NFT Marketplace Development: Complete Guide
The crypto market is hyping today, with millions of people trying to join the trend and monetize blockchain solutions in many ways. And the good news is that you can also get a fair share of the rapidly growing market with numerous variants of market entry. From crypto banks to trading platforms, blockchain transforms how digital assets are exchanged and the asset value is created. Today, blockchain is used to build DeFi products closing the traditional finance access gap for unbanked populations; create, trade, and store crypto assets; and establish new digital assets with distinct value.
One of such innovative assets is non-fungible tokens (NFTs). They operate on the Ethereum platform, one of the top blockchain platforms of modernity, and follow rigorous blockchain standards of security. Thus, NFT creation or establishing an NFT marketplace is a reasonable approach to market entry if you’re skeptical about cryptocurrencies or can’t afford to go through all the complexities of ICO. In this article, 4IRE experts share their experience in the NFT niche and explain the process of NFT marketplace development step by step so that you capture the intricacies better.
What are NFTs?
The concept of NFTs as digital assets is often perplexing for laypersons. The term covers digital art (e.g., images, music, animation), gaming items, and a broad array of collectibles. The core feature distinguishing NFTs from cryptocurrencies is their non-fungible and intangible nature.
Tangibility means that you can touch something or hold it in your hands. Fiat money is tangible – most of you have held a $100 note in your hands at least once in your lives. The situation is different with blockchain assets. Just like crypto-coins, NFTs are intangible; you can’t go to a local bank and cash your crypto-belongings by withdrawing them from your account.
Fungibility is the asset’s ability to be divided into parts without losing value. For instance, if you divide a pack of $100 notes into separate notes, your $1,000 will still remain a $1,000. But think of a car or real estate; you can’t sell half of your car or a room in your house without consequences for their functionality and value. Thus, similar to fiat money, crypto money is fungible, meaning that you can store one BTC on your account, spend 0.02 BTC on a new car, or send 0.05 BTC to your granny. But NFTs are not, and you can’t sell a half of a game collectible as its value is holistic, not assigned to its parts.
Thus, unique, indivisible NFTs enable developers to represent some unique objects in the form of Ethereum assets. Their storage and exchange are powered by Ethereum blockchain’s smart contracts, enabling digital content creators to monetize their works of art and publicize them as digital assets. But for an image or a piece of music to become a real NFT, it has to be:
- Original (not copied from anywhere, possessing its unique metadata)
- Authentic (having a verifiable owner and creator)
- Non-fungible (discussed above)
- Possessing unique value (not equivalent to any other asset)
- Existing in the Ethereum blockchain
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NFT use cases
With fiat and cryptocurrencies serving as commonplace assets with monetary value, one might wonder what NFTs stand for and for which purposes they can be used. First of all, it’s about ownership. Digital content authentication and copyright protection are more challenging than tangible assets’ protection. Thus, NFTs serve as a powerful tool for establishing and preserving ownership of digital objects. Once you buy an NFT, an Ethereum smart contract validates the transaction and makes you the only happy owner of this unique asset.
To date, NFT use cases include:
- Digital art
Do you want to own a piece of a Mona Lisa? There is no need to cut it into small pieces to organize this, as tokenization of tangible artworks allows their owners to sell partial ownership of their otherwise non-fungible assets.
Luxury fashion items, such as clothing and accessories, are often counterfeited. Tokenization of these items helps verify authenticity and ownership without extra effort, guaranteeing that you validate any item’s authenticity with NFTs.
- Licenses and certificates
Licensure and certification are also prone to counterfeiting, while its tokenization allows hassle-free originality authentication by those wishing to turn to a specialist or hire a new employee.
With NFTs, an endless variety of collectibles can be tokenized with unique blockchain algorithms, so you acquire unique ownership rights by buying a relevant NFT equivalent of a collectible you want.
- Sports items
Buying sports tickets or accessories online is often unsafe because of forgery and scams. You can secure yourself by purchasing Ethereum-validated, tokenized tickets.
- Names and domains
Ethereum Name Service offers unique crypto addresses that users can reserve for their business needs. Tokenized NFTs for these names and domains can secure your ownership thereof.
- Gaming items
The world’s gaming industry has become a multi-billion-dollar enterprise, with gamers hunting for rare weaponry and accessories across the Web. Tokenized gaming NFTs can help you buy or sell the gaming items you need without online fraud risks.
- Virtual worlds
With NFTs, you can create and sell a whole virtual world or its parts to interested followers. It’s an excellent opportunity to gather your tribe of fellow thinkers around some digital idea or game.
What is an NFT marketplace?
NFTs are non-fungible and intangible assets, but they still have specific monetary value for their owners. Otherwise, there would be no commercial interest in NFT popularization. So, where can you buy or sell NFTs? Where to showcase your NFTs so that they are bought and sold by users?
