Non-fungible tokens (NFTs) have recently been surrounded by just as much hype as their fungible counterparts, better known as cryptocurrency. Since NFTs are unique and can’t be replicated, they can be used to generate large sums of money. In this article, we’ve got five quick, beginner-friendly options for you. Keep reading to find out how to make money with NFTs.
Thanks to some crazy news stories, NFTs are getting a lot of attention at the moment. The best example is the sale of Mike Winkelmann’s work “Everydays: The First 5000 Days” for $69 million at Christie’s in 2021. This work is an NFT collage made from 5,000 digital images. And that’s just one example (albeit an extreme one!) of how you can make a lot of money with NFTs.
NFTs are perhaps best compared with works of art, collectors’ items, and other one-of-a-kind objects. Just like an original Picasso is unique and can’t be replaced, even by an exact replica, NFTs are by definition one of a kind. The word is usually used to refer to digital objects, though strictly speaking an NFT is the digital ownership of a physical or digital artwork.
NFT creators turn digital goods into unique collectors’ items and objects that can be sold. However, when you buy an NFT you don’t get the work itself, but the right of ownership. Since NFTs are part of the Ethereum blockchain, you can check who the current owner of an NFT is in the transaction history. Essentially, as certificates of authenticity, NFTs guarantee that a digital object remains non-fungible and can’t be forged. That’s where they get their value. It’s rather rare to sell an NFT for millions. But they do offer artists the chance to sell art online and make it possible for collectors, investors and auctioneers to make a profit.
Cryptocurrencies like Bitcoin are fungible tokens. This means that they aren’t unique and can be exchanged without losing value.
Auctions like the one at Christie’s for “Everydays: The First 5000 Days” are actually rather rare. NFTs are usually bought and sold online through NFT marketplaces, which are like Amazon or eBay for NFTs. What you’ll find there are works of crypto art like songs, videos, GIFs, and drawings. They can take the form of physical works of art that have been uploaded as a file, or they can be purely virtual objects and artworks. Even books can be financed by and sold as NFTs, as in the case of author Elle Griffin.
Another form of NFTs are digital properties in virtual metaverses like The Sandbox Game, the third largest metaverse in the Ethereum blockchain. Other well-known NFT objects include CryptoKitties and Cool Cat NFTs, which are comparable to trading cards.
Well-known NFT marketplaces include:
Some of these marketplaces are open for all buyers and sellers, whereas others are invite-only. Some sites feature a wide variety of NFTs, and others specialize in specific forms, such as NFT art. NFT marketplaces use blockchain for making purchases and verifying transactions. The blockchain is what houses data about ownership and rights of use. Payments are made in Ethereum’s cryptocurrency, meaning that you’ll have to buy some of it if you’re looking to create or sell NFTs. Crypto exchanges like Crypto, Gemini, and BitMart and crypto brokers like BSDEX and Toro are popular options for acquiring currency.
If you’re looking to trade in NFTs, you’ll first need to do the following:
While there are a few marketplaces that accept Bitcoin and Altcoins, most only accept the Ethereum currency Ether (ETH). So, if you’re looking to buy, sell, or collect NFTs, you’ll need an Ethereum-compatible crypto wallet. To make a wallet, you can use Coinbase, Binance, or Crypto. Alternatively, you can create soft wallets for different currencies. If you opt for a soft wallet, you’ll have to download special wallet software. However, online wallets are a better choice for beginners. With Coinbase Wallet or MetaMask, you can create a wallet for different currencies.
You’ll need a wallet in order to carry out any cryptocurrency transaction. Crypto wallets establish the identity of the buyer/seller and ensure that crypto transactions are verified. You don’t store your crypto funds directly in the wallet. Instead, the wallet contains private and public keys for crypto transactions. NFT marketplaces will normally indicate which wallets they support. One option for finding the right wallet for you is Ethereum’s wallet finder.
After you’ve set up your wallet, the next step is buying the cryptocurrency itself. You can either do this in your wallet or use a cryptocurrency marketplace. If you opt for the latter, make sure the marketplace is credible. Some popular platforms are Gemini, Binance, Coinbase, and Kraken.
