Like many other social media storms that have graced the digital space lately, another one is bulldozing through it. NFTs, or Non-Fungible Tokens, are digital assets with unique identifying codes that can be bought or sold like any other product or service. They are digital tokens that can be claimed or bought as certificates for physical or virtual assets.
They’re quickly becoming one of the most profitable blockchain experiments in the century, with a growing number of supporters to back its unique money-making model. Certain high-profile influencers like Twitter CEO Jack Dorsey and lifestyle guru Paris Hilton have been vocal about their support for it, even going as far as auctioning off NFTs.
It helps to think of NFTs as tradable digital receipts stored on a publicly distributed database. This database is called a blockchain, and everyone has access to it and can independently verify at all times. These digital receipts contain unique information that can be used to prove who the sole owners of certain items are, whether they be tangible or intangible.
Although the cryptology behind NFTs is quite tricky, understanding what they are and how to make quick money off of them is not! Like with most labor of loves in life, this isn’t a get rich quick scheme to make you a self-made billionaire overnight. Having a basic understanding of how NFTs work, however, will definitely give you a leg up and the odds of your success will increase substantially.
While a vast majority of NFTs are created, bought and sold using Ethereum, high gas fees can make the process incredibly expensive. Raribleanalytics estimates that minting a single NFT on Ethereum costs around $98.69 in gas fees while minting NFT collections will put you out of pocket by $900, on average. But there are still numerous ways to generate an income from NFTs than selling them at a higher price than you paid or created them for.
1) Buy things you truly enjoy
The golden rule of buying NFTs is to invest in ones you genuinely like and want to support. It’s the same thing with anything in life, really, that work doesn’t feel so much as work when you like what you’re doing. Purchasing a personal NFT you’re personally interested in because if things might not work out, ie. your token ends up being a dud, you’re at least left with something you appreciate on a deeper level.
2) Rent out other NFTs
Renting out NFTs is one way you can earn passive income, particularly those in high demand. There are certain card trading games that allow players to borrow NFT cards to boost their chances of winning, kind of like a good luck charm. The terms governing the deal between the two parties involved are governed by smart contracts so NFT users usually have the freedom to set their preferred duration of the rental agreement and the lease rate for the NFT.
3) Consider the floor price
Assuming that you’re buying into a new project release, it’s always a good habit to try and buy your way in at floor price. Whether it’s a dutch auction where prices decrease over a specific period of time, or a set minting price, it always pays off to purchase at face value. Why? Because it’s more than likely the floor price is set to be the minimum selling price. If you did your research and got in on a good NFT, you have a better chance of making a profit assuming the floor price will steadily rise eventually. But remember, nothing is guaranteed.
4) Flip your NFTs
One of the best things you can do for yourself and your community is make sure to re-invest in your brand. Think of it like flipping a house. The money you earn from selling your non-fungibles for a profit should be reinvested into buying more NFTs and building your own brand. Flipping is one of the quickest ways to earn money in the NFT space. Buy low, sell high. Keep in mind that when you’re flipping your tokens you don’t always need to sell them for a huge profit. Some NFTs hold value better than others and vice versa, so test the waters first to see which situation demands which course of action.
5) NFT Royalties
The underlying technology that powers NFTs allows creators to set terms that impose royalty fees whenever their NFTs change hands on the secondary market. In other words, creators can receive passive income even after selling their creations to collectors. Just like any business. They’re able to earn a share of the sales price of the NFTs in question indefinitely. For example, if the royalty for a digital artwork is set at 10%, the original creator will receive 10% of the total sale price each time their artwork is resold to a new owner.
Making money with NFTs is an extremely risky business, but not entirely impossible. If you play your cards right, you just might be another one of the many millennial millionaires who have now live off their art.