Ultimate Guide on How To Create an NFT Marketplace

Do you know what masterpieces of art, great paintings of various sorts, are famous for? We answer: they’re so valuable because they're unique. Alas, the same cannot be said about digital creative items, no matter how special they are… in the end, they’re so easy to duplicate. At least that was the case before NFT tokens appeared.

NFTs are a whole other story. Each of them is inimitable and exists in a single copy. Being stored in the blockchain, it is immune to fakes. That's why NFT items are attracting more and more attention. Among those fascinated by them are ardent collectors seeking to own unique digital objects. 

The popularity of NFT-based art is growing year by year, especially during the pandemic (whereas sales of physical art have plummeted). And the demand keeps growing: the total value of NFT transactions at the beginning of 22 amounted to more than $300 million, which exceeded the sales level for the entire past year. 

All of the above leads to a logical conclusion: it's high time to develop an NFT marketplace and start making money on it. And in our article, we’re going to tell you how to do it.

What Are NFT Tokens?

Let's first see why you should build your own NFT marketplace (to serve as a place to sell and buy NFT items):

• According to the latest data, NFT items are being sold out really quickly (maybe it's a fad, a kind of fashion statement, but the trend is still impressive!);

• Among the reasons explaining NFT's popularity is the fact that celebrities are also interested in these tokens. To be precise, they convert everything from music and video clips to paintings to NFT format.

• Over the past year, the crypto NFT market has increased by 310%;

• NFT tokens can be a lucrative venture, some products based on them have been sold for $50+ million (and owners of NFT marketplace platforms serving as intermediaries get their commission too, which is cool, right?). Among examples is the CEO of Twitter who sold his first Twitter post and received nearly $3 million (slightly less). Or here's another example: CryptoKitties, the cutest digital kitty, has gone for a whopping price ($172K). And let’s not forget about Mike Winkelmann who managed to get almost $70 million after selling his NFT-based painting.

NFT is a trending topic of discussion, flashing in the headlines of various publications. And no wonder! Believe us, there is something to talk about. How do you like this kind of article: “The burned piece named ‘Morons (White)’ became an NFT token and was bought by the blockchain company Injective Protocol”?. The transaction price reached $95,000. Interesting, isn't it?

So, what is NFT, what is its catch?

NFT concept

To create an NFT-platform, we should understand what NFT means, to begin with. So let’s figure it out.

NFT stands for non-fungible token. These tokens exist in a special environment known as the blockchain.

You may be familiar with the concept, but let's briefly recall its essence anyway, just in case. The blockchain is a system integrating a great many computers. It consists of peer nodes (with no controlling one among them), which form a chain of blocks (hence the name: blockchain). Each device included in the system stores all the published information.

Now back to the definition of tokens. At its core, a token is a record in a ledger within a blockchain. And usually, tokens are fungible (exchangeable) like a currency: in other words, you can convert a dollar into a euro and vice versa.

However, this only applies to money and everything like that. Not every digital asset is equally fungible. Let’s say, a painting by Pablo Picasso isn't the same thing as a piece by Claude Monet. That's why NFT tokens were invented.

Each NFT item is inimitable and unique. And key information about it (authorship, buyer, transactions, etc.) is securely stored in the blockchain. NFT can be compared to a digital certificate confirming the product's uniqueness.

Above, you see an example of an NFT. It’s a pixelated image of a punk woman. The lot, called NFT Cryptopunk 4250, was put up for sale at a price of over $116K.

BTW!

NFT tokens are based on the Ethereum blockchain and use the ERC-721 standard.

History of NFT tokens

While blockchain has been on everyone's lips from way back, NFT is a relatively new concept. We started talking about it closer to the 20s of the 21st century.

The glory of NFT began with the game CryptoKitties (whose players had to feed charming digital kittens). The game managed to gain a lot of fans; moreover, some of these NFT-based virtual kittens had been sold at fabulous prices.

And in 2021, the popularity of NFTs skyrocketed even more. The reasons are various, including the evolution of the blockchain infrastructure itself. And, of course, the pandemic had its impact too: being in self-isolation, people were carried away by new tech ideas and digital opportunities. Finally, the interest of celebrities has turned NFT into a real trend (which served as the beginning of the NFT token development boom).

What are NFTs' properties?

Now let's try to figure out what the diagram above means:

• You cannot break these tokens into parts, they exist in their original holistic form;

• Non-fungible tokens contain all the necessary information about the object, including authorship and current owner; and this information can be confirmed without any problems;

• As we’ve already said, NFTs cannot be exchanged like a currency (or cryptocurrency). Being unique, each token has its own price… and value;

• Tokens are available for sale and auctions (using various types of NFT platforms).

• As to programmability, it allows you to apply various digital technologies to these tokens. That’s what makes them so special (among other things).

