Thomas GretherNFTs are the current big hype topic in crypto space. What initially started with digital cats like CryptoKitties turned into a billion-dollar market within a few years. Today, digital, unique works of art, stored on the blockchain, cross the online store counter for hundreds of thousands of dollars in some cases. Digital art is traded on NFT marketplaces like OpenSea.
What exactly is OpenSea?
OpenSea is like the eBay for non-fungible tokens. Artists and traders alike come together here to buy, promote, and sell digital art. The marketplace went online in January 2018, founded by Alex Atallah and Devin Finzer. The company is based in New York. The platform has been able to access large amounts of investment several times. in 2018, OpenSea raised $2.1 million through Y Combinator. Then in March 2019, it was another $23 million, and in July 2021, $100 million. Investors, at least, saw the potential in the NFT platform.
Important: Ethereum-compatible web wallet
The Ethereum blockchain for smart contracts and tokenization is still the first port of call for non-fungible tokens. However, OpenSea also supports the Polygon (MATIC) and Klaytn (KLAY) multi-chain solutions. You will need an Ethereum-compatible web wallet and some ETH to use the platform’s features. We recommend the MetaMask wallet and Google Chrome or another Chromium browser (Brave, Opera).
Preparation: set up wallet and fill it up with ETH
You can find more detailed MetaMask instructions here on our website. Basically, the setup is not difficult at all. The wallet will guide you through all the necessary steps. Write down the pass phrase on a paper and keep it safe. Besides, for security reasons, you should download the wallet only from MetaMask ‘s official website.
You will need a minor amount of ETH for the operations on the platform. These gas fees are usually very small. If the network volume is high, the fees can sometimes increase. You can get Ethereum on just about any exchange, for example, Binance, Coinbase, Bitpanda and many more. Then transfer the ETH to the MetaMask wallet and the preparations are complete.
1. Step: Sign up on OpenSea
Go to the OpenSea website. The signup process here is a bit different compared to most websites. First, click the profile picture icon in the top bar. Instead of using your password and nickname, log in here using your wallet. Besides MetaMask, you still have a choice between Coinbase Wallet, WalletConnect, Fortmatic, and a few more options.
For our OpenSea tutorial, we will be using the MetaMask wallet.
- Click on the profile icon in the top bar on the right.
- The wallet window will open where you enter the password to unlock it. “Connect with MetaMask” should then be in the new window that opens.
- Click “Next” and then click “Connect.” The process is quickly completed and the dashboard will open right after.
To complete the login, then click on the gear. MetaMask will contact you again with the signature request. When you confirm it, another window opens where you enter your username, an email address and other information. Save the settings. OpenSea will then send you a confirmation email to the email address you entered. By verifying the account, you have completed this step.
2. Step: Have a look around on OpenSea
After that, you are free to take a closer look around OpenSea. Click on “Explore” and then click on “All NFTs.” You will be redirected to the Marketplace where you will see the current NFTs. You still have the option to narrow down your search more precisely. The filters in the left bar will help you do this. For example, you can display only the latest NFTs or set in which margin the prices should be.
Then there are further setting options:
- Collections: many NFTs are part of a collection. For example, if you are only interested in the CryptoPunks, then you can easily find all relevant digital artworks.
- Chains: So far, OpenSea supports the blockchains Ethereum, Polygon and Klaytn. Some NFTs are only on certain Chains, in which case you pay the fees with the respective cryptocurrency.
- Categories: Here you can find further type and genre subdivisions. For example, you can filter music tracks or search for special topics such as sports.
- On Sale In: With this option you can search for specific payment methods. The most common payment method on OpenSea is ETH or WETH (Wrapped Ether). Overall, you have a choice between Ether (ETH) and Wrapped Ether (WETH), BASED, DG, 0xBTC. In most cases, you will only need Ether and Wrapped Ether.
3. Step: Buy NFTs on OpenSea
The next step in our OpenSea guide is to get yourself an NFT. First, you should have the necessary Ethereum in the MetaMask wallet for this. Then, search under “Explore” for a Non-fungible Token that you like. Or you can search for something specific in the search bar. Some NFTs are available for sale, others require you to place a bid. You will need “Wrapped ETH” (WETH) to place bids.
If you just want to buy the NFT, then click on the “Buy” option. Often these are “bundles”, i.e. several tokens in one package. During the purchase process, you will immediately see the current value in US dollars. The digital asset will then end up in your wallet.
Important: Wrapped Ethereum and bids
For our tutorial, we need to briefly talk about Wrapped Ether. WETH is a special type of Ether. They allow you to place bids and then pay the WETH automatically when the bid is accepted. You can convert your Ether directly to WETH if you use MetaMask.
