How to Make Money with NFT?
With the rising excitement surrounding NFTs, digital content creators, entrepreneurs, investors, and enthusiasts are very interested in how to make money with NFTs and how these NFTs function. These digital assets appear to be very profitable and a major fortune for certain investors.
NFTs are the latest genie in the world of Crypto. Everyone is gearing to join and lead the race, from top-notch brands to micro-enterprises to celebrities and common people. Though this evolving industry has turned seven, the hype of NFTs started to rise during the year 2021 when this industry succeeded in getting a significant market. The industry report by DappRadar reveals that this niche amassed more than 23 billion USD in trading volume during the year 2021, which can be considered the "Year of the NFT.” According to another report by “Global Market Estimates," the NFT market would see an incredible rise from 2021-2026 at 185% CAGR value.
With the increased hype of NFTs, digital content creators, entrepreneurs, investors, and enthusiasts are quite curious about learning how these NFTs work and help make money. These digital assets seem highly lucrative and a big fortune for some investors. They are getting high profit from NFT investments, while many are still on the sidelines planning and wondering how to utilize this digital asset to earn money profitably. If you are ready to dive into this emerging industry and try your luck, this blog would be very helpful in answering the queries striking in your mind about making money from NFTs.
How do NFTs Work?
NFTs are distinctive digital assets associated with a certificate of authenticity, making this asset different from other tokens. Possession of an NFT is verified through blockchain technology. NFTs are bought and sold on various marketplaces such as OpenSea and Rarible. The creators, collectors, and investors of NFT enlist their digital file on a specialized market and hold on to its possession until someone purchases it. An owner can impose terms of his own choice on his NFT and earn passive income as long as he owns that NFT. When someone purchases that NFT, he gets the ownership of that NFT. The new owner now can sell, trade, or rent that NFT to earn money.
ThinkML Team
However, according to the intellectual property law experts, when someone purchases an NFT, just the metadata is owned by him rather than the work. In short, if you are not the creator/original owner of your NFT, you get the transfer of ownership, but the copyrights would be retained by the original creator of that digital asset.
Earning Money with NFTs
NFTs have been in the headlines for their outrageous prices. One of the most high-end NFTs named “Everydays: the First 5000 Days” by Beeple was auctioned and sold out worth $69 million to an entrepreneur “Vignesh Sundaresan” in March 2021. It was the moment when this industry got global attention. The world's most expensive artwork is "The Merge" by Pseudonym Pak, sold out in December 2021 for 91.8 million USD. Such huge figures inspire enthusiasts and investors to create and invest in NFTs to get rich.
An NFT owner can expect to earn lifetime passive money by chasing multiple ways. Let’s walk through these approaches one by one:
1. Sell your NFT on a Marketplace
It is one of the most sought-after approaches to earn money from NFT. An NFT can be anything digital like arts, collectibles, images, videos, memes, etc. To sell an NFT, first of all, you have to create it. Before starting an NFT, you must deeply understand what an NFT is and make sure you want to create one and sell it. NFTs are normally created and sold on a marketplace. Creators of NFTs are making millions by selling them on the marketplaces.
Let's look at how to create and sell an NFT in a marketplace. However, before that, you must ensure that you have some digital content portfolio and own its copyrights.
- Choose your Marketplace
When you have a digital file to convert into an NFT for selling, you need to select a marketplace. At present, various marketplaces exist for you to get NFT sold. A few of these marketplaces include:
OpenSea – a gas-free, open marketplace for NFTs on Polygon, with gigantic asset collection.
Nifty Gateway– Best platform for Rare Drops
GameStop – for blockchain gaming.
DraftKings – for Sports Collectibles.
SuperRare – crypto art marketplace on Ethereum
Mintable – an Open marketplace with a range of collectibles, considered best for beginners.
Rarible – Popular NFT Art marketplace
OpenSea is the world’s first and the largest NFT marketplace that is the most famous in the industry. However, you need to conduct proper research on all marketplaces and choose that best fits your content.
- Arrange your NFT wallet and link it with that marketplace
Once the marketplace is selected, the next step is to arrange an NFT wallet and connect it to your preferred marketplace. An NFT wallet is a digital wallet that helps you pay your fee and receive payments and store NFTs and cryptocurrencies (such as Ether) in one place. Here, one thing to remember is that almost all the well-known and reliable NFT platforms demand some fee to mint your NFT. This payment is mostly made in cryptocurrency. Before earning some cryptocurrency by selling your NFT, you would have to buy some to pay the fees.
- Mint your NFT
After linking your digital wallet, upload your digital file/content that you already have on your selected marketplace and start minting your NFT. “Minting” refers to converting your digital file into a digital asset (crypto collectible) on the blockchain. It might seem complex, but most marketplaces offer a stepwise guide to complete this minting process.
Once the minting process is done, your NFT is created.
- List NFT for Sale and Earn money.
Once your NFT is created, you will have to list that NFT for sale on the same marketplace. After listing, the marketplace will compute the “gas fees” against your NFT that you would have to pay. The gas fee is the fee charged by the blockchain network to record your transactions. This fee varies for different marketplaces and is typically based on how busy the blockchain network is. However, this fee can be reduced by listing your NFT during non-peak hours.