NTF types

• Private NFTs. Information about them is available only to the buyer. To be more precise, the blockchain system fixes the transaction (such as making a sale), but that's all. The rest of the data remains confidential.

• Public NFTs. Sometimes the option of complete confidentiality outlined above isn't quite suitable (after all, the sale item needs to be shown to the consumer who wants to become its owner). In such cases, a part of the item is available to each blockchain participant, which means everyone can see a certain public NFT fragment.

BTW!

There are also SFTs or semi-fungible tokens. Being an intermediate option between fungible and non-fungible tokens, they're focused on creating limited collections containing a predetermined number of items. SFTs are, too, divided into public and private ones. 

Crypto NFT Market Niches

Any object claiming to be unique can be digitized, turned into an NFT, and put up for sale. Here are just a few of the most popular options (though it's all up to your imagination):

• Music (songs, music tracks, and so on);

• Visual arts (it usually refers to paintings and stuff like that);

• Text content (books, literary pieces of any kind);

• 3D models (a prime example of digital creativity!);

• Game elements, be it characters, fictional worlds, etc. (think of the CryptoKitties game and its digital kittens, which influenced the popularization of the NFT marketplace development);

• Educational stuff (say, training courses);

• Security items. Yes, these NFTs are also very popular and usually presented as access keys to some programs or any other important content.

Who is interested in NFTs?

Infatuated with the new cool trend, people of creative professions dived right into tokenizing their pieces. And among them are famous personalities:

• DJ 3LAU was the first to digitize his own music album. He earned a little over $11 million from its sale. 

• Other musicians (such as the band Kings of Leon) started to tokenize their works too.

• Singer Grimes, who is also the mother of Elon Musk's child, turned her drawings into NFTs (profit after the sale was $ 5.8 million).

• Artist Beeple (real name is Mike Winkelmann) sold his painting "Everydays: The First 5000 Days" as an NFT and set a record of sorts (because the price reached almost $70 million, which is impressive).

• Magazines and newspapers also use NFT marketplaces: a prime example is the Times, which sold several of its iconic covers. Other publications, including the New York Times, tokenize their popular columns.

Speaking of who buys NFTs, we have to mention collectors of unique things, gamers interested in digital in-game items, art fans... and just people who are passionate about everything new (including non-fungible tokens).

What Are Non-Fungible Token Marketplaces?

To buy and sell NFT items, you have to deal with special resources. Traditional cryptocurrency exchanges won’t do in this case. In other words, we’ve finally come to the key topic of our article: how to create NFT marketplaces.

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We’re talking about a trading platform with non-fungible tokens stored. And these tokens can be sold and bought. Moreover, NFT products either have a fixed price or are put up for auction.

Key NFT-platforms’ Types

• Multi-purpose NFT platforms. The most popular option is a resource, which offers all kinds of digital assets: music, visual arts, educational content, whatever! 

  • On the plus side, you get access to a wider target audience. But on the downside, you'll have to face higher competition. Surviving in such an environment is a tricky thing and requires investing a lot of money and effort.

• Specialized NFT resources. You can also develop an NFT marketplace, which specializes in just one type of digital product (say, paintings).

  • Of course, you'll have fewer users (only people interested in your NFT item type). However, you'll find it easier to popularize your platform and make it in-demand.

• Special non-fungible token marketplaces with NFT collections. Another option is to create an online gallery with digital art collections (what about the semi-fungible tokens we’ve already mentioned?).

How the NFT Marketplace Works

A non-fungible token platform operates on the basis of so-called smart contracts. Their peculiarity is that they’re self-fulfilling and don’t depend on the human factor. Therefore, the parties to the transaction don’t have to trust each other.

Smart contracts supplement a token with unique data about the product it’s connected to, after which the NFT item is open to sales or auction. And the purchase money is debited from the buyer's account only if the terms of the transaction are met. Otherwise, the deal is considered invalid, which leads to its automatic termination. Of course, such an approach reduces and even eliminates fraud attempts. That's why smart contracts are so popular right now.

As you can see, the whole thing is very clear and simple.

The User Flow of NFT Platforms

As the owner of the platform, you must decide how best to approach the registration process: 

• the user signs up either as a seller or as a buyer (he/she has to pick just one thing);

• any registered user is allowed to be both a buyer and a seller.

Let's consider the second option in more detail and describe the user flow (or rather, the steps the user flow consists of):

• Registration and account creation. The user has to add his personal information.

• Adding a crypto wallet (needed to store NFT tokens and crypto coins).

• Buying or selling NFTs (depending on what is of interest to the user at a particular moment):

  • sale of NFTs. Acting as a seller, you create a token and complete it with a description (so that a potential buyer understands what it is, how much it costs, what it looks like, and so on). Next, the NFT product is checked by a moderator (optional) and, if everything is ok, put up for sale or auction. After the sale, the money is credited to the seller's account.

