With NFTs exploding in popularity over the last few years, you may be thinking of creating your own and wondering what the true costs are. Let’s break it down.
The NFT market exploded from $300 million to $24.9 billion in 2021, and by now, it’s safe to say that NFTs have far outgrown their “meme phenomenon” status. The cost of creating one can range widely depending on the blockchain and various associated fees that we will cover in more detail later in this article.
What is “minting” an NFT?
The process of creating NFTs is referred to as minting, a term that references the age-old method of manufacturing physical coins from different blends of metal. NFT minting, however, is purely digital. It’s an act of converting data into a digital asset and permanently recording it on a blockchain. Once an NFT is minted, it cannot be modified or deleted.
Today, the average cost of minting an NFT on Ethereum—considered to be one of the most expensive blockchains—is around 16 to 20 gwei1, or $0.38 to $0.46 USD at the time of writing. However, as we will discuss below, there are many factors that affect this, and at times, the average cost can vary from being free, to as high as $1000. This is called Gas—a fee you pay for using the blockchain. You can easily check the average price of Ethereum Gas on a free site called Etherscan. Flow, Dapper’s native blockchain that was created specifically for NFTs, is much cheaper. Gas fee on Flow is only $0.01 USD, but it is often waived as part of a promotion.
With such a big difference in cost, you may be asking: how are these fees calculated? It seems that blockchain choice really affects the fees, so let’s investigate further.
Understanding the cost of minting NFTs
Always minting NFTs for free is not realistic once you consider the operational cost of running and securing a blockchain—a responsibility shared among all blockchain users. That’s why fees are such an important part of the crypto ecosystem. Here are the main reasons minting NFTs costs money:
- Blockchain security: All blockchains have validators or miners who check the details of every transaction, including the transactions involved in creating an NFT. Depending on the way the validation system is set up, which can vary by blockchain, this work can require a significant amount of computing energy—and this energy costs money.
- Network congestion: As networks become more congested and many users try to use the blockchain at once, more energy is needed to validate these transactions. As a result, the network slows down and becomes more expensive to use. This is similar to Uber charging a “Surge” charge when traffic is dense or there aren’t enough cars to carry all the passengers. As a general rule, the busier the network, the higher the fees.
- Marketplace charges: Marketplaces have costs associated with keeping the market online and safe for use. Markets may also charge a fee for creating your secured account, as well as for listing each NFT for sale.
In summary, here are specific fees that you might incur when minting your NFTs:
- Gas fee: partially burned and partially paid to the validators; this fee is volatile and will go up if more people start using the blockchain.
- Account fees: paid to a marketplace for creating an account.
- Listing fee: paid to a marketplace for listing an NFT for sale.
How can NFT minting costs be reduced?
There are a couple strategies you can use to reduce your upfront costs when minting NFTs:
One option is Lazy Minting which is a process of creating the NFT and putting it up for sale while deferring the fees until after the sale is complete. The fees come out of the buyer’s total, not the seller’s total. So if you sell an NFT for $500, you would still need to deduct the gas fees, the market fees, and the account fees from your profits.
Picking a more economical blockchain
Another option is to create your NFTs on a less expensive blockchain like Flow. Flow is focused on reducing energy consumption and is more purpose-built for NFTs. In fact, minting an NFT on FLOW uses less energy than a single Google Search or Instagram Post.
Understanding how gas fees are calculated
As mentioned earlier, the Gas fee covers the price of energy that’s used to perform and validate a blockchain transaction. Gas is usually charged in “native tokens.” Every blockchain has its own “native token” or base accounting unit that’s used for payments and other transactions. Ethereum’s native token is Ether (ETH) or GWEI—one-millionth of an Ether. The Flow blockchain’s native token is FLOW. The price of native tokens like Ether or FLOW in USD fluctuates with the market, just like any other currency.
To better understand how gas fees are calculated, let’s compare two NFT-friendly blockchains: Ethereum and Flow.
Get started with minting NFTs
The cost to create an NFT really depends on the blockchain you decide to go with. It can get pricey, especially if you count the work that goes into designing and programming NFTs, but there are ways to save costs. You can try to find a blockchain with lower Gas fees or use a strategy like “Lazy Minting” to defer paying fees until you sell your NFT.
Another factor you may want to consider is the popularity of the blockchain you’re using. If fewer people are using the blockchain, it can be more difficult to sell your NFTs. Although Ethereum is still the most popular blockchain for NFTs, other blockchains, like Flow, are getting very competitive. In fact, in June 2022, Flow had surpassed $1 billion in all-time NFT sales.
Once you’re ready to mint your NFTs, think carefully about which blockchain you want to use and decide on a marketplace that suits you, your project, and the potential community you want to build. If you need some help getting started, check out our step-by-step guide on how to create your first NFT project (free for a limited time) using Flow and Rarible.