Are you looking to make extra money? If so, you may wonder how to do it with NFTs. Luckily, there are many different ways how to make money with NFTs. Keep reading for more information!
What is an NFT?
Making money with NFTs requires a basic understanding of what an NFT is. NFT is an abbreviation for a non-fungible token. “Non-fungible” in crypto means that the item is unique and cannot be replaced by anything else. A “token,” on the other hand, is a digital representation of a physical item or a tradeable asset built into a blockchain.
Originally, the problem was that people could easily duplicate art, whether a photo, video, audio, or even tangible art displayed in a gallery. There was no convenient way to tell which art was authentic and thus worth spending your money on.
However, blockchain technology presented an opportunity to make this problem go away. Once a creator or an artist mints their art onto the blockchain as a digital token, it’s recorded as a unique, one-of-a-kind, non-fungible item linked directly to the original creator.
From here, the original owner may choose to sell their work as an NFT, transferring their ownership rights to the buyer. All of the transactions between the buyer and seller are recorded on the blockchain. These include the current ownership rights, terms of the agreement, and consecutive sales – all recorded in a smart contract that cannot be changed.
And because the art is digitally represented on the blockchain as a unique non-fungible token, each sale is authentic, transparent, and free of fraud. Today, anyone can mint any item they own as an NFT, whether digital content like an image, video, audio file, or even real-world tangible items like art, collectibles, or real estate.
How Do NFTs Make Money?
At first, minting your work as an NFT may seem unusual. You may ask yourself, “what am I going to gain?” First, a tangible item or digital content online can be easily replicated. There is no easy way to determine the number of shares for a single photo, let alone track down the original.
People often spend their money on items that they believe to be valuable. In the case of NFTs, what gives it value is the idea that buyers know that the artwork they are looking at is one-of-a-kind. It cannot be replaced by anything else, and this aspect alone drives up consumer interest.
Digital content or tangible items minted as NFTs can no longer be duplicated or re-shared through the power of blockchain technology. Instead, they are recorded permanently as a unique item of the original that cannot be changed or altered. This makes NFTs an authentic tradeable asset. Taking a step further, the blockchain will list down the current owner of said NFT, thus adding another important feature: transparency.
Today, thousands of NFTs have amassed millions of dollars, often reselling on secondary NFT marketplaces such as OpenSea. For example, you may have heard about the most expensive Beeple NFT, ‘The First 5000 Days,’ which sold for a cool $69.3 million. Many more NFTs make large profits, while others are worth very little.
At this point, you’re probably wondering what determines the value of an NFT. Consider how rare the NFT you intend to buy or sell is. Knowing that you are the owner of a rare and popular unique asset is often a special feeling. ‘The First 5000 Days’ NFT, for example, is extremely rare and quite popular.
You might also interested: Physical NFT Explained (2023): From Blockchain to Your Hands
How to Make Money Off NFTs
So, now that you know what NFTs are and how valuable they can be let’s take a look at seven beginner-friendly ways to get started.
1. Renting Out Your NFTs
Owning an NFT is pretty special. It means that you’re the owner of a one-of-a-kind asset. So it makes sense that you may not want to relinquish your ownership rights. This is where renting outcomes in.
In the same way, you can rent out a car or a house to a tenant, and have them pay you a certain amount of money for a fixed period of time, so can you, with the NFT, you have exclusive ownership rights.
Often, this applies to NFT gaming platforms where users need certain in-game NFTs to play the game. Alternatively, there are many other fields where someone may need your NFT for a period of time, from the fashion industry to finance to investors.
2. Selling Your Work as NFTs
If you’re an artist or creator who wants to make money selling your work as NFTs, or you’ve decided it’s time to part ways with your NFT, then you can do so easily. This is one of the most popular ways people make money with NFTs, by creating unique, rare art collections and selling their ownership rights to buyers for a profit.
Here are some of the popular NFT marketplaces where you can start minting, listing, selling, or buying NFTs.
- Axie Marketplace
3. Letting Your Work Do the Work for You
But hold on a minute before you sell your work as NFTs and give away your ownership rights to it; there’s a way you can let your work do the work for you through something called royalties. Royalties are a fixed rate fee paid to the original creator of an NFT each and every time their work is sold to another buyer on secondary marketplaces.
This is a great way to earn passive income without spending a dime. All you need to do is set up the terms of the agreement while minting your NFT, stipulating that you will be getting paid a certain percentage of each consecutive sale of your work. Depending on the platform, this is usually somewhere between 5% to 10% or even higher.
4. Buying and Selling NFTs
At this point, you’ve probably seen the value of NFTs and the potential they can have to transform the economy. Like stocks in the real world, some entrepreneurs make money with NFTs simply by buying and selling them for profit.
Of course, you will need background knowledge of the pricing of NFTs. It is a volatile market space that tends to shift depending on consumer interest. Still, the same volatility has much potential to make money. For example, art collector Pablo Rodriguez-Fraile could flip Beeple’s NFT almost 1,000 times its original price.
On the flip side, some NFTs have very little value, so even if you flip them over and over, you may spend more on other costs. So, always do prior research or hire a professional where possible.
