4 Key Things To Know Before You Start Reselling NFTs In 2023

By now, you’ve surely heard of Non-Fungible Tokens or NFTs as they are more commonly known. They are digital assets that utilize blockchain technology to authenticate their uniqueness and ownership. In contrast to cryptocurrencies like Bitcoin, which are fungible and can be exchanged on a one-for-one basis, NFTs are unique. They’re like digital collectables, each with its own specific characteristics and value. This uniqueness and the rise of digital art and virtual goods have been the driving force behind the explosive growth of the NFT market in the last couple of years. Whilst the market for NFTs has slowed down since its peak during the pandemic, there are still opportunities to make a profit with NFTs in 2023 if you know what you’re doing. However, understanding the fundamentals of NFTs and the blockchain is crucial before diving into this world. With that in mind, in this article, we will take you through five things you need to know before you start with NFTs in 2023.

Understanding NFTs

Understanding how NFTs actually work is of course crucial. Unlike traditional digital assets, NFTs can’t be directly compared because no two NFTs are identical – even those that are part of the same collection might have significantly different values. Therefore, understanding this unique aspect of the marketplace is critical to your success. Most collections will feature broadly similar works of art, although each will have its own unique feature. Usually, each feature is of a different rarity. As such, the NFT with the most rare features will usually be the most sought-after and expensive.

Learning about the laws and regulations

Just like any other form of reselling, NFT reselling also falls within the purview of certain laws and regulations. In fact, there are more laws and regulations surrounding NFTs than there are with other niches. These can vary greatly from one jurisdiction to another and could potentially have significant implications on things such as taxes and licenses. For instance, in the US, the IRS treats cryptocurrencies as property for tax purposes, meaning capital gains tax can apply to NFT transactions. Also, with NFTs being relatively new, the legal landscape around them can change quickly. Evidently, staying informed about such changes will be vital to effectively operating in the NFT market.

Knowing NFT Jargon

You will also want to familiarize yourself with the jargon used in the NFT world. Phrases like ‘gas fees’, ‘minting’, and ‘proof-of-ownership’ are commonplace in the NFT world. Knowing what they mean can greatly improve your ability to understand and navigate the market. Here is a quick rundown of some key terms.

Royalties: Many NFTs are programmed to pay royalties to their original creators every time they are sold. This fee, which you will pay as a seller, is usually a percentage of the sale price.

Smart Contract: A smart contract is a self-executing contract where the terms of the agreement are written into code. NFTs are typically created and traded through smart contracts.

Minting: Minting is the process of creating a new NFT on the blockchain. Once minted, the NFT can be bought, sold, or traded on various platforms.

Gas Fees: Gas fees are the transaction costs that users must pay to miners on a blockchain network like Ethereum. They fluctuate based on network congestion and can be quite high during peak times. Always factor in these fees before buying an NFT.

Wallet Address: A wallet address is a unique identifier that represents a destination for a cryptocurrency payment. A wallet is usually where your NFTs are stored and wallet addresses can be shared publicly.

Proof-of-Ownership: In the context of NFTs, proof of ownership refers to the verifiable claim of ownership of a digital asset that is facilitated by blockchain technology. When an NFT is minted, it is registered to a specific wallet address in the blockchain. This wallet address is considered the owner of the NFT.

Know the tools and platforms for NFT reselling

These days, there are numerous platforms to trade NFTs on. Among the most notable include OpenSea, Rarible, and Foundation. Each platform has its strengths, from OpenSea’s sheer volume and variety to Rarible’s user-friendly interface and Foundation’s focus on curated, high-quality art. Understanding how these platforms work is crucial for anyone looking to profit from reselling NFTs.

Beyond just buying and selling, several tools can help you in your NFT reselling journey. For instance, Nansen is a blockchain analytics tool that helps you spot smart money movements in real time. It also gives information about NFT trading activities, allowing you to identify trends and make better decisions. Similarly, tools like Rarity Tools allow you to evaluate the rarity of NFTs within a collection based on their attributes, providing invaluable insights when determining which NFTs to invest in.

Additionally, the Juiced app will inform you of the most profitable NFT releases. It also contains information on all the latest and most profitable sneakers, collectables, electronics and more as well as tools to help you as a reseller. You can sign up for free here.