What Is OpenSea? What Is OpenSea? Complete Beginner’s Guide

Are you looking for the next moonshot Opensea NFT? The next CryptoPunk or BoredApe you can flip for 100x or more? Well the truth of the matter is they are incredibly hard to find. I’m going to give you the complete 101 guide to using this marketplace, from finding gems to trading them and even minting your collection. I also have a few of my tips and tricks that you definitely don’t want to miss.

What are NFTs

Right, you might be wondering what the heck this NFT mania is all about, and if you’re still trying to wrap your head around what NFTs are, here’s a quick TLDR. The first instance of a non-fungible token emerged in 2012 with the phenomenon of colored coins which were unique digital assets issued initially on the bitcoin blockchain.

Since then, several new forms of NFTs have come to life, and this is primarily thanks to the many developments happening on the Ethereum blockchain from 2015 onwards. In the same way that Ethereum introduced the now universally recognized ERC20 token standard for fungible tokens, it also introduced the ERC721 standard specifically for non-fungible tokens.

The revolutionary nature of non-fungible tokens stems from the fact that when you buy an NFT, it is yours to control as you see fit. Now, I admit I’ve recently been very tempted to hang up one of those mighty punks on my wall. Now, NFTs open sea can perform a plethora of different functions, and some of the most salient examples of NFTs include digital art, virtual reality items such as plots of virtual land, in-game items, music, sports, tweets, crypto domain names, ownership records for physical assets, and more.

Not only that but NFTs can also be programmed so that whenever an artist creates a piece of art and mints it as an NFT in order to sell it, they can get a cut of the proceeds through a mechanism known as royalties.

What is Opensea?

OpenSea was founded in 2017 by Alex Atala and Devin Finzer, two Ivy League computer scientists and blockchain enthusiasts. Alex, who is now the CTO of the company, previously built cybersecurity products at Palantir, whereas CEO Devin was a growth engineer at Pinterest.

This superstar duo and their team are currently based in New York City, and since its very early days, OpenSeas has sparked the interest of various private and top-tier VC investors in the NFT space. The list here is quite extensive, but here’s the TLDR. In January of 2018, OpenSea raised $120,000 in a seed round led by Y Combinator, a US-based seed accelerator operating since 2005 with an impressive investment track record, including companies such as Stripe, Airbnb, Dropbox, Reddit, and Coinbase.

In May 2018 and November 2019, respectively, OpenSea crypto raised an additional $2 million in a second seed round led by heavyweight VC funds One Confirmation, Animoca Brands, Blockchain Capital, and Coinbase Ventures, among a few others. But most notable of all were the $23 million Series A and the $100 million Series B funding rounds led by Andreas and Horowitz in March and July of this year, an investment that shot OpenSea’s valuation up to a staggering $1.5 billion. Not too shabby.

Now OpenSea’s incredibly rapid ascent also saw multiple private investors wanting in on the action as well. These included some well-known celebs and sports stars such as Ashton Kutcher and NBA All-Star Kevin Durant.

Openseas Explosive Growth

Many have argued that OpenSea’s skyrocketing success principally originates from the excitement generated by the $69 million sale of Beeple’s Every Day’s NFT. I am rather inclined to agree, and this is primarily because Beeple’s NFT sales did, in fact, drive a lot of attention away from the mainstream cryptocurrency market and, to some extent, legitimized NFTs as an entirely novel, admittedly strange, but magical asset class in the world of crypto.

When the demand for non-fungible tokens started heating up earlier this year, OpenSea was first on the scene and has since become an integral part of the boom and overall adoption of the NFT ecosystem. Compared with the other NFT marketplaces available, such as Rarible, Nifty Gateway, or Binance NFT, for instance, OpenSea sits comfortably at the top. In fact, since its launch four years ago, OpenSea has seen exponential growth in terms of user adoption, NFT listings, and trading volume. So here are some stats for you.

Currently, it has over 300,000 active users, over 1 million collections, more than 34 million NFTs, and billions of dollars in cumulative volume traded. On OpenSea, users can also create their own customizable NFT marketplaces, set their fees for the items they wish to sell, and initiate NFT auctions, which people can participate in with several different cryptocurrencies.

You can think of OpenSea as a marketplace similar in many ways to eBay in that it allows you to scroll through a wide selection of rare NFT ocean items, digital artists, and collections and participate in any ongoing auctions.

Unlike eBay where transactions are based on buyer and seller reputation, transactions on OpenSea purely rely on blockchain technology and smart contracts. This, in turn, allows users to avoid having to go through all those annoying bottlenecks that come with using a centralized third-party escrow.