- Access your MetaMask wallet
- Navigate to “Import Tokens”
- Search for WETH and add the token to it
- Then go to Swap and exchange the ETH into WETH
If you are bidding for an NFT, then click on the token and then click on “Place bid”. Here you enter the amount of WETH you are willing to pay. Your bid will then be added to the list. If you should have placed the highest bid by the expiration of the ultimatum, then you will be awarded the contract.
4. Step: Bid on OpenSea
Under certain circumstances it can be useful to make an offer instead of buying directly. Therefore, we briefly cover this topic in the OpenSea guide. If an NFT is available for sale, then you can also click on “Make offer” and suggest a price yourself. In this case, the seller would pay the gas fees since they are the one doing the transaction. This way you can offer a lower price than the one set by the seller. It is then up to the seller if he wants to go for it. For example, because no other interested party can be found for the Non-fungible Token.
5. Step: Selling NFTs on OpenSea
The next important step in the OpenSea instructions is to sell the Non-fungible Tokens. To do this, the NFTs must be in the connected wallet. Then click on your profile. Here you will see all the NFTs that you hold in your wallet. Select the item you want to sell and click “Sell”. Then set the price. You can choose a fixed price (“Fixed Price”) or start an auction (“Timed Auction”). In case of an auction, you still select a time period. Do not forget about the fees. The “Service Fee” is used to pay network fees. The “Creator Earnings”, on the other hand, go directly to the creator of the token, so that he has something from his creation even after resale.
OpenSea Tutorial: Create your own NFTs
To do this, click on “Create” in the top bar. OpenSea does not do the work for you to create the NFT yourself. You have to create the digital art yourself. Therefore, this process is actually called “minten”, i.e. embossing. You upload your file to OpenSea and the platform turns it into a unique NFT, stored on the blockchain.
The platform allows a number of different file formats, including:
- Image files: JPG, PNG, GIF, SVG
- Video files: MP4, WEBM
- Sound files: MP3, WAV, OGG
- 3D files: GLB, GLTF
The maximum file size is 100 MB. You upload the file and fill in some fields, like the name of the NFT, an external link for more information, the description or to which collection the token belongs. Then click on “Create” and the process is completed.
Dangers of trading on OpenSea
OpenSea is not without its flaws. As on other crypto trading sites, you should take good care of the security of your funds. Scams are a danger as well as hacks and bugs.
- Hacks: on January 25, Reuters reported on a bug at OpenSea. This bug allowed $1.1 million worth of NFTs to be purchased below their actual market price. According to a statement from the platform, this is not a problem with the platform, but a feature of the blockchain. While it is true that transactions (and thus token purchases) cannot be reversed. But the fact that NFTs could be bought for free has nothing to do with the blockchain.
- Bugs and exploits: they can hit any platform sooner or later. As a user, there is hardly anything you can do to defend yourself. It is best not to store your NFTs in the MetaMask wallet if you do not want to trade with them at the moment. Enjin or Trust Wallet would be good choices for secure storage.
- Artist Scams: Artists sometimes don’t have it easy on OpenSea. It is quite easy to copy their art and issue it as your own Non-fungible Tokens. While there is a verification process, it is slow and not always reliable. This also creates the problem that you may be buying fake art from imitators or even bots.
There is little you can do about this other than educate yourself. Always check the links and additional information. Artists will often provide links on NFTs, such as to social media profiles.
InfoboxA risk: hype phases and bubble formation
NFTs have become a billion-dollar business. More and more artists and companies are entering the market to offer their own non-fungible tokens. If you think back a few years, the ICO hype from 2017/2018 may come to mind. Here, too, there was a bubble. And every bubble has to burst at some point. Investors should be aware of this danger.
Ether of a different kindWhat are WETH?
WETH (Wrapped Ethereum) is a special kind of Ether. WETH represent ordinary Ether and therefore can be exchanged 1:1. This process and their other functions are governed by smart contracts. Originally, they were developed because other token standards could not be traded with Ether. They are therefore important for decentralized marketplaces based on Ethereum. By the way, there is also Wrapped Bitcoin (WBTC).
At the latest when selling NFTs you will come across the “Floor Price”. This is the minimum price that an NFT can have. The floor price fluctuates depending on market activity and the Ethereum price. It is updated automatically.
Fees are charged for each transaction on the platform and amount to 2.5%. These transactions are paid in Ethereum. Furthermore, creators of NFTs can set their own “Creator Earnings”. This fee can be up to 10% and is paid to the creator of the token each time it is resold.
OpenSea itself claims not to collect any fees. The gas fees go directly to the network. However, that would be the only source of revenue for the platform. Therefore, it can be assumed that the revenue consists of the 2.5% fees.