When the potential buyer who intends to buy an NFT visits that marketplace, explores it, and finds your NFT preferable, he would purchase it by paying in cryptocurrency. The majority of transactions on the leading marketplaces are done with Ethereum. Once the exchange is completed, the NFT would be transferred to the NFT wallet of the buyer and the cryptocurrency to the seller of that NFT.
2. Trade your NFT
Trading is another way to make money with NFTs. If you think that you can sell it only if you are a creator of NFT, you are wrong. The market is filled with several investors and entrepreneurs who keep NFTs just like stocks and get profit by buying and selling them. This is what we call NFT trading. Experts believe that if you trail the same investment principles that you follow while buying stocks, you can generate enough money in the NFT space. To make more money from NFT trading, you must buy an NFT as soon as it is in its minting process and then sell it at a higher price on that particular NFT marketplace. If you are an entrepreneur/investor who has purchased a wide range of NFT collections but now you don’t want them any longer, you can get them sold out easily. The process of selling your NFTs collection would be similar, as discussed above; however, the only thing that you would have to skip is the "Minting" process.
NFTs monthly trading volume was 64 million USD on average for the first half-year of 2021, that was jumped to above 750 million USD in the second-half year. CNBC reports that NFT trading in 2021 was increased by 21000% from 2020. However, to earn handsome money with NFT, you must trade it wisely. The main trick to trading NFT is analyzing and deciding when to sell it. The decision about the right time to sell your NFT depends on the type of NFT, your purpose behind its purchase, and any other interests associated with that NFT. Quick but thorough research on the internet and your selected marketplace would help a lot.
ThinkML Team
Another thing to consider before trading is price appreciation or depreciation. It would be best to keep in mind that all NFTs are not of the same value. Some are worth millions of dollars, while some might be worthless. Therefore, as an NFT trader, you must analyze each prospect of an NFT to make handsome money in future resale. It’s better to consult a professional or hire someone to guide you on how to earn a handsome amount of money by trading your NFT.
3. Rent Out your NFT
Renting your NFT is an amazing way to earn passive income, particularly if your asset is high in demand. An NFT can’t be replicated, but the owner of that NFT can rent it out to those who don't own it but want to use it or experience it before they go for buying. For example, various NFT trading card games allow the game players to borrow those cards and enhance their winning chances.
In practice, the process of NFT renting executes in at least the following two ways:
a. Collateralized Lending
In this method, an NFT owner enlists his digital asset on a particularly customized marketplace for the lending and borrowing of NFTs. Interested persons looking to borrow an NFT come across that marketplace, search for a particular NFT of their interest, and start the borrowing process. An agreement regarding the terms and conditions occurs between the lender and the borrower in the form of a smart contract where that particular NFT is deposited. The smart contract contains all the pertinent details, including rental duration, required collateral, etc. The smart contract becomes operational once the agreement on the complete parameters of that contract takes place between both parties. Hence, the NFT is rented to the borrower. He can use that asset and enjoy it for the agreed period of the contract.
To defend the lender and his asset, the borrower must deposit collateral. The value of that NFT is confirmed using price oracles. Moreover, to cover the cost of NFT borrowing, the renter also has to pay a rental fee. When the contract's expiry date arrives, the collateral is released, and the smart contract returns the NFT to its actual owner.
b. Collateral-Less Lending
In this scenario, the renting process is comparatively simple, where both the lender and the borrower enjoy the benefits. In the collateral-less method, the lenders don’t need to transfer their original NFT to the renter; rather, a wrapped version containing all the attributes of that original NFT is minted. Both the parties agree upon a rental price and duration. The borrower pays the rental fee and incentives-related fees, and the smart contract becomes active. NFT is issued to the borrower. In the same way, the borrower has the advantage that he doesn't have to put up collateral. Hence his financial assets are less affected.
When the smart contract duration ends, the wrapped version of NFT is burnt. The incentive-related fee becomes the earning for liquidity providers.
ReNFT is the leading marketplace configured for renting purposes. Lenders set duration and daily rates to borrow an NFT. Nowadays, the lenders can charge rent ranging from 0.002 to 2 WETH (wrapped Ether). Football fans can use the marketplace of FootballCoin to enlist and lend their NFT footballer cards to get more Crypto.
Besides making money, NFT renting can improve the reach and availability of NFTs to the masses and ultimately uplift this industry to an unimaginable height.
4. NFT Staking
NFT staking is the latest way to make passive income without selling NFT collections in the crypto world. This approach of earning money allows NFT holders to lock their digital assets for some period in decentralized finance (DeFi) platforms to gain rewards. It is like the Liquid Earn program of cryptocurrency, where you earn rewards. Some marketplaces offer you a wide range of NFTs for staking purposes, while others allow you to get staking token rewards on the purchase of just native NFTs. So, it would help if you chose a marketplace wisely to get maximum rewards from staking. Here is a list of NFT marketplaces that allow NFT staking:
Kira Network
NFTX
Only1
Splinterlands
In the case of staking, you lock your NFTs in a digital wallet and produce a beneficial interest called "Yield." Note that the reward/coins you earn through NFT staking can be reinvested in other yield-generating protocols. Hence, by NFT staking, you can make money while holding ownership of your NFT.