Furthermore, all transactions on OpenSea are atomic, meaning that either the whole transaction goes through and the buyer gets the NFT or the smart contract enabling that transaction is reverted completely and nothing happens at all. To better explain this, let’s take eBay as an example. On eBay, a buyer who purchases an item needs to pay the seller before they eventually ship the goods. In contrast, on OpenSea, both the buyer and the seller make a binding agreement to transact at a specific price.

If, for whatever reason, the deal goes south, it’s business as usual. The seller keeps the NFT and the buyer isn’t left holding the bag after all. OpenSea provides its NFT marketplace infrastructure free of charge, and absolutely anyone can make use of it, but it does, however, take a 2.5% fee cut from any transactions or sales.

This fee is pretty low especially when compared to other NFT marketplaces out there. Nifty Gateway, for instance, takes a 5% cut from any sale on its marketplace. If that’s not pricey, there are some other NFT platforms out there that take as much as 7.5% per sale, which, in my eyes, is way too high.

How does opensea work

Now, when it comes to interacting with OpenSea, there are a few ways to go about it. Your best bet is to simply fire up your search engine of choice on your desktop, navigate to OpenSea.io, and engage with its NFT platform directly. For those of you who are always on the move or simply prefer using your phones, OpenSea token has also recently released its official app, available in both iOS and Android.

But before we progress any further, I must note that any interaction with OpenSea will require that you download an Ethereum wallet with all of these supported. As with many other DeFi protocols and NFT dApps, OpenSea’s marketplace is non-custodial, meaning that no central authority controls the sales or the NFT assets listed on its platform. This also means that there are no sign up or KYC procedures that you need to undergo a much smoother user experience overall. Now, I know if it’s your first time visiting OpenSea, it can be a bit overwhelming, but there’s no need to fret.

When you’re on the OpenSea home page, click Connect Wallet if you’re looking to trade, sign in with your MetaMask wallet, and that’s it. Your OpenSea account is ready to go. On the home page you’ll see an introductory dashboard to the OpenSea marketplace. Here is where you’ll be able to search for your favorite NFT collections and artists, check out market statistics such as trading activity and rankings, create your collection, and even mint your first non-fungible token.

Now, a quick fun fact: here is also where you’ll be able to see what NFTs other holders have in their accounts by simply popping in their Ethereum address in the search bar. For instance, here’s a quick sneak peek into the OpenSea account of NBA superstar Stephen Curry. Pretty cool, right? Now, if you already know what you’re looking for, you can type in the title of the single NFT item or of the entire collection up there in the search bar.

This page will also display all the latest sale prices and the names of the individual NFTs or collections that have been selling as of late. All the top collections and trending items will default to the top spot of the search results. Still, you can refine your search even further by scrolling through the available sorting options such as recently listed, recently created, low to high prices, high to low prices, and so on. Now, just a quick pro tip on this: spotting multiple and repeated sales from the same collection is a great way to understand which items are currently hot and trending.

But remember that the most important part when it comes to investing in NFTs is thoroughly researching the project, its founding team, its roadmap, and ultimately being able to gauge its community strength. In fact, compared with Bitcoin and Ethereum, NFTs are a completely different animal, so make sure you always do your proper due diligence before you unquestioningly ape into the first one you see. Because, after all, all that glitters is not gold.

Properties of Collections

Now, when you look up a collection on OpenSea, you’ll see its name pop up in the middle of the page and a brief description outlining the collection. Below that, OpenSea will specify the number of items within the collection, the number of individual owners, the floor price, and the cumulative volume traded. But here’s a second pro tip: as a rule of thumb, when you’re on the lookout for up-and-coming projects, you ideally want to seek out those with the lowest supply of items within their collection, the highest number of owners and a rapidly increasing trading volume.

This is because collections with a high supply of NFTs and a low number of holders generally tend to produce a stagnant market. And if the rules of supply and demand have taught us anything at all, when supply is low, and demand is high, the value and scarcity of an asset can only but naturally appreciate. Just something to keep in mind. When it comes to researching NFTs on OpenSea there are several filters you can make use of. These filters vary in status, price range, collections, change, categories, and sales. So, in the status section, you’ll be able to search for NFTs that are available for purchase immediately by clicking on the buy now button.

NFTs that are currently being auctioned by clicking on the on auction button. New listings on new items that already have offers on them by clicking on the as offers button. In the price section you’ll be able to look up a series of NFTs within a specific price range in either US dollar terms or ETH. In the collections tab, you’ll be able to browse through an extensive list of all the verified collections available, which will be highlighted with a blue check mark.

Once a collection has received a considerable amount of trading volume or has hit a predetermined number of sales, the OpenSea team will verify said collection and give it a stamp of approval as a legitimate and authenticated collection. Think of this as a Twitter or Instagram blue check mark. This also constitutes a great tool when researching an NFT project as it increases confidence in the collection itself and, by default, in the NFTs contained within it.

