The NFT space is ginormous with new projects dropping every day. You already know it’s essential to catch the drops early but there’s also another key thing to keep an eye out for, NFT auctions. Steady, don’t panic. If you haven’t got a clue what it is and how it works, you’re about to find out.
Assuming you know what non-fungible tokens are, you should know how to pick the right one to invest in. Also, you should know how to buy one outside of an auction. Now that you know these key points, let me tell you all about these auctions.
An NFT auction is just like normal auctions, but the product on sale is a non-fungible token. Basically, things play out in the following way:
- The creator lists an NFT for auction
- They set the minimum price the bidding starts at
- When the auction starts, buyers proceed to bid on the non-fungible based on how much they’re willing to spend
- When the auction ends, the non-fungible token goes to the highest bidder
This is the general unanimous way of how an NFT auction works. However, there are different types of auctions.
There are different types of NFT auctions depending on how you determine the winner, how you admit participants and the type of organization. Let’s check each.
Determining the Winner
Based on how the winner is determined, there are:
- An English NFT Auction: In this auction, the person who had the highest bid wins. The winner takes the prize after the auction ends.
- A Dutch NFT Auction: The auction usually goes the opposite way. It starts at a high price, which is usually overpriced and goes down with time. The person who places the bet first wins.
Admission of Participants
There are two ways in which participants can be admitted to the NFT auction.
- Open: Any user of the platform can buy an asset.
- Closed: A user has to obtain an invitation in advance.
Types of Organizations
The organizations can either hold the auction online or in a combined manner. In the latter case, bidders can place their bets online or attend a real-life auction.
Now that you know what an NFT auction is and its different types, you might want to start bidding. But, how? Well, it’s pretty simple. You just have to find the right marketplace hosting the auction you want to participate in, sign up and connect your wallet.
Then. select the NFT you want to bid on and view the current bid and remaining time. Place your bid and make sure it is higher than the current one then confirm it. If you end up being the highest bidder, your bid will be accepted and the transaction will go through on the blockchain then the NFT is all yours!
Let’s say you’re not the one holding the money wanting the NFT but rather the other way around. You’ve created a non-fungible and you want to auction it off. How? Easy, just follow the below steps:
- Choose the NFT marketplace you want to host the auction on
- Sign up and connect your wallet
- Select the non-fungible you want to auction from your wallet
- List your NFT for sale through the ‘Auction’ option
- Wait for buyers to start placing their bids
- When the auction ends, you will receive a notification of the highest bidder
And, Voilà! Your non-fungible has been successfully sold.
Whether you want to start an NFT auction or participate in an existing one, you need to check the NFT marketplaces that hold such events. The following are the top NFT marketplaces for NFT auctions:
So, that was the basics of an NFT auction. There are a lot of cool projects that hold these types of auctions and they end up selling for insane prices. Now that you might want to start investing in NFTs whether through an auction or generally, I must ensure that you’re protected. Here are the common NFT Scams and the top 7 signs you should look out for!