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Understanding the Transaction Fees Involved in Buying and Selling NFTs

2021-08-23

Every day, people hear news about another NFT or non-fungible token getting sold at a surprisingly high price. Because of that, so many people now want to create NFTs to turn their one-of-a-kind item into a collectible. People who have a laptop and own any possible collectible, however trivial, absurd, or easy it may be to now make an NFT.

To make NFTs, creators can use minting platforms like Binance NFT. Their non-fungible token will have a value that can depend on some factors. Every creator may not be a Beeple, and each sale doesn't have to be conducted on a public auction like the ones at Sotheby's or Christie's. Many content creators are offering their NFTs at affordable prices that usually don't exceed several hundred dollars.

People may be surprised to know that after they mint and sell their NFT, they get returns that may be sometimes smaller than what they initially expected. Since most of the creators just recently got involved in the crypto space, they are unaware the interacting with the blockchain where the NFT resides is not free.

Our article will explain the fees that you may see whenever you navigate the ecosystem of NFTs. We won't provide you step-by-step instructions on how you can sell NFTs. Instead, we will inform you of the reasons why and where the fees may arise. Having this information will allow you to judge better on your collectible's price, so you can search for ways you can get the best profit you can earn. 

The Brief Introduction to NFTs

Here is a quick look at the essential information you need to know before you jump in and sell NFTs. Here, we'll focus on the relevant aspects of the costs associated with making, marketing, and buying NFTs.

The digital art token called the NFT cannot be duplicated or altered, as each of them is unique. Commonly, non-fungible tokens represent a particular object that can be anything. It can be a virtual asset such as a meme, video clip, or PNG image. It can also be a physical asset, like a title to a painting. There is an endless potential to have anything converted into an NFT. However, you need to make sure that you own the questioned object.

Those who create NFTs need to decide how much they want to sell it, the creator royalties, and resale rights together with the other conditions of the sale. The self-executing program or smart contract allows this information to be captured and recorded on a blockchain. Whenever someone wants to purchase an NFT, they can go through the NFT marketplace or personally interact with the one who created the NFT. The sale process is automated in every marketplace, and it would depend on the conditions that the creator sets when it comes to the purchase or reserve price.

You wouldn't need to have your token created or make smart contracts written on your own. There are so many marketplaces online that sprung up to cater NFTs and keep the underlying technical aspects hidden from the users. In case you want to get more information on how NFTs work, make sure to check out the Binance blog for updates!

How Fees May Arise

It is not free to interact with the blockchain. The concept referred to as gas is what the Binance Smart Chain (BSC) and Ethereum have. Gas is the computational "fuel" measure needed in interacting with the blockchain. Each interaction needs gas in a certain amount, depending on the type and number of complicated computations and the required storage. Since NFT smart contracts tend to be highly computationally intensive, simple fund transfers can mean more gas costs.

The amount could depend on the gas price that fluctuates according to some factors. These gas fees compensate miners, as they are the ones who do the computations to validate the blockchain's transaction records. You can have these fees payable on Binance Smart Chain's BNB or Ethereum's Ether.

Whenever the gas price is set too low, your transaction can usually stay unconfirmed because miners consider transactions that have high gas prices as their priority. Between the users, there is a bidding system that this mechanism creates. Some of the crypto wallets follow the current gas price of the market and recommend the correct cost to the user. Ethereum had relatively high gas prices for some time, as it went as high as $50 for every transaction. The Binance Smart Chain has smaller fees, as their simple transfers cost less than $0.10.

Considering these, let us outline the cost for every step of the process involved in creating, recording, purchasing, and reselling an NFT. There may be certain steps, but not everything, that could depend on the gas fees.

The Creation and Funding of a Wallet

Initially, making a crypto wallet is what you need to do. The crypto wallet can hold the funds, so you can receive sale proceeds and pay for the gas fees. Many wallets are available for you to use, including MetaMask and the Binance Chain Wallet. The wallet will act as the conduit where the creators can interact with the NFT marketplaces.

If you want to have cryptocurrency added to your wallet, you need to use a crypto exchange like Binance. It can have your fiat currency converted to cryptocurrency. You will be required to pay fees in Binance that you can often absorb in the exchange rate of the conversion.