This is also done in order to prevent scammers from creating a fake collection based on the original one and from stealing your hard-earned crypto. And on that point you probably won’t be that surprised to know that OpenSea is filled to the brim with bad actors trying to trick you into buying forged or unauthenticated NFTs. Unfortunately quite a regular occurrence.

So please be aware of this and always make sure that the NFT you’re buying is from a collection with a blue check mark next to it or has been officially verified by the creators themselves because otherwise, your JPEG really could be worthless.

Buying on Opensea

The majority of the NFTs listed on OpenSea live on the Ethereum blockchain. Still, curiosity might also tempt you to explore some of the other NFTs that exist on either the Polygon or Clayton blockchains. This can be done by simply filtering through the available chains in the chain section. Now, you’ll also most likely be aware of the incredibly high gas fees on the Ethereum blockchain.

During times of high network congestion these can make buying and selling NFTs on OpenSea ridiculously expensive. So, in order to counter this pressing issue and render trading more sustainable, OpenSea has recently added support for Polygon, formerly Matic.

This is a layer 2 scaling solution built on the Ethereum blockchain. OpenSea’s integration with Polygon effectively allows for a more affordable trading experience, as buying and selling through Polygon is pretty much gas-free, and transactions are nearly instant. Anyways, suppose you’re looking for NFTs in the art, music, domain name, trading card, or virtual reality verticals on OpenSea.

In that case, you can filter these through the numerous categories available on the left-hand side of the dashboard. When it comes to actually buying an NFT on OpenSea, the first thing you’ll want to make sure of is that you have enough ETH in your metamask.

When you’ve found the NFT you wish to purchase you can either acquire it by clicking buy now or by making the seller an offer for it. Alternatively, if it’s in the auction, you can join in on the race and place your bid by clicking place bid. Auctions on OpenSea generally follow two separate bidding structures, with these being English auctions, which tend to happen on a more regular basis, and Dutch auctions.

The latter instead revolves around selling with a declining purchase model where the price for the NFT starts higher than its fair market value and progressively falls until a buyer steps in to purchase. Sellers implementing an English auction structure can also set a reserve price, meaning that if the seller doesn’t receive any bids equal to or greater than the reserve price they’ve set, the auction will simply end without a sale.

Now, the quickest way to get your hands on an NFT is through the buy now option, and all you need do is click buy now, adjust the transaction fee in your Metamask wallet, sign the transaction, and purchase that NFT. Once the transaction has gone through successfully, your purchase will automatically appear in your wallet, and your NFT will be immediately displayed under the profile section of your account on OpenSea.

Listing on Opensea

Now, suppose you’re an artist, musician, social media influencer, or content creator looking to explore the magical NFT world. In that case, you can do so by minting your own personal NFT or NFT bundle directly on OpenSea. For instance, say you’re the next Michelangelo, and you’ve recently produced the most exquisite piece of fine art.

You’ve also learned from your fellow artist friends about the many lucrative opportunities offered by NFTs, so you decide to jump on board the NFT bandwagon and mint your first NFT on OpenSea. If you’re a seasoned NFT artist, feel free to skip this section, but here’s how you can create your own NFT and list it on OpenSea. Setting up your collection and minting your first NFT on OpenSea is pretty straightforward. First, go to opensea.io, sign in with your Metamask wallet, go to your profile icon, select my Collections, and then click Create a Collection.

At this stage, you’ll be prompted to add your collection’s name and a description, upload an image logo, and add links to your various social media accounts, such as Twitter, Discord, and Instagram. Now, the following step is important because you can also set your preferred royalty fees to a percentage of your choosing. Royalties essentially enable you, the artist or creator, to collect a fee whenever a user resells an item you created, which, in a sense, acts as a sort of ongoing affiliate mechanism.

OpenSea, by default, recommends that you set a 2.5% fee on your royalties, but that’s entirely up to you. After all, this is your work, and only you should be able to decide how much commission you would like to make in secondary sales. Then, pick the blockchain you want your NFT to live on, with the two current options available being Ethereum and Polygon. Select the cryptocurrency you would like to be paid in from your sales, choose your favorite display theme for your items, click create, and voila, that’s when you’re done with your collection.

So, now that you’ve set up your collection return to OpenSea’s main dashboard, click Create, and sign in with your Metamask wallet once again. Now click Create a new Item or simply drag and drop your desired file or set of files into the appropriate drop box. Files can be anything from images, screenshots, videos, audio, or 3d models, and the types of files supported here include jpegs, png, gifs, mp3s, mp4s, and many more.