Unfortunately, NFTs are not available for trading on regular crypto exchanges as they represent distinct assets. NFT marketplaces are decentralized platforms on which NFT owners can store and trade their belongings for cryptocurrency. The number of NFT marketplaces is large and growing, with some platforms offering exclusive tokens, while others are welcoming everyone willing to join the NFT sector to sign up and offer their NFTs for sale. Here are a few distinctions to keep in mind.
Universal NFT Marketplaces
World-known universal platforms like OpenSea, Rarible, and Mintable offer all kinds of NFTs on sale, ranging from domain names to digital art to music to game collectibles. They are open and democratic for new users, allowing anyone to generate Ethereum-based assets and start selling them.
Specialized NFT Platforms
Specialized, or niche, NFT platforms attract investors looking for specific NFT types. For instance, the Valuables platform is a place to buy tweet NFTs, while Looking Glass Factory features digital holograms. The Sandbox Marketplace includes only NFT assets used in The Sandbox, while Foundation is a premier marketplace featuring artwork auctions for invite-only artists.
Unlike NFT marketplaces, NFT galleries do not allow selling or buying these tokens. These are the equivalents of traditional galleries where owners showcase their NFTs and organize thematic exhibitions and shows. This is done to popularize the NFT concept.
The golden standard for NFT creation is the Ethereum blockchain. However, many alternative solutions have emerged recently, with NFT marketplaces on other blockchains currently under development. OpenSea functions on Ethereum and Polygon, Rarible, Foundation, and SuperRare are Ethereum-only marketplaces. New developments include Atomic Hub (a Wax-based NFT market), NFT Showroom built on Hive, VIV3 built on Flow, and BakerySwap on BSC.
Why are NFTs trending now?
The crypto boom has left a trace on everything connected to the blockchain. The latter is a viable solution to traditional banking, finance, and a solid alternative to old-school technological approaches. Thus, there is much optimism about blockchain development services in the coming years, with NFT included.
Statistical data proves the ever-increasing interest in, and capitalization of, the NFT market. In 2018, there was only around $40 million of NFT investment, with the figure reaching $141+ million in 2019 and exceeding $338 million in 2020. After only five months of 2021, the NFT market cap has already risen by over $100 million to reach $432 million. The leading NFTs and collectible tokens dominating the market include THETA, CHZ, and ENJ.
Thus, the future of NFTs seems promising, with increasing investor attention and broadening the scope of offers on the NFT market. The key favorable factors for the NFT market development include:
- The hype around blockchain, cryptocurrency, and digital assets
- Simplicity and user-friendliness of creating, buying, and selling NFTs
- People’s readiness to invest in digital artwork and unique artifacts
As you can see, the demand for NFTs is real. It’s enough to recollect the $100,000 price for Cryptokitties or a Crossroads sale for $6.6 million, let alone the sensational Everydays deal for $69 million. Beeple, a famous digital artist, has already sold NFTs for the cumulative value exceeding $100 million, while Crypto Punks’ collectibles reach $1 million in price each.
How do NFT marketplaces work?
So, how does an NFT marketplace function, and what does it derive revenue from? In other words, what’s the sense or value of creating your custom NFT marketplace, and is such an endeavor worth the hassle?
Such marketplaces get a commission for NFT transactions and gain revenue from the “gas” fees paid by the artists using their blockchain platform’s capacity for NFT token generation.
On the user side, the NFT market’s procedures look as follows:
- New users come to the platform and register there.
- They create a crypto wallet or link an existing one with the platform.
- Artists create NFTs on the platform’s Ethereum (or other) engine and set up the price for their assets.
- The user’s collection is checked and validated by the marketplace, getting into open display after that.
- Buyers place bids if they want to buy the NFT, and the auction takes place.
- After the auction is over and the best bid wins, the NFT marketplace organizes the smart contract-based transfer of NFTs to their new owner.
Features of an NFT marketplace
NFT marketplaces are essentially blockchain-based, so for them to function well, they need to include some features and functions integral for such a service. At a minimum, you should incorporate the following into your NFT market project:
- Blockchain engine for smart contracts token generation. As NFTs are transferred to a new owner, the transaction should be validated in the relevant blockchain.
- Features enabling users to buy and sell NFTs. As you have a marketplace, it should have the functionality for buy/sell operations.
- A user-friendly, functional UX/UI. Both artists and users should find your NFT marketplace navigable and understandable to conduct their transactions here.
- Auction features. There is a specific set of features required for digital auctions at NFT marketplaces.
- Financial transactions. Artists should be able to withdraw their earnings; clients need to pay for their acquisitions; the NFT marketplace should get its fees.
- Artist ratings. An intelligent system of artist ranking can help users find the most popular and trending NFTs quickly.
