The Evolution of Blockchain into NFT Marketplaces

Blockchain is expanding rapidly into a mainstream technology, and the market for the technology is growing rapidly. In 2017, blockchain technology was valued at $339.5m, and by 2021, this market is expected to reach $2.3bn. Many organizations in various fields are now looking at blockchain applications that extend far beyond cryptocurrency and the new financial models such as NFTs and NFT marketplaces.

What is an NFT Marketplace?

While platforms such as Spotify and Netflix, which offer unlimited content for a subscription fee, NFT platforms are based on the premise that digital content can also be scarce — that is, limited in quantity — and can therefore be meaningfully owned and traded. Blockchain technology allows these platforms to verify that digital content, such as art, is in fact the original and not a replica. This method can be compared to how a traditional auction house might verify that a painting is in fact the original and not a replica. A number of platforms even allow users to “burn” items, further emphasizing the notion of scarcity. Blockchain-based transactions can also facilitate royalty attribution, resulting in automatic sharing of revenue from second-hand sales.

While partnering with the right platform can lead to a new market and new revenue streams, partnering with the wrong platform can lead to serious consequences, as with any investment — It is not always obvious what the right choice is when leveraging rapidly-evolving new technologies like NFTs. To avoid making costly mistakes, it is important to understand the landscape of platforms that are currently available and determine which will be the best fit.

What kind of Marketplaces are out there?

NFT marketplaces can be characterized on a spectrum of streamlined to augmented based upon a number of factors. Streamlined marketplaces support a wider range of non-financial transactions (NFTs) and offer generic services to sellers, whereas augmented marketplaces are highly specialized and provide a more comprehensive experience.

The streamlined platforms like OpenSea and Rarible that offer both auctions and fixed-price sales options for a wide variety of NFTs more closely resembling traditional platforms such as eBay, Esty, and Mercari. The primary purpose of these marketplaces is to facilitate efficient transactions, mostly accepting both credit cards and crypto payments in Bitcoin, Ethereum, and occasionally other specialty tokens. They offer minimal additional services, and because of their breadth, these platforms generally have fairly large and varied user bases.

In contrast, augmented marketplaces focus on narrower niches and offer numerous value-added services, such as minting, marketing, curation, pricing recommendations, portfolio trackers, and even full-fledged games built on top of NFTs. The NBA’s Top Shop, for example, focuses exclusively on basketball collectibles that are packaged and sold by the platform, Sorare hosts fantasy soccer competitions that incorporate the cards users buy on the platform, and SuperRare focuses on visual art and offers extensive curation and recommendation services.

As valuable as these specialty services can be, they can be expensive to implement, integrate, and support, In general, augmented platforms charge a higher takerate and have a higher setup fee. Streamlined marketplaces typically charge a lower fee, but may require sellers to invest their own resources or hire external experts.

The rise of NFT marketplaces has been a significant force in the development of NFT trading and could act as a catalyst for NFT’s mass adoption. Platforms are evolving into scalable, cost-effective solutions to enable mass adoption of NFTs and It appears as if the next-generation NFT marketplaces are on the verge of being experienced with more mainstream players entering the space.





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