Don’t use credit cards like this!

NFT market has picked up steam. Not only for artwork, but the usage of Non-fungible Tokens (NFTs) is growing beyond social media posts, blog posts, or even real estate. Recently, Rario, the Indian tech platform, announced its plans to launch NFTs for cricket lovers. It has been reported that big names of the cricket world such as Zaheer Khan, AB De Villiers and Faf du Plessis will offer their digital collectibles to fans. But the process of buying NFTs can be confusing given the various fees involved. Before buying or creating an NFTs, you should first know about the costs. Here are the details –

Cost of buying NFTs

NFT market has become the flavour of the season with the astronomical amount they are getting sold for. For example, Mike Winkelmann also known as Beeple, became the third most valuable living artist when he sold a piece for nearly $70 million. Many new marketplaces have been launched following the craze, giving a platform even to new and budding artists. However, before trying to get a piece of the growing NFT market, you should know that there is something called a gas fee, which is a sum required to mint the NFT via a blockchain.

“Apart from the value of the collectibles, there are transaction fees. Whenever you do a transaction through blockchain, there is a blockchain transaction fee called a gas fee. It is a fixed fee, which does not depend on the value of the transaction. It is lowest at around 7 paise in Matic,” said Toshendra Sharma, founder and CEO of Matic backed company NFTically.

Similarly, WazirX NFT marketplace is powered by the Binance Smart Chain, which has a gas fee of about $1. Therefore, before buying an NFT, you should always check the gas fee involved in the transaction.

Resale of NFT

What happens when you resale the item bought from the creator? “All you have to do is to put that item on sale. First, you need to spend Rs 25-40 for authorising the transaction through Metamask wallet. Once the transaction is authorised, you have to set the price, which is a very subjective matter. After that, you can fix the value of the collectible or put it into an auction and the item will go to the highest bidder,” added Sharma.

Royalty fees

But before you sell in the secondary market, you should be aware there is something called royalty fees. “Royalty fees go to the original creator every time the transaction takes place. This option cannot be disabled in the secondary market. The royalty is set by the minter one time, which could be anything between 10%-30%. As a seller, one needs to be aware that high royalty does not sell for high prices,” added Sharma. 

Cost of creating NFT

If you are the creator, then two types of costs are involved- deployment and minting cost. “When you create a collection, you deploy a smart contract which costs higher in Ethereum and can go up to $100-$500. The same charge in Matic can be $3-4 which is one time cost. After deployment, you have to put the item on sale, which is called minting for which fees in Matic is 7 paisa, in Ethereum it is Rs40-50 which is paid once,” added Sharma.

Moreover, there are charges on the sale of collectibles. For example, WazirX charges a 5% fee to the seller on selling the NFT. Similarly, NFTically charges a fee of 1.5% on sales occurring on the artist’s own store and a 2.5% fee for sales on the NFTically marketplace.

The future of NFT’s market is not clear yet. But if you plan to buy one, do check the costs involved.