Opensea - review of the NFT marketplace; advantages and disadvantages
NFT and blockchain have been causing a stir for some time now. Unique virtual art - non-fungible tokens are becoming the Mona Lisa of our time - at least for anyone who is convinced of the principle of NFT. Works of art and unique collectibles are sold on digital marketplaces, the largest in the world being Opensea.
What is Opensea
By the volume of transactions, Opensea is not only the oldest, but also the largest and probably the most well-known NFT marketplace. Since it was founded in 2017 by entrepreneurs Devin Finzer and Alex Atalla, the value of the American cryptocurrency company has steadily increased - since the NFT boom in 2021, the company's valuation has reached $13.3 billion.
Opensea is a decentralized NFT marketplace based on the Ethereum blockchain. Rapid learning of NFT and blockchain technology is available here. Artists can use the platform to create NFTs and offer them for sale - through open auctions, fixed-price bids or individual price bids. For each transaction, Opensea receives a 2.5% commission from buyers and sellers. Trading is standard with Ethereum cryptocurrency (ETH) installed, but Opensea accepts over 200 other payment options, including Dai, Mana or USDC. There will also be Solana integration in the future.
From April 2022, users can also use fiat currencies, paying via Visa, Mastercard, Apple Pay or American Express, the Moonpay app. This offer should also open up access to the NFT market for those who do not use cryptocurrency.
Opensea is considered the largest NFT marketplace for a reason - the number of non-crypto tokens on the platform is enormous. In addition to crypto-art, Opensea's offering also includes music, digital trading cards, game characters or even entire virtual landscapes and meta-universe properties. In numbers, that's more than four million NFTs in more than 200 digital assets. In doing so, Opensea quite rightly ranks first among the giants of the Metaworld.
How to use Opensea
Interested parties can use the Opensea NFT marketplace either as buyers and traders or as sellers and creators. The main requirement to participate in NFT transactions in Opensea is to have a decentralized Ethereum wallet that is connected to the platform (via "My Profile").
Cryptocurrencies are stored in digital wallets. Opensea offers users a range of wallets. In most cases, they are free in the form of so-called hot wallets. The Metamask wallet is particularly popular.
The existing NFT offering can also be viewed in advance without having capital or a wallet. Recommendation features and filters help users browse. In addition, Opensea checks retailer profiles and designates good participants with a blue check mark.
How to buy on Opensea NFTs
Transactions on Opensea are based on the Ebay principle: NFTs are either offered at a fixed price or auctioned off. Opensea also charges a commission on the purchase or sale of items - 2.5% each - as well as license and gas fees. This should be considered for every transaction.
How to buy an NFT on Opensea at a fixed price:
Find a facility and create a cryptocurrency wallet of your choice (if you don't already have one).
Make sure you have enough budget in your wallet to buy.
Connect the wallet to Opensea.
Click "Buy Now" and confirm the transaction.
The NFT is now stored in a collection in your wallet.
It's just as easy to buy NFTs at auction:
Same here: make a selection, create and connect a wallet with enough budget.
Click on "Make an offer" and review the details of the collection.
Select the currency in which you want to make a transaction, and make a bid.
Confirm the transaction.
The status of the auction can now be viewed in your wallet.
Important for buying NFT through the auction: if you make a new price offer to the creator, it must be at least five percent higher than the previously submitted offer.
Disadvantages of OpenSea
Even at the NFT giant Opensea, not everything is perfect. The world's largest token market is not immune to scammers - and you need to be aware of them if you want to get into NFT trading.
In general, investing in NFT is always playing with fire. Unlike, for example, stock trading, it's not economic (and more calculable) events that determine the value of a token in NFT trading, but purely demand. If it is high, the price of an NFT can skyrocket.
On the other hand, if demand is low, the path to a total loss is quite short. In addition, it is unclear how long the rush around NFT will last and whether the trend can even begin to fall sharply. When buying and speculating on NFTs, there is always some underlying risk that investors should be aware of. The investment here is not in physically tangible objects or measurable company values, but in digital objects that exist only in the digital world and have subjective value.
Opensea is also hitting negative media headlines: the platform has been repeatedly subjected to phishing attacks, and accusations of fraud are on the rise. For example, demand for some tokens is artificially boosted by scammers to increase the value of digital works and attract more customers. Dedicated support should now stop fraudsters.
Last but not least, the mining process to produce cryptocurrencies such as Ethereum requires a high level of computing power and thus generates a significant amount of emissions. Digital currencies - and therefore platforms based on them, such as Opensea - have long been criticized for their greenhouse gas pollution.
Alternatives to OpenSea
Opensea is (by its own information) the world's largest NFT marketplace. But other platforms have also established themselves in the NFT world and could be a serious alternative to the market leader Opensea for investors. Some of the trading platforms are based on different approaches, and the target audience and NFT offerings can also be more or less differentiated, such as with the Sorare fantasy soccer platform. Which service is best for your own project is up to you.