You’ll then need to name your NFT item and link it to the collection that you’ve just created. Once you’ve done this, you can add properties, levels, and stats to your individual NFT or collection. This is to highlight any defining characteristics of your collectible and provide buyers with an additional description of your item. Select the blockchain you would like to mint your NFT on and click Create.

Bravo, you’ve just minted your first NFT. Now, to sell your newly minted NFT, just click the sell button in the top right corner and select your desired asking price. OpenSea will not charge you for minting, but for the first NFT you sell on its marketplace, you will need to pay an Ethereum gas fee.

Valuing NFTs on Opensea

This is purely to help you understand how to read the characteristics as well as the defining elements of any collection. Every collection is inherently unique in its own way. Still, the process that goes into analyzing the qualities and recognizing the rarity of NFTs on the OpenSea marketplace is structured and universal. I do have to say, however, that I am not affiliated with these projects in any way, and these are purely for illustrative purposes.

As it stands today, two of the most popular collections on OpenSea are the OG CryptoPunks from 2017 and the Board 8 Yacht Club. A phenomenal collection that has been turning heads ever since it was first minted earlier in May of this year. Both the CryptoPunks and the Board 8 Yacht Club are collections made up of 10,000 unique AI-generated NFT pieces, with each NFT holding its individual qualities, elements of rarity, and authentic character.

Similar to Bitcoin and Ethereum for fungible tokens, these collections are commonly referred to as the blue-chip projects in the NFT space. As you might have guessed, they represent some of the most sought-after non-fungible tokens, with all-time trading volumes of 520,000 ETH for punks and 170,000 ETH for apes.

So let’s have a look at some CryptoPunks on OpenSea, shall we? Currently, the floor or the minimum acceptable selling price for these funny-looking pixels is pretty much non-existent due to their incredibly high prices. The current floor for CryptoPunks on the Lava Labs marketplace, the tech company that created and launched the CryptoPunks back in 2017, is at 103 ETH or around $300,000. Let’s just take CryptoPunk number 2770 as an example here.

This particular NFT portrays a pixelated punk with a few unique defining features, such as a cool mohawk, a beard, and a cigarette. These are all elements that, in the world of CryptoPunks, are considered to be reasonably rare. To help gauge the rarity of an NFT, OpenSea outlines the characteristics and the main qualities of the asset in its properties section. Each property shows a percentage of rarity and indicates the recurrence of a specific trait throughout the collection. Thus, the lower the rate of a particular property or trait, the higher the rarity and, therefore, the value of the asset.

Below the property section OpenSea will also generally provide a brief description outlining the main features of the collection or project and will also insert the relevant links to the collection’s official website and social media channels for further reference. It also might be worth your while to check out the details of the individual NFT in the details section. This is where you’ll be able to verify the authenticity of the NFT listed, double-check its contract address, and basically confirm that the NFT you’re looking at actually belongs to a stated collection. Okay, so that’s punks. On the more contemporary spectrum, though, we have the BoardApe Yacht Club.

This particular BoardApe, for instance, BoardApe number 3749, sold just over three weeks ago for a mind-blowing sum of 740 ETH. I know absolute madness. But the price does, in fact, reflect its ultimate rarity, and if you’re a BoardApe Yacht Club fanatic, you could even go as far as to say that its price is indeed justified. For greater context, the rarity of this BoardApe can be deduced from its superbly unique and scarce properties, such as the laser eyes trait, which only has a recurrence of 0.69% across the entire collection of 10,000. Or how about its solid gold fur, a rare trait that is only present in 0.46% of NFTs within the collection?

The methodology applied here to CryptoPunks and BoardApes is entirely transferable to all the other NFT collections on OpenSea. And while OpenSea’s properties section does indeed offer users some additional insights into the rarity of a specific NFT within its broader collection, the fact of the matter is that rarity per se remains one of the hardest elements to identify within a non-fungible token collection. Also, while OpenSea can potentially allow you to spot a good project early on with some promising metrics, the majority of the work when it comes to NFT investing is done outside of OpenSea entirely.

Conclusion

Now, I will say, however, that the NFT market seems to have calmed down for the time being, and this is understandable given the massive surge that it’s enjoyed thus far throughout 2021. The thing about NFTs that has me particularly intrigued is the sheer magnitude of their growing ecosystem, so I can most definitely foresee a long-term growth scenario playing out for peer-to-peer NFT marketplaces like OpenSea.

While it’s true that competition in the marketplace environment is ramping up fast, I don’t really expect any other entity to take the crown away from OpenSea, at least not for the time being. I also really liked how the marketplace strives to cater to both buyers and collectors as well as artists and creators. They’ve also provided the tools to allow anyone to mint NFTs seamlessly, create their customizable marketplaces, and set their preferred royalty percentages.