  • buying NFTs. The process of buying an NFT product is identical to that of traditional marketplaces, whether it's an eBay auction or Amazon with a classic approach to selling goods.

Take a look at the interface of OpenSea (one of the most popular NFT platforms). It’ll get you an idea of what you have to build (if you decide to create an NFT-platform too).

Must-Have Features of Your NFT Marketplace

Let's consider the most essential features, without which your resource won’t work as it should:

• Account-related features. We see no point to detail the features common to almost all sites and applications: registration, account creation & management, and so on.

• Storefront. Any store, including those based on NFT, should have some kind of storefront. This applies to both physical stores and online ones. Therefore, you must provide the user with the opportunity to create his seller page in a few clicks, without extra steps.

• Search system. Also, features of your NFT marketplace should include the ability to search for products. Pretty obvious, right?

• Filters. The feature is related to the previous one: to be precise, before initiating a search, the customer specifies his wishes using filters.

• Creating listings. The feature is targeting sellers. They create listings and manage the sales process.

• Buying or Bidding. Don't forget about buyers either: offer a simple, clear way to purchase the NFT item (through a traditional sale or with the help of an auction).

• Digital Wallet. And of course, you need to add a wallet, without which it’d be very difficult to perform monetary transactions.

These features are quite enough to build an NFT marketplace (in the end, it's better to start small than not to start at all). However, if you want more, consider additional options such as:

• Interactive chat to initiate real-time communication between buyers and sellers;

• Wishlist: the perfect solution to boost sales. The user may be limited in funds right now, but it doesn't mean he won't be able to buy the product of interest later. And there are more chances to make this happen if the desired items are placed in a separate list (Wishlist);

• Chatbot, whose task is to answer users' questions around the clock (even at midnight);

• Comparison of goods, which will also make your resource more attractive in the eyes of users.

And now it's time to discuss the NFT-platform development process, step by step.

How to Create NFT Marketplaces?

• Initial preparation. You should start by understanding what you have to deal with. How long will the project last? What budget do you need to implement it? What will increase the chances of its success? To answer these questions, you have to research the crypto NFT market and its main players, analyze the target audience, make a list of must-have features, think over the user flow, and perform other similar steps. 

  • The smartest option is to order the Discovery service instead of trying to do research on your own. Experienced professionals will determine the key project requirements and suggest the best way to act. 

• Hiring performers. Now that you've taken care of the project basics, it's time to find someone to bring the idea to life. Simply put, you need to hire development experts skilled enough to build your own NFT marketplace exactly the way you need it.

  • If you hire Discovery specialists to carry out the preparatory stage of the project, you’ll be able to find the developers much easier. The thing is, Discovery and Delivery teams often work together.

• UI/UX. The discovery phase often involves creating an initial prototype of your website or app. And in this case, you can immediately proceed with building a detailed interface design. Otherwise, you'll have to start with prototyping.

• MVP. If you're on a tight budget, start small by developing an MVP (an NFT trading platform with a minimal set of features). You can improve it later when you realize you’ve chosen the right strategy.

• Testing. Test your project on end-users. Do they like what they see? What should be improved?

• Project release. So, you've added new features to the project and corrected its shortcomings. Now you can release the final version of the NFT marketplace. Of course, you'll keep improving it in the future, because working on a digital product is an endless process, but the first difficult stage has remained behind.

• Project improvement. As we said, keep evolving your product: collect user feedback, implement new features, and improve old ones. Updating functionality is the only way to succeed. 

Tech Stack to Build an NFT Marketplace

Of course, the developers you hire know how to create NFT marketplaces (at least they should). But just in case, we’d like to show what technologies will help you implement the project.

How to Make Your NFT Trading Platform Profitable?

We’re 100% sure you’re eager to learn how to monetize your project. In fact, there’re many ways to achieve your goal, but we’ll list only the most popular ones:

• Sales commission. The seller pays a certain commission for each NFT product sold (usually about 5-10%).

• Ads. Advertising is a great way to monetize any website or application, including platforms for NFT trading. Just make sure your ads aren't too intrusive (or you risk annoying your users).

• Paid promotion. If the seller wants his NFTs to get to the top more easily, he is welcome to resort to a paid promotion.

• Listing fees. Another commission option, this time it's a per-listing fee.

• Paid features. And finally, why not make some of the features (those that aren't included in the basic set) paid?

Thinking of creating an online marketplace? We have a few useful tips to help you with such a challenging task!

We've discussed everything to get you started with non-fungible token marketplaces. Now you know how to approach the NFT-platform development process without unnecessary risks. And if you're ready to move from words to deeds, write to us, and we'll discuss your project in more detail.