When an NFT (Non-Fungible Token) is sold, several things typically happen:
- Ownership Transfer: The ownership of the NFT is transferred from the seller to the buyer. This transfer is recorded on the blockchain, which serves as a decentralized ledger that tracks the ownership and transaction history of the NFT.
- Smart Contract Execution: NFT transactions are often facilitated by smart contracts, which are self-executing contracts with the terms of the agreement written into code. The smart contract ensures that the transfer of ownership occurs only when the payment is successfully completed. Once the payment is verified, the smart contract automatically executes the transfer of the NFT to the buyer’s wallet.
- Payment Processing: The buyer typically pays the seller in cryptocurrency, which is the most common form of payment for NFTs. The specific cryptocurrency accepted for the transaction may depend on the platform or marketplace where the NFT is being sold. The payment is usually made using a digital wallet connected to the buyer’s account.
- Transaction Fees: There are usually transaction fees associated with buying and selling NFTs. These fees can vary depending on the platform or marketplace being used. The fees often include gas fees, which are required to process and validate transactions on the blockchain. The amount of fees can depend on the network congestion and the complexity of the transaction.
- Metadata and URI Update: NFTs are typically associated with metadata, which includes information about the artwork, collectible, or digital asset represented by the NFT. When an NFT is sold, the metadata might be updated to reflect the new owner’s information. Additionally, the URI (Uniform Resource Identifier) associated with the NFT may be updated to point to any changes in the location of the asset or additional information about the new ownership.
- Marketplaces and Royalties: Some NFT marketplaces include features that enable creators to earn royalties on secondary sales. This means that if the NFT is resold in the future, the original creator of the NFT may receive a percentage of the sale price. The smart contract governing the NFT transaction may automatically distribute these royalties to the creator’s wallet.
It’s important to note that the specific details and processes involved in selling NFTs can vary depending on the platform, marketplace, and blockchain network used. Different platforms may have their own unique processes and rules for buying and selling NFTs.