Every new innovation comes with a slew of setbacks.
When non-fungible tokens, or NFTs, first came on the scene in 2014, there were both technical limitations and wariness of consumers tied to them.
Now NFTs — units of different types of unique data stored as digital assets — are becoming more ubiquitous. The process to create NFTs is more refined, and more and more people are not just familiar with them but investing in them.
Enter NFT gas. Gas fees related to creating (“minting” in NFT language) and using NFTs have complicated the process, especially for artists or other creators minting their work for sale in NFT form.
Minting NFTs isn’t always cheap and can be a hefty cost. We go into detail with this article:
But now, let’s take a closer look at NFT gas fees — and how creators and consumers can potentially avoid getting ripped off. Also, most recently, a big player in the game has introduced a way to defer mining fees to the buyer. See below for the details!
What are NFTs?
If you are familiar with the digital currency bitcoin, you are already familiar with NFTs. Bitcoins are fungible — they’re digital currency that is interchangeable and the same, just like a penny or a dollar bill.
On the other side, NFTs are non-fungible tokens, meaning they are unique digital assets in a way that various types of bitcoins are not.
Hypothetically, anything can be an NFT — a work of art, videos, photographs, music & concert tickets, audio files, movies, and even memes that have made serious money.
Basically, if it can be created uniquely and digitally, it can be an NFT.
Though people can own copies of digital items, the owner of the NFT is the only owner of the original file and has a license to use it (but not copyright), just as the owner of a unique physical painting is the only owner of that painting.
If you want better insight on copyright, you will want to read this article, “Is NFT Art Protected by Copyright Law? (How To Get Sued).”
NFTs are stored on blockchains, a kind of digital ledger that confirms a particular digital item is unique.
Blockchains can be traded and sold, just like physical items. As NFTs became more prominent, so did different types of blockchain networks created by financial platforms to manage NFTs created by NFT platform companies.
If you have yet to get your first wallet or collect an NFT, for that matter, you will need to read this guide to help you along this fun journey!
Pumping NFT Gas
Gas fees are another significant difference between NFTs and Bitcoin, and other currencies.
Creating an NFT is called mining. Those who make NFTs, such as artists or general content creators, are called miners.
While there are NFT platforms (or “wallets”) that provide NFT creations for free, most charge creators fees to create them — which has become known as gas fees; if you want to learn more about wallets, then check out the top 9 picks here.
Users are charged gas fees by BNFT trading platforms in order to use digital energy to validate blockchain transactions simply.
Gas fees are not created equal. Sometimes they go up and down depending on when during the day the NFT is created. Many platforms have started charging gas fees for not just minting an NFT but separate fees related to buying and selling them.
Across NFT platforms from Rarible to Foundation, the amount of gas needed to create an NFT often depends on how fast creators need it to be made and how large the contract is.
And since there is a slew of different digital wallets to choose from when creating NFTs, there can be separate gas conversion fees when going between various forms of currency used on individual trading platforms.
For example, the Ethereum blockchain uses its own cryptocurrency called Ether. The Worldwide Asset Exchange blockchain calls its currency WAX. On top of that, each network has different terms for their unit of gas.
Ethereum’s gas unit is called Gwei, and gas fees on Ethereum are paid with Ether.
Yes, it’s complicated, but NFT blockchains see gas as vital to their business. Since there are gas limits, spammers can’t manipulate the network to take advantage of the minting process and computational energy.
How Gas Impacts NFT Creators
Since gas prices wildly fluctuate, fees have the potential to impact the actual art or other work being created.
Sometimes when prices are high, artists hesitate to create work and mint it for an eager marketplace. In addition, artists and buyers will hold off on buying NFT works when prices are high.
Creators may even try to factor in the gas cost into their work. That means NFTs can come with higher price tags that don’t reflect their actual worth, just to make it more affordable.
That impacts collectors, who end up with NFTs with highly inflated worth. On the flip side, artists may overcompensate for hefty gas fees by overcharging.
How Not to Get Ripped Off by Gas Fees
There are a couple of things NFT buyers can do to try to avoid high gas fees.
Since gas prices are adjusted based on a particular blockchain’s activity at any given time, buyers can do a bit of homework about traffic times on the networks they’re purchasing NFTs through.
Usually, transactions, and therefore gas fees, can get sky high on different days and times.
For example, Ethereum gas fees have been usually lowest on the weekend when activity is lowest. If you’re not in a rush with a transaction, it literally pays to wait until a lower activity day.
Tech-savvy NFT investors can also look into certain sidechains that are separate blockchains with a blockchain that creates a faster — and cheaper — network for both creators and buyers.
Other popular approaches to lowering gas fees include combining related NFT transactions into one transaction and platform since gas fees can vary based on the transaction type.
You can also consider ditching an expensive blockchain for one that either has lower NFT gas fees or no gas fees. However, if you are new to NFT art, then you will want to start here.
How to Mint NFTs for Free
Don’t have enough ETH or crypto to get your NFTs minted? Well, no worries. Mega platform Rarible launched a new process called “Lazy Minting,” where you can market your pre-minted NFT on their website, and when a buyer decides to make a purchase, the NFT will then be minted, and the fees will be added to the purchase price.
This new deferred payment process is a game-changer, and those of us with little to no crypto can begin to create and sell NFTs!
For more info on this process check out:
The Future of Gas
As NFTs continue to rise in popularity, expect related gas fees to adjust as well. More blockchains mean more competition and, often, lower fees.
Certain gas fees that exist today may soon not exist at all. That’s good news for both artists and NFT investors. Stay tuned!
And speaking of the future…it looks bright after reading this article: 10 Reasons Why NFTs Will Change the World. To the moon my friends.