NFT Swapping For Beginners!
Here You Will Learn What NFT Swaps Are And Why Investors Use Them
Who Swaps NFTs
NFT swapping is usually reserved for more advanced investors.
This is because it is not as easy as using a high-volume NFT marketplace and because many investors network amongst themselves to find someone that wants to swap an NFT.
You also need to have an in-depth knowledge of the value of an NFT collection, including rarity and valuable traits. It is easy to be taken advantage of by a more knowledgeable investors.
Some people make their living hunting undervalued assets that the owner is unaware of the true value. They convince you to swap your asset for a less valuable one or for less money than it is worth.
This is why you need to be a sophisticated NFT investor.
This article aims to help you learn about a niche part of NFT investing. NFT Swaps!
What Is NFT Swapping?
Think of NFT swaps as antique or baseball card trading. You have an asset (NFT) that another person wants. They have an asset that you would like to own. You agree to trade your NFT for their NFT.
Why would you want to swap an NFT for another NFT rather than simply selling your NFT and then purchasing another?
The answer is cost!
When you buy and sell NFTs you will occur trading and transaction fees. Many NFT collections also have a royalty fee attached to the NFT. Royalty fees can be as high as ten percent of the purchase/sale price.
For example
Imagine you could trade an antique you own for another antique and not pay the auction house costs. You also want to ensure your swap is successful and protected.
If you can find someone selling an antique you like, you can trade directly with them cutting out the middleman. This is the service NFT swap platforms offer.
Although this is a niche sector of NFT investing, there are NFT platforms designed to help you swap your NFT for either cryptocurrency or for another NFT.
What options are available to NFT swappers?
1. Swapping An NFT For A Profit
You can list your NFT for sale on an NFT swap platform and swap directly with other investors for a cryptocurrency. This is similar to selling your NFT for cash.
How does this work?
- You list your NFT for sale for 100 Solana on the swap platform, exactly as you would on any NFT marketplace.
- A buyer will either try to negotiate for less than the list price or pay the asking price.
- You agree to the swap, and your NFT is transferred automatically to the new owner.
- 100 Solana is sent to your designated digital wallet minus a small trading fee.
2. Swapping (Exchanging) One NFT Directly For Another NFT
For example
You own an NFT.
You find another NFT that you like more than yours.
Rather than sell your NFT on a traditional NFT marketplace, you decide to swap it directly (peer-to-peer) with someone else.
The buyer and seller decide on the value of the NFTs and swap.
3. Multi-Swap
There is a third option that NFT swappers use.
Sometimes one NFT owner will have an NFT that is worth more than the NFT they want to swap.
NFT platforms that allow swapping, also allow buyers and sellers to add multiple NFTs in one swap, as well as cryptocurrency.
For example
You own an NFT worth $1000.
You like an NFT that is worth $500.
You agree with the buyer to accept their $500 NFT as well as $500 in cryptocurrency.
Some trades also involve one buyer offering three cheap NFTs in exchange for the one NFT that is more valuable.
NFT swapping platforms allow the buyer and the seller to agree on the terms and also combinations.
Why Do Investors Want To Trade One NFT For Another Or Swap?
Some NFT investors might like the NFT collection they own but would like to upgrade to a more valuable or desirable trait.
Other NFT investors decide they don’t like their NFT anymore and want to swap into a new NFT collection. They find an NFT investor that wishes to do the same. They both swap into their preferred collection. It is a win/win for both parties.
What Are The Advantages Of NFT Swapping?
Traditional NFT marketplaces register a new owner of an NFT when someone completes a sale using their platform. Royalties are owned by the seller.
On NFT swap sites, the sellers NFT is not registered as a new sale. It is simply recorded that the NFT has moved into a new digital wallet.
NFT investors are always moving NFTs from one wallet to another. This makes it near impossible for the NFT creator to know if the NFT was simply moved by the original owner to another wallet they own, or it was sold to a new investor.
Using an NFT swap service, a seller can circumnavigate the royalty fees (10% of the sale price). This is because, at present, royalties are not programmed into smart contracts, making it very difficult to track payments.
Some NTF swapping platforms allow the seller/buyer to choose if they wish to pay zero, half, or full royalty fees. As you can imagine no one ever pays the royalties.
How Much Can You Save Using An NFT Swapping Service?
It can really add up, especially with active NFT traders.
If an NFT sells for $10,000, using a swap platform could save you $1,000!
Important Things To Know With NFT Swapping
Now you know what NFT swapping is, how do you ensure you get the correct value when you decide to swap?
Firstly, be aware there are professional NFT hunters in every social group. They may try to private message you and convince you that the swap they propose is a good one.
DYOR. This stands for do you own research.
Before you swap your NFT, it is important to know its true market value.
It is worth noting that some NFT traders may like a particular trait and could offer you above the market value as they are desperate to add your NFT to their collection.
This rarely happens.
How To Research The Value Of Your NFT
- Join the NFT projects discord and social groups. If you want to swap an NFT you own for another, you should join both NFT collections’ social groups.
- Most NFT discord groups have swap or sale channels. You can post a picture of your NFT in these rooms and ask other investors what they think it is worth. It is also an effective way to find a potential buyer.
- Visit all the NFT marketplaces that have both NFT collections for sale. Look for current and past NFTs sales with similar rarity or traits. You will soon be able to estimate the value of your NFT.
- If you have trusted friends who have been in the NFT world for some time, message them and ask them to help you value and swap your NFT.
A word of warning (NFT swap scams)
Sadly, many NFT investors have been scammed, trying to swap their NFTs.
This is the most common NFT swap scam
Someone messages you to ask to swap your NFT. They might even offer above-market value to entice you.
You agree on which escrow or NFT swap platform to use. As you are trying to swap, the seller has technical difficulties and can’t get the system to work.
Sometimes they even bring in a mediator who “works” for the official NFT collection team. It is a scam. They will convince you to use another swap system, and you will lose your NFT.
The solution is to either refuse to swap with them or insist they use the official site. If the deal is too good to be true, it probably is!
Another less common scam is the buyer offers you an NFT in a collection, but it is an outlawed NFT.
You might not notice that you are swapping for an NFT that is not part of the current official collection, and you purchase the near-worthless old NFT.
We have created a list of swap platforms in our NFT swap resource directory. Visit it today.
We have written more articles on NFT scams and how to avoid them. Visit our NFT articles section to learn more.
View our 60 plus NFT categories resource directory here.
Would you like to learn where to spend your cryptocurrency, or learn more about this fascinating topic? Visit us today at spendingcrypto.com
Author:
Jonathan Titley
Founder:
spendingcrypto.com
Co-founder:
https://fomomagazine.io
(NFT industry magazine and project reviews)
Co-founder:
https://nftave.io
(NFT marketplace and educational academy)