5. NFT Play-to-Earn Games
Another easy way to make money with NFTs from the comfort of your home is gaming. With the booming rise of NFTs, many industries are innovating traditional business methods, including the gaming industry.
So, instead of traditionally paying to play some games, you can play to make money on NFT gaming platforms. These are called Play-to-Earn (P2E) NFT games. The way these gamers work is through rewarding skilled gameplay with rewards.
Also, they will often mint in-game assets like costumes, avatars, skins, weapons, lands, and more, as NFTs. So, to play an NFT game, gamers are often required to have in their possession a certain in-game asset that can be bought or sold on NFT secondary marketplaces like OpenSea.
For perspective, some highly expensive in-game assets minted as NFTs, such as the ones from CryptoKitties, can even rack up as much as $300,000. Because of how expensive in-game NFT assets can be, gaming guilds have come up to ‘rent out’ these assets in exchange for a certain percentage of the rewards gamers earn from playing these games.
However, recent times are seeing the release of more accessible games that are more affordable to sign up for. Others are even holding giveaways for the first few sign-ups. That said, the future of NFT gaming looks bright. Some of the popular P2E games out there include Axie Infinity, The Sandbox, Decentraland, Silks, and more.
6. Staking NFTs
Staking NFTs is increasingly becoming popular. Previously, crypto users would stake or ‘lock away’ a certain amount of their cryptocurrency into a Decentralized Finance (DeFi) smart contract to generate yield, often in the platform’s native token.
However, today, a few platforms are venturing into staking NFTs instead of cryptocurrency. Notably, the Play-to-Earn gaming industry offers NFT staking services such as Zookeeper and MOBOX.
Your return on investment will depend on the value of the NFTs you’re staking. It also varies depending on the platform you choose. Some may even require you to buy their native NFTs to stake them on their platform and, in return, earn token incentives, usually in the platform’s native token. These include platforms like Splinterlands and Kira Network.
In other cases, you may find that your reward is in the form of a platform’s governance token, which gives you the power to influence the decision-making process of the platform’s future. All in all, NFT staking is largely still in its infancy, so definitely explore the variations and carefully assess the profit you stand to gain with certain protocols.
7. Investing in NFT Companies
Since 2020, the NFT industry has been on an upward trend. Between 2020 and 2021, NFT sales increased more than 200-fold to a whopping $17.6 billion. So, there is potential to make money with NFTs, particularly as an investor in NFT companies showing promise or NFT startups that you think are likely to succeed.
Investing early in promising new NFT companies can be an easy way to make money with NFTs indirectly and across various industries. You could choose to buy stocks or invest wisely ahead of a company’s success by buying their NFTs while selling for a low price. When the NFTs increase in value, you can sell them for profit. Though keep in mind that it could take weeks or months post-launch for a profitable amount of social awareness to spring up.
Diversify Your Income Strategy
Many conversations, online trends, podcasts, and social media posts today are about NFTs and their potential to transform the future. From celebrities to entrepreneurs to crypto enthusiasts, people are both excited and curious about the future of NFT.
For now, it’s practical to make money with NFTs using relatively easy ways. So, if you haven’t already, these 7 ways are a great head start in NFTs. However, it’s important to note that all investment strategies come with risks, so always do your prior research extensively before choosing to invest.
1. Is it Easy to Make Money with NFTs?
As with any other investment strategy, making money with NFTs largely depends on the market. So, while creating and listing your NFTs on NFT marketplaces is easy, finding a ready consumer group is where the work begins. However, making money with NFTs is easy if you already have an audience.
2. What Kind of NFTs Sell Best?
For a while, artwork has become a popular, best-selling form of NFT. Most of the most expensive NFTs that have been sold to date are art pieces that are rare and popularly known.
3. What Makes an NFT Worth a Lot?
Several factors influence the value of an NFT. The most common is the rarity. Rarity makes an NFT scarce and hence worth a lot. Another common factor is the NFT’s popularity. You will find that the more an NFT is shared, the more social awareness you create for your work. Once the NFT is popular with a larger audience, it attracts a stronger market demand.
Other factors that can make an NFT worth a lot include the use case, the owner’s experience or work, its underlying value, liquidity, and the prospective future value of the NFT.
4. How Do I Know If My NFT is Rare?
It’s quite difficult to know if your NFT is rare. Fortunately, there are tools that you can use to determine how rare your NFT is. For instance, you can look up the Rarity Score of your NFT using the rarity feature on most NFT marketplaces. The way the score is calculated is slightly complex by taking into account the NFT’s features in real-time, like total sales, average price, and volume.
However, the idea is that the higher the rarity score is, the more valuable your NFT is. Some of the tools you can use include Rarity.tools, OpenSea, Etherscan Token Tracker, Icy.tools, and many more.
5. What are Some of the Popular NFT Platforms and Marketplaces?
Ready to buy and sell your first NFT, you can easily get started on some of the popular NFT platforms and marketplaces that include:
- Axie Marketplace
- Nifty Gateway
- NBA Top Shot Marketplace
Read more: How to Flip NFTs – A Beginner’s Guide