- Search filters. Users coming to find specific NFT types should be enabled to filter the list of offers.
- Crypto-wallet integration. As payments for NFTs are now made in cryptocurrencies, the NFT marketplace should have a functional, secure system of crypto wallet integration.
So, include all these aspects into the NFT marketplace development plan and discuss the technological options for each stage’s implementation.
Tech stack for NFT marketplace development
Once all features you want to see in your NFT marketplace are clear, it’s time to choose the tech stack required for the project’s practical implementation. You’ll need to choose a blockchain platform, a storage platform, a front-end development framework, and the NFT standard supported on your marketplace.
You need a blockchain platform as it will be the basis for your NFT marketplace functioning. Ethereum is the classical choice of NFT platform developers because of the publicly verifiable nature of transaction history and token metadata, giving the NFT transactions added security. The standard back-end of all Ethereum-based NFT marketplaces allows NFT owners to transfer their tokens efficiently. Flow is a newer option for digital asset, game, and app creation that NFT developers like for its simple, user-friendly Cadence programming language. Tezos is also a popular choice because its FA2 NFT contracts suit the NFT marketplace creation objective perfectly. Finally, the Cardano platform boasts top-notch security and sustainability.
Once you approach an NFT marketplace project, you need to decide where NFTs will be stored. For this purpose, the IPFS hypermedia protocol or the decentralized Filecoin storage network will be ideal matches. Pinata can also be a suitable choice as it’s compliant with IPFS and ensures secure, verifiable NFT storage.
To date, the NFT-supporting standards include ERC-721, ERC-1155, FA2, dGoods, and TRC-721. NFT marketplace creation for each of them comes with specific technological issues, so you need to choose a viable option with your development team.
The most popular developer choices for NFT marketplace front-end development include Vue, Angular, and React. All of them are simple and coder-friendly, delivering quick results with sleek, easily navigable designs.
How to create an NFT Marketplace?
The process of NFT marketplace development is complex in technical terms, but you can make it simpler and more manageable by following this step-by-step process.
At this stage, you will determine the core business goals and strategy for your NFT marketplace. Will it be an open or invite-only platform? What NFTs will it feature? What blockchain will be used for asset tokenization? What analytics will you employ? How will you make your marketplace unique and popular among clients?
Next comes the stage of technical features’ design (back-end). Here you need to develop the complete technical infrastructure of the marketplace, deciding how user profiles will be created and managed, where the NFTs will be stored, what payment solutions will be linked to the system, etc. By the end of this stage, you should develop a clear project architecture and a technological set of features for further development.
After the back-end, the time comes to front-end design. You need to create a prototype, select brand colors, design mockups of user pages, and come up with the final design for your product. Don’t underestimate this stage, as the UI is what your users will see. So, if they don’t like the NFT marketplace’s visual design or don’t understand the navigation, they won’t stay with you.
NFT dApp development
The blockchain development team starts the software development stage based on the agreed technical specifications. Software engineers will build some features from scratch, tying your back-end and front-end together and making it all work optimally.
Once the NFT marketplace is ready, the QA team runs multiple checks of all its features, such as registration, user profile creation, payment, wallet linking, etc., to identify any bugs and pitfalls. After troubleshooting and fine-tuning, the product may be regarded as ready for the launch.
Launch to market
The NFT marketplace’s launch is an art on its own. You can launch your NFT project in one go or opt for several iterations. Another option includes continuous integration, which is less user-friendly but easier in technical terms. Consult your developers to choose the most optimal variant for your specific project.
Support and maintenance
The development team’s work doesn’t end upon launch. Once new users join the NFT platform and add new NFTs, you may need support and maintenance. The NFT marketplace also needs regular updates and new feature integration, which is continuous work on your project’s smooth operation.
SDKs versus custom development
After the NFT marketplace idea and project are ready, you should start thinking about the team to bring your project to reality. One of the easiest solutions is to take a ready-made NFT marketplace SDK (e.g., OpenSea SDK) that allows quick NFT platform setup. However, pre-made templates allow little customization and scaling, which is unacceptable if you have far-reaching plans for NFT business development. So, we recommend hiring a custom development team that will code everything from scratch, applying top-notch blockchain solutions, and giving your project enough flexibility and scalability.
How we can help
If you have decided to set up your NFT marketplace, the 4IRE team of developers will be pleased to bring you closer to this project’s implementation. With over 10 years of experience in blockchain development and service, we have in-depth expertise and a universal tech stack to offer. Our custom development team will tailor the NFT tech stack to your demands and existing IT infrastructure, ensuring smooth back-end and front-end development, rigorous QA testing, and timely market launch. Talk to our experts today to see how easy it is to get a well-functioning, innovative NFT marketplace to monetize your blockchain services and ideas.