4 Best Practices for NFT Auctions

Best Practices for NFT Auctions

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If you are scrolling on any digital medium, NFTs is one word that will always appear on your screen and leave you awestruck! Why? Because the world is going crazy over this new concept that might be the next big revolution for the asset industry. 

First Amitabh Bachchan and now Salman Khan, biggest Bollywood stars have made their debut in the NFT space. This news does not even scratch the surface of how far NFTs have come as an industry, as a concept, and as a revolution. 

People are making millions of dollars through NFTs, and odd items are being offered at high costs. For instance, a Llama image is now available on OpenSea for around 100,000 Ethereum tokens, while a Grinch-inspired Sushi costs approximately 78,294 ETH coins.

Even Twitter founder Jack Dorsey’s first tweet was sold for $2.9 million. Similarly, a digital artwork collage by artist Mike Winklemann, known as Beeple, was auctioned off at Christie’s earlier this year for $69 million. 

Beeple’s collage, Everydays: The First 5000 Days, sold at Christie’s. Image: Beeple

These events have pushed NFTs to new heights, and everyone wants to be a part of it which is evident from the ever growing sales in the NFT space. The weekly sale of NFTs has reached close to a half Billion USD in mid October. 

Most artists think of blockchain-based transactions as a quick and straightforward method to sell digital art through various platforms such as Rarible or Foundation but they frequently discover the hard way about fees, taxes and resale royalties that come along with the deal. 

As a result, before selling any NFT work, it is critical to follow best practices and understand various aspects. 

Best Practices to Follow for NFT Auctions

It is critical to follow best practices while selling your NFTs to make sound judgments and avoid online fraud.

Mentioned below, we have outlined a few practices that you may use while selling your NFTs:

#1. Choose the finest platform for minting and selling your work

There are over 50 mainstream marketplaces for minting and exchanging NFTs, and this number is increasing by the day. 

This has caused a lot of confusion among vendors over which platform to use to mint and sell NFTs. Furthermore, different platforms use distinct paradigms for user operation. Some platforms exclusively function through invite-only programs (Nifty Gateway, SuperRare), whilst others employ user verification methods (Rarible, Foundation).

Furthermore, the platforms support different Blockchains, thus making it even more difficult for you to select the best platform. 

So, it’s advisable to choose platforms based on your requirements. For example, if you are comfortable submitting your personal information for verification, you can use Rarible for this.

You must also examine the cost structure of various platforms to select the cheapest and best platform. In addition to this, you should also analyze the kind of buyers and audience a particular platform has as that will contribute a lot in making your NFT more viral.

Platforms and their fee structures:

  • Nifty Gateway charges 5% plus $0.30 for every secondary sale. 
  • SuperRare charges a 3% transaction fee for all purchases, paid by the buyer.
  • Foundation charges a 15% commission. 
  • Opensea offers “Lazy Minting” where one can pay minting fees after the sale of the NFT.

#2. Follow the best security measures

To mint NFTs on any platform, wallets may be required to store your Ether or any other cryptocurrency supported, which will be used to buy/sell NFTs. You have the choice of selecting soft or hard wallets. 

Similarly, while choosing a wallet, check for features like two-factor verification, wallet address and seed phrase security. Furthermore, utilize a VPN while trading NFTs to protect your privacy.

Another important criteria for the security of your NFTs is ensuring that they are stored in a decentralized location. Storage providers such as Pinata for IPFS ensure that the data is stored on a decentralized location with the utmost security. The reason behind this is that the NFT exists in the digital space and having the best storage is unquestionable. 

Must Read: Check these 6 major NFTs loop holes that might hit you

#3. Be aware of copyrights

Due to the exponential growth of NFTs, copyrights are something people have often overlooked but have started realizing its importance again. 

Copyright is a cornerstone of intellectual property, and artists should understand how and when to use it, particularly when it comes to NFTs. 

One should not take pre-existing pictures and incorporate them into an NFT, but doing so without a significant alteration and obvious additional message is subject to punishment under copyright law. 

Moreover, Minting a digital artwork without the author’s express permission may result in litigation, with the infringer having to prove that their usage is “fair” under copyright law.

#4. Watch out for scammers

The NFT marketplace is full of fraudsters looking to steal your funds. They employ a variety of techniques to obtain access to your digital wallets. 

For instance, they conduct phishing attacks by sending malicious links over Twitter Direct Messages or Discord. When clicked, they can seize control of your wallet and steal your NFTs. As a general guideline, never click on links from unknown sources or click on them from a spare computer not the one you have all your data in. 

Similarly, scammers may add strange NFTs to your wallet through an airdrop. If an NFT appears in your wallet that you did not purchase, simply disregard it. If you attempt to authorize it for trade, it will fully empty your wallet and take everything.

Closing Thoughts

NFTs are transforming the world. From art to real estate to even a tweet, NFTs have unlocked a new world for us to explore. As a result, everyone wants to participate in the NFT frenzy which makes them overlook the dark side and go all in without the required due diligence. 

While the NFT space is amazing, highly rewarding, and probably the new way of how we look at assets, it is necessary to understand before buying or selling your NFT. Therefore, before going into NFTs, one must conduct research, be prepared with the required tools, and take safety precautions. 

Don’t succumb to FOMO; instead, proceed with caution.

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