Art and its Digitization in the Philippines

Because of the pandemic, the global industry of art got forced to adopt more digital mindsets. Regarding internet speed, digitization, and technology, the Philippines has been consistently lagging behind our neighbors. The industry of culture is doing everything it can, so we can continue to move forward. Trickie Lopa, the co-founder of the Art Fair Philippines, canceled the fair this 2021. The year 2020 has been the biggest one, with more than 61 international and local galleries participating. The annual Art Fair became an event where people lined up in the car park, The Link, for hours. When they got in, they had many things to see with booths that the artists manned. At the Art Fair, you can talk to the artists regarding their work and collection. With it, people can get more information about them other than the price of their pieces. Initially, it was a challenge to have that experience brought online. However, since Art in the Park became successful, the people felt that it might be possible.

The event initially got indefinitely postponed but pushed through last August 2020. The event that was supposed to happen in a day at the Jaime Velasquez Park eventually became a virtual exhibit for eight days at the artinthepark.ph.

Since people are still making artworks and are still interested to see art, the Art Fair has been a suitable platform for people to showcase their art. Art Fair 2021 has focused on digital art, especially the controversial Non-Fungible Tokens or NFTs. They had the virtual event run for ten days and have been entirely accessible on the Metaverse website.

Join an NFT Marketplace and Mint an NFT

So many marketplaces can provide the needed tools to help anyone describe their NFT, including the conditions involved in its sale. For Binance Smart Chain, BakerySwap and Treasureland are among the two of the biggest that you can check at OpenSea for NFTs based on Ethereum. Whenever you commit to creating the NFT, you need to pay for the gas fees, so you can interact with the smart contract that gets to mint your token. Whenever you list an NFT, some NFT marketplaces don't charge platform fees. Whenever the NFT sells, that is when the mining fee would kick in as the buyer will be the one to absorb the cost. However, not all of the markets are working this way.

Take note that there are specific marketplaces that can only work with certain blockchains. We recommend that you get a wallet with the right cryptocurrency that you can use in that blockchain. Most of the time, for Ethereum, you need Ether, and for Binance Smart Chain, you should have BNB. If you want an appropriate amount of your existing holdings converted into the correct currency, you must use a crypto exchange. There is a fee associated with this conversion.

Selling your NFT

Every time you sell your NFT, there is a platform service commission or fee that the marketplace would likely charge. Aside from that, you may also have to pay a gas fee whenever you interact with a smart contract that associates with the sale that you had on the blockchain.

Payment

Lastly, a gas fee is involved whenever you transfer the sale's net funds to the seller's wallet. Based on the resale's initial contract, the creator will receive a reduced royalty fee because of another gas fee.

A Sum Up On NFTs

Since you've read so much about NFTs, it is evident that it cannot be possible to avoid any fees as you create, sell, or buy NFTs. However, you can mitigate the surprises once you become aware of the ways the fees may arise. Knowing about this can also help anyone get a better price for their collectible, so they can get the best returns.

It can be unavoidable to have gas fees for people who interact with the blockchain. However, you can minimize the costs with some steps. These are:

  • Understand the fees that different NFT marketplaces could charge when handling the minting, sale, and listing of your NFT. It could differ depending on the platforms that you want to check out.

  • Constantly review the gas prices' variation over certain times, so you can see the best time to have your NFT minted. It is usually the time when the gas prices are minimal. Check out the gas prices of BSC here.

  • Choose a blockchain like Binance Smart Chain as it has minimal fees for minting your NFTs.

For people interested in NFTs, the best way for them to grow and expand in the new collectibles' marketplace is through proper education—having a great understanding of how the fees work can ultimately allow everyone to benefit from the ecosystem of NFTs.

Get A Better Understanding of the NFT Marketplace with Binance NOW!

Get the best information on how to craft and trade NFTs with Binance! We can assist you in curating events, creating your own NFTs, and discussing business opportunities. 

If you want to get so much passive income, consider getting involved in Binance Staking and Binance Savings! Have your cryptocurrency placed in Binance Savings, so you can earn interest. It has so many available products and packages that would depend on when you want to have access to your funds. Here, so many features are included, like the APY rates that investors want to have. You may even get into Binance Flexible Savings if you wish to have your coins redeemed anytime with a 7-Dat APY of 1.2%.

For people who want to start investing, we recommend Binance Staking. You may also choose to have your cryptocurrency stored in cold or hot wallets.  Give support to the blockchain network, so you can put your cryptocurrency at stake and assets locked, as this can help you earn more tokens! 

Let your funds do the needed work for you as you trade cryptocurrency.

Go and download Binance from Google Play or Apple's App Store RIGHT AWAY and use it to kick-off your crypto trading journey. Now that cryptocurrency has been undergoing rapid development and expansion, anyone can reap the benefits of this technology. Get yourself involved in trading NFTs with Binance and don’t forget to enjoy along the way.