5. Royalties
NFT royalty is an automatic payment that recompenses the initial creator of NFT for using his digital asset. Even after selling an NFT, the creator of that digital asset can get passive royalties throughout their course of life. To earn passive royalties, you as a creator must set a royalty fee and impose some terms and conditions. After that, each time your NFT is sold, you, the original owner, would get a %age of the sale price. Hence, the original creator of an NFT would be earning royalty, i.e., on average 5-10% (of the sale value) for his entire life. Several marketplaces or blockchain platforms allow the creator to select his royalty percentage during the minting process. The agreed %age is automatically deducted and delivered to the original creator upon each sale.
NFT royalties are received from secondary sales after the original sale. For instance, first of all, the original creator sells his NFT in a marketplace, the buyer who purchases that NFT further sells it to another buyer in the secondary market. At this time, the original creator/owner would get royalty as the decided %age of sale value. For example, if the royalty fee decided initially by the NFT original creator was 10%, he would earn 10% each time his NFT is resold. Hence, the original creator of an NFT can earn lifetime royalty in the form of a decided %age of sale value.
Suggestions to Ensure NFTs a Profitable Investment
High figures at which NFTs are being sold out make one think of NFTs as the way to easy wealth; however, earning with NFTs is not as easy as it seems. It is important to note that though the process of selling an NFT looks quite easy and profitable, it might be quite expensive as well. While minting and selling an NFT, the marketplace and Ethereum costs are high based on when you put it up for sale. Even the trading of NFTs comes with uncertainties, and a trader might have to pay the royalties along with the other fees and might end up with a low profit. You can earn millions of dollars by selling or trading an NFT. However, you would also have to spend thousands of millions to pay. Therefore, before diving into this deep sea of NFTs, ensure that you are fully prepared to emerge as the winner ultimately.
Here is a brief guide to help you stay safe and generate continuing wealth in the NFT space.
- Do Proper Research
NFTs are incredibly rising in popularity. Being fairly new, most investors and collectors don't recognize and understand the real potential that NFTs hold. They lack facts regarding the ideal practices for NFT investment. An NFT marketplace can be a money-spinning wellspring if you have complete information about what you are doing. Therefore, get comprehensive research on popular NFT platforms and NFT brands to learn what's hot in NFTs and find out why these NFT collections are popular and worth selling.
- Use Fundamental Investment Principles
The investment world revolves around supply and demand. For instance, the prices increase in the stock market if the number of buyers is greater than that of sellers. As far as the collectibles market is concerned, the prices are uplifted when an item is unique and popular. The same investment principles can boost the cost of an NFT. Remember that all the rare items do not necessarily observe a price increase. If you also identify things that are at present undervalued but are probable to get popular, you would have a winning blend.
- Invest in What You have Expertise
This hypothesis is commonly considered valuable for the stock market, but it most probably fits best for the NFT market. The market is full of countless NFTs for purchase, but most of them are worthless, and several others would remain the same in value. It is more about luck to pick the winning item from the huge pool of NFTs. However, if you are an expert in some market area and have extensive knowledge about that, you could have a prominent edge on the rest of the investors. For instance, if you are a movie addict and do not ever miss watching a movie released, you would be capable enough to spot or predict a rising star even before they turn out to be popular. Just keep an eye out; if they issue an NFT, don't hesitate to become the first one to purchase that. It might be inexpensive when you buy while they remain unknown, but it could boost in value once they become popular.
Bottom Line
NFTs are not new, but they have gained traction recently. At present, NFTs are witnessing considerable uplift in the average transaction size and value, confirming that they will become more valuable with every passing day as the number of users is continuously increasing. Since Web3.0 is right in the offing and we will probably be witnessing the metaverse soon, learning about earning from your digital assets is vital and beneficial. If you want to join the race to make handsome money, look out for NFTs that can be rented, traded, or staked. To earn more from NFTs, invest in the right and best ones. All NFTs are not a good investment, so do proper research before investing in NFTs to ensure that you are on top. If you have some digital content and want to create your own NFT, select the best marketplace to list your NFT for sale, and do remember to put up a reasonable royalty fee for your NFT that would help you earn passive income throughout your lifetime.
NFTs are the latest but most thrilling investment class that is attracting many enthusiasts, but one thing for sure is that it's not for everyone. Some NFTs turn out to be high-valued, whereas some are completely valueless. To succeed in this new trend, you need to have a complete thorough study about NFTs and their market, then implement a disciplined investment strategy but invest just that amount you can easily afford to lose. If you follow a strategic approach as discussed in this blog, investment in NFTs will be an amazing addition to your overall portfolio, making incredible money for you. Last but not least, the NFT era is just at its initial phase. As the metaverse is soon to control our digital lives, we will be witnessing amazing new ways to make money from our digital assets on NFT platforms.
