What Is An NFT Auction? Here Are The Vital Insights

NFTs have carved a niche for themselves in the crypto marketplace. Here are insights on how NFT auctions are done?

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A Comprehensive Guide to NFT Auctions

Ever thought of creating and selling your NFT at an auction to generate a lucrative income stream? Come to think of it, do you know how much the famous “Disaster Girl” meme sold for as a non-fungible token? A whopping $500,000. And if that isn’t enough, how about Jack Dorsey’s first tweet auctioning for $2.5 million.

However you want to consider it, NFTs are the new goldmine, creating opportunities for owners and collectors to earn sustainable incomes.

Perhaps, you missed out on the Bitcoin rave when it was just a few cents, and then Ethereum and the likes. You wouldn’t want to overlook this once in a lifetime opportunity, would you?

The demand for digital gaming, artwork, and crypto collectibles is skyrocketed. One memorable event in the industry is the Beeple NFT auction, Everdays: The First 5,000 Days, which sold at Christie’s for $69.2 million. The same NFT auction also set a record for the high-selling digital art in history.

Read Also: How MoonSwap Works

Introduction to NFTs

An NFT is a non-fungible token or cryptographic token that is attached to a unique asset of value. The digital asset can be sold, traded, or transferred.

With the proliferation of cryptocurrencies and the advent of blockchain technology, tokens have taken on a new lease of life. In fact, they are now being treated as real digital assets. This is a major step in their evolution from just pure digital currency to an asset class in its own right.

While NFTs are often associated with the art and gaming (game items and avatars) industry, they have a variety of applications, including financial transactions (payment solutions), intellectual property (patents, copyrights, and trademarks), ownership (real estate, collectibles, and more), reputation (social media, marketing, and branding), and utility (smart contracts).

NFT Auctions: How Do They Work?

NFT auctions connect creators with audiences. Collectors looking for unique digital artwork or other collectibles can find them on reputable NFT auction websites. An NFT auction site runs on a blockchain, most likely, Ethereum.

In most NFTs, an ownership transaction is initiated by a wallet and the NFT is then registered and stored, similar to cryptocurrencies. The blockchain verifies the identity of the seller and the ownership and validity of the NFT. Of course, bidders on the platform are also verified.

Read: How Chainlink Connects Smart Contracts To The Real World And The Opportunities Therein

In an auction, the owner of the NFT sets a reserve or starting price for the asset. The auction site runs on the Ethereum blockchain, which means that prices are set in ETH and are used for all transactions on the network. The reserve price is the lowest possible bid price, and is also called the “opening bid”. Collectors are to bid above this limit. With each bid, the price of the asset increases.

There is a time limit for the bid duration after which the seller accepts the highest bid price and receives it in ETH, while the NFT auction platform transfers ownership of the NFT asset to the buyer after the individual must have settled the NFT. There are no further bids on the asset except the new owner decides to auction it in the future.

When listing an NFT on an auction site, there is a certain percentage charge or GAS fees on the potential transaction. Hence, it is essential for you as a creator to factor in this cost before auctioning your NFT.

Conclusion

The most interesting fact about an NFT auction is that it operates in a digital world and yet it incorporates real-world assets. Depending on if you decide to be a creator or a collector, there is an avenue for you to make money and own highly treasured collectibles.

Author: Gb Obasogie

Committed to a better you

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