Even if you’re only planning on selling NFTs, you’ll still need to buy some Ether. Platforms will usually charge a fee for creating NFTs or, to be more precise, for minting NFTs. There will also be transaction fees for cryptomining, called “gas fees” in Ethereum. While some blockchains, like OpenSea, don’t charge you to mint NFTs, they still require you to have a certain minimum of crypto credits in order to publish your NFT on their blockchain.
Now you’ll need to choose the NFT marketplace you want to work with. Some popular ones are:
Once you’ve chosen your marketplace, link your wallet to it. To do this, you’ll want to look for a button that says “Create”, “Connect Wallet” or some variation of this. You’ll then use a QR code to connect the marketplace and wallet.
You don’t necessarily have to create NFTs yourself in order to make money with them. To buy and trade in NFTs, all you need is a crypto wallet and crypto coins. But if you do want to create NFTs yourself, there are some things you should first take into consideration. NTFs can be understood as certificates for unique objects, including physical artworks and objects, as well as virtual objects, real estate, and domains. NFT collections are particularly successful and are comparable to owning a collection of artworks, music or trading cards.
NFTs are created with smart contracts, which enable identification and verification using blockchain addresses and token numbers. Anyone can create NFTs. The only requirement is that you’re the creator and owner of the object that you want to sell as an NFT.
To sell an NFT, you’ll first have to mint it. To do this, upload the file in the correct format and size. Then you’ll want to add a name, a description and any additional information that might be relevant to potential buyers. Decide which cryptocurrency you’ll accept as payment and whether you want to sell it for a fixed price or at an auction. You’ll also need to decide whether you’ll receive royalties for each sale or whether the NFT will be freely available. Your NFT isn’t tied to any one marketplace, so you also have the option of putting it on multiple platforms.
If you’re wondering how to make money with NFTs, the answer is that there are actually a number of ways. Below we’ll briefly discuss five different possibilities.
Flipping NFTs refers to the practice of buying an NFT at a low price and then selling it for a higher price. This doesn’t require creating NFTs yourself. For example: CryptoPunk Character 8348, one of a set of 10,000 NFT characters, was bought for $456 in 2017. In August 2022, it was worth $171 million. Just like buying the work of up-and-coming artists, investing early in affordable NFTs with growing value can lead to big profits. Buying domains as NFTs or digital artworks are great ways to start flipping NFTs.
Here are some important tips if you’re considering trying your hand at flipping:
One common piece of advice for selling NFT art is to offer NFT collections rather than individual NFTs. This could include collections of characters, music, or images. Collections allow you to make more money at once while adding value for collectors. With a little bit of luck and patience, individual NFTs from a collection can generate huge profits, as we’ve seen with CryptoPunks and CryptoKitties. You should also analyze current niches and niches that have yet to be discovered.
Owning crypto shares and investing early in projects is a good way to make a profit without having to do very much. For example, those who invested in CyberKongz Genesis, a series of gorilla profile pictures, currently earn ten banana tokens a day. Banana tokens are the project’s cryptocurrency, which had a value of $900 per token in August 2022.
Here are some other possibilities for making passive income from NFTs:
Blockchain games like Axie Infinity allow you to buy and sell objects, land, and characters in the game. This works just like blockchains and NFTs, meaning you can make a profit by minting your own character or a series of characters as NFTs. If the characters grow in popularity, their value will increase as well, even more so if the NFT collection is rare. Axies and Mystic Axies from the game Axie Infinity are some of the most valuable NFT items on the market, having sold for as much as $1.1 million.
Why limit your NFT earnings to the digital world? As soon as an NFT collection becomes popular, you can market it in the “real” world. If you’ve created a popular NFT collection with unique characters, you can put them on t-shirts, shoes, bags, and phone cases. If you have a dedicated fanbase, you’ll want to look into smart merchandising and brand building.
The final method on our list is also the most complex: creating a new NFT marketplace. NFT marketplaces function largely in the same way as online shops, so it’s best to approach this endeavor as if you were going to set up an online store, and then go from there. First, you’ll need to decide whether you want to create the marketplace yourself or pay a company to do it for you.
Some important considerations when creating your own marketplace include:
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