The crypto market is volatile. Whether or not you make money from an NFT sale can depend on if it appreciates, its history, rarity and its utility. NFT values fluctuate by the second. Whether you already own an NFT or want to start buying and selling for a profit, it can be a difficult market to break into.
What is an NFT?
NFTs are one-of-a-kind digital assets that exist on a blockchain with unique identifiers and data. This is what makes them “non-fungible.” You can exchange one NFT for another, but since they’re all unique, it could mean a loss or gain. Most NFTs are bought with cryptocurrency.
NFTs offer continued earnings on subsequent sales and the ability to prove ownership thanks to blockchains – public ledgers on a network. Using smart contracts on these blockchains, the original creators of an NFT earn royalties each time the NFT is sold.
NFTs vary in utility, ownership history, formats and scarcity. They can be playable video game characters, GIFs, music files, videos and much more.
There’s no guarantee that you’ll make money by selling NFTs, but here are 4 steps to start selling them and some general best practices.
Steps to sell an NFT
Selling an NFT involves evaluating the market, choosing a sale price, finding a place to list your NFT and looking for a buyer.
Step 1: Select a marketplace
Choosing the right marketplace for your NFT can be key in getting the offer and buyer you want. And Marketplaces vary in what genres of NFTs they specialize in.
For example, Foundation is an NFT marketplace that focuses on highlighting smaller artists and requires an invite to become a verified creator. OpenSea, on the other hand, is a mixed marketplace featuring NFTs across nearly all niches — art, sports, gaming, memes, etc.
If you own an NFT that you didn’t create, you should know what niche it’s in to help you determine where to list it for sale.
If you’re set on creating your own NFTs, knowing what niche you want to focus on can determine where to create and list your NFTs.
Step 2: Get a digital wallet
A digital wallet, or crypto wallet, is required if you want to buy or sell NFTs. Once you buy an NFT, it’s stored in a wallet and protected with private keys.
In some cases, the marketplace where you want to sell your NFT has their own wallet. Gate.io, for example, gives account holders a free digital wallet that can be used on the Gate.io ecosystem, including its NFT marketplace.
Wallets vary in how they work and how your private keys are stored. Your options include:
- Hot wallet – Usually involves downloading a browser extension and is always online. Strong choice for beginners since they’re user-friendly and typically free. However, thee may be more prone to hacks due to constantly being online.
- Cold wallet – External hardware that’s only online when plugged in and could run you between $60 to $200 or more. They’re more secure since they’re not always online, but need to be physically plugged in which may be inconvenient for some.
- Custodial – A wallet where a third-party holds and protects your wallet’s private keys for you.
- Noncustodial – You’re in control of how and where your private keys are stored.
Some digital wallets include MetaMask and Ledger. MetaMask is a free, hot, noncustodial wallet. It’s popular with crypto play-to-earn games and is widely accepted. Ledger Nano S is a hardware, noncustodial wallet and retails for $59 (USD). It’s about the same size as a thumb drive.
Step 3: Research your NFT’s value to set a listing price
You wouldn’t sell your car without any sort of research, right? Same principle when it comes to NFTs. If you have an NFT that’s part of a collection, start by comparing the value and recent sales of other NFTs in the same project.
Consider your NFT’s attributes as well — rarity, past celebrity ownership, real-world utility and uniqueness. Is the NFT part of a charity project, business or from a limited drop? Narrowing down the NFT’s attributes and comparing prices of NFTs that share the attributes of yours can help you aim for a realistic value.
On the other hand, auctions can help you determine a selling price organically. Marketplaces typically offer auctions as a way for an NFT to reach a real market value. You can set a minimum price, and if it’s not met, cancel the sale, get the NFT back and try again another time.
Step 4: List your NFT for sale
With a marketplace in mind, a digital wallet and some research under your belt, you can start the process of listing your NFT.
Most marketplaces offer these methods:
- Auction. Set a minimum price and wait for bids to come in like a traditional auction. Most online auctions are timed, and if the minimum price is not met, you typically have the option to end the sale and the NFT is returned to you.
- Fixed price. Set a price and wait for a buyer. Usually given the option of setting a time limit.
- Private sale. Create a listing to be sent to a specific buyer via email, phone or their account. Set the terms and conditions and wait for the buyer to accept.
Once you’ve picked your preferred sale method, follow the marketplace’s steps to list your NFT.
If you’ve just minted your own NFT, then you’ll need a title, description, tags, genre and price.
If you’re selling an NFT that you purchased from someone else, select the NFT from your account or wallet and complete the required fields to list it.
Compare NFT marketplaces
How much can I sell an NFT for?
You can list your NFT for whatever you’d like. How much it actually sells for depends on its utility, historical significance and current trends. Average selling prices of NFTs are all over the map. In 2021, the average selling price of an NFT on SuperRare was around $5,800 as reported by Art Net. Foundation had an average price of around $3,500 in 2021.
Keep in mind an average can be skewed if just a few NFTs sell for over a million dollars, so take these figures with a grain of salt.
Minting an NFT costs you anywhere from $1 to $1,000 or more in transaction fees for interacting with a blockchain. A good start in picking a selling price is making up for the mint price and going from there.
What fees are associated with selling an NFT?
Marketplaces typically take 2.5% to 5% of the selling price each time you make a sale. And if you’re planning to sell an NFT that you create, gas fees could range from $1 to $1,000, depending on the blockchain and the day.
When to sell an NFT
Some sellers ride the hype of a specific collection or project and buy and sell quickly — within a few days or weeks when prices are the highest. This involves watching the market, buying when prices are low, then selling when you start to see signs of peaking.
Buying and selling in the long-term can involve investing in a project that’s reputable, then selling later when you either find the right buyer or when the value appreciates. This strategy may require more funds upfront.
Neither strategy is guaranteed a profit, but both involve watching trends and values like a hawk.
What to watch out for
Before you buy an NFT to sell, consider these scams:
- Fake or plagiarized NFTs. In January 2022, OpenSea revealed that more than 80% of NFTs minted for free on the platform were either fake, plagiarized or spam.
- Rug-pull scams. They typically involve a “verified” account creating and selling NFTs, then vanishing as soon as the values peak. In January 2022, Doodled Dragons was a verified collection on Solana that promised to donate all proceeds of sold NFTs to charity — they took all the money and ran once the collection was sold out. The creator announced on Twitter, “our first charity will instead be… my bank account. cya nerds.”
Judging whether or not a collection or creator is legitimate is becoming harder as more marketplaces flood the space. And be aware that with NFTs, refunds are typically out of the question.
Before buying an NFT with the intention of selling, consider the history of the collection, the validity of the marketplace and the credibility of the creator.
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