
4. Listing Or Service Fees
This is related to listing your NFT artwork for sale or auction on the platform. Different platforms may charge different fees based on their own fee structure. For example, Polygon charges a 2.5 per cent service fee, which is taken from the selling price of your NFT.
We can say that while it doesn’t cost much to create an NFT, selling it can cost you a few hundred dollars. However, most of the costs associated can be minimised by using a set of cheaper platforms and options available. For example, you can select a marketplace like OpenSea or Mintable, a blockchain like Solana and check the lazy minting option. In conclusion, we can say that there are various different platforms available varying from cheap to expensive and the artist may select one based on his preferences and budget.