Selling crypto art can come with huge hidden fees, leading some people to lose hundreds of dollars
NFTsales have generated nearly $500 million in the past month alone.
crypto artpiece sold for nearly $70 million on Thursday.
- NFT buyers say the process can be confusing and include multiple levels of hidden fees.
Over the past few months, digital assets known as non-fungible tokens, or NFTs, have picked up steam as celebrities, artists, and investors generated millions of dollars selling them.
In the past month alone, top NFT platforms have sold nearly $500 million in digital assets, according to CryptoSlam. On Thursday, digital artist Mike Winkelmann - more commonly known as
Creators and buyers alike have seen significant profit from
The $6.6 million piece was the highest digital token sale at the time, but was upstaged by Beeple's $70 million sale weeks later.
Read more: Here are 4 NFT startups transforming the way we buy art and sports memorabilia
Many are trying their hand at buying or selling NFTs amid the headline-grabbing sale prices.
A senior content strategist at Kapwing, a platform catered to digital storytelling, tried his hand at buying and selling NFTs and told Insider the process is not nearly as simple as it seems.
"It's like the wild west," Robert Martin told Insider after he lost over $200 in gas fees.
What is a gas fee?
The primary currencies used on NFT trading platforms include Ether, WAX, and Flow. On most NFT trading platforms, users are responsible for paying for the computing energy required to process and validate transactions on the blockchain. The gas fees fluctuate depending on the time of day.
Martin said he bought an NFT for about $30 worth of ethereum on Rarible and ended up losing over $200 on the NFT, even after a buyer offered over three times the token's original price less than 24 hours after he bought it.
While additional fees fluctuate between sites, many popular sites charge users a gas fee for minting a token, as well as a fee for selling and buying. Most platforms also require digital wallets, so users must take into account conversion fees between different forms of ether.
Martin said he was taken by surprise when Rainbow Wallet charged him nearly $80 to convert wrapped ether (WETH) into regular ether (ETH).
"It was on me for receiving the WETH, but it's [was] also hard to tell whether I was charged or the sender was charged," Martin told Insider.
Martin said, as a new user, the gas fees were not readily apparent to him and what seemed like a good deal at the time - a sale for nearly three times its original price in under a day - ended up costing him far more than his original purchase price.
On Martin's digital wallet, Rainbow Wallet, he said the fees were in the fine print, but it would have been helpful for him if there was an alert or notification before he made the purchase regarding the fee.
"[Gas fees] could pose a risk to new users," Martin told Insider. "There needs to be a lot more education out there. It seems like most of the resources are catered to people who are already involved in the crypto world."
Another NFT artist, known only by his Twitter handle @SHL0MS, told Insider he wrote off the gas fees when he minted his first NFT, largely as an experiment.
"The space is moving so quickly that there's a lot of pressure for artists to use it to their advantage," @SHL0MS told Insider. "There's pressure to start minting and buying NFTs, but for me it was about being in a place where I was financially comfortable paying the fees without expecting anything in return."
@SHL0MS started by minting a single transparent pixel on Rarible a few months ago, a piece that cost him over $200 in gas fees, but sold for $300. Last week, @SHL0MS sold a piece for about $17,000.
NFTs could represent the future of the art world
Rodriguez-Fraile told Insider he knew Beeple's work would someday be valuable, but he had no idea it would rise from $67,00 to $6.6 million in a matter of months.
"I had no intention of being a flipper, but I also do not like to lose value," Rodriguez-Fraile told Insider. "I had a higher offer for another Beeple piece, but I kept it for its historical value. The only reason I sold 'Crossroads' was that I thought it could act as an important catalyst in realizing the value of digital art."
The art collector told Insider creators are pushing the limits of art. When he first met Beeple, he realized he would be a symbol for the movement.
"This will become the art world over time," Rodriguez-Fraile told Insider. "For the first time we can mathematically provenance, history, and everything around the movements of a piece of art. It's more desirable than a physical piece and gives collectors a closer connection to the artist."
John Crain, SuperRare's CEO, told Insider the company is working to develop new income streams for artists, allowing them to connect directly with their fans on the site.
Nifty Gateway co-founder Griffin Cock Foster compared the development of NFTs to the beginning of the internet - a system which started off as a type of "wild west," a way to make connectivity and work easier, but quickly became enmeshed in day-to-day life and a world unto itself.
"It'll be interesting to see a world where everyone is an art collector," Griffin Cock Foster told Insider. "I think we're very much in the first inning of NFTs taking off. It's a very powerful and transformative technology and we don't even know what it might lead to further down the road."
There are still many barriers to the NFT space
Rodriguez-Fraile said NFTs still have a long way to go before they can be more accessible to the general public. In particular, platforms need to work on developing a better user experience, in order to avoid confusion on gas fees and make NFTs more accessible to users outside of the crypto community.
Griffin and Duncan Cock Foster told Insider Nifty Gateway is working to bring NFTs to the general public through simplifying their user experience. The site is one of the only platforms that allows users to purchase NFTs using their credit cards instead of a
The process allows users to avoid additional fees. Many platforms are also working to alleviate their environmental impact, through streamlining use of the blockchain.
For NFT buyers, the site can also impact a token's value, according to Rodriguez-Fraile. As more platforms continue to crowd the space, the art collector said he places most of his trust in highly curated sites like SuperRare and Nifty Gateway, because they are more selective about the artists they work with. For users looking to start out creating NFTs, community-owned sites like Rarible and Mintable are more accessible for new creators.
Martin told Insider he's not sure whether NFTs are here to stay or whether they're operating under a bubble, but he plans on buying more.
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