You’ve probably heard that a lot of people are making a lot of money from NFTs right now, and you may be wondering how exactly it works. For some investors, the NFT space is very lucrative, but many are still unclear on how to even get into it. That’s exactly what this article is about.
As Web 3.0 draws ever closer and we’re all likely to meet in the metaverse soon, it’s important to understand the role NFTs play and how we can profit from the technology. That’s why we’ve put together five ways for you to make money with NFTs.
Overview of the NFT market
NFTs (non-fungible tokens) have exploded in popularity over the past year and have become a major market in the crypto space. NFTs are digital objects which are stored on a blockchain. The most popular NFT projects are on the Ethereum blockchain and there are very successful NFT marketplaces already.
According to DappRadar, the niche has now reached over $23 billion in trading volume, making 2021 the best year yet for NFTs.
The most expensive NFT ever sold is the artwork “Everydays: the First 5000 Days” by 3D artist Beeple. The collection was auctioned off in March 2021 for $69 million. As of 2021, OpenSea is the most popular NFT marketplace with over $16 billion in cryptocurrency trading volume.
An almost unlimited number of different types of NFTs can be created, but most often they are media such as images, videos, or audio files. In some cases, even physical objects are linked to the digital NFT. In addition, tokens can be used to transfer ownership rights to files or media. In specialized markets, one can sell the NFTs, buy new NFTs, and make profits from the trade. We will discuss this further below.
The average transaction size and total value of NFTs have increased significantly. The unique tokens seem to become more and more valuable as more and more interested parties join. The release of the new NFT collection by Bored Ape Yacht Club, a popular group of NFT creators, also shows that interest remains high.
Similar to decentralized exchanges for cryptocurrencies (DEXs), NFTs are traded on dedicated marketplaces such as OpenSea or Rarible. Collectors, investors, and artists who create NFTs showcase their collections on these marketplaces and hold ownership rights until the NFT changes hands.
How you can make money with NFTs
Because the NFT sector is still relatively new, few investors and collectors know how best to invest. And they know even less about the full potential that the technology enables. NFT marketplaces can indeed be a lucrative source of income – but only if you know exactly what you’re doing.
We’ve found five ways you can make money with your NFTs. You can learn how to create an NFT here.
5 ways you can make money with NFTs:
- 1. staking NFTs
- 2. flipping NFTs
- 3. lending NFTs
- 4. profit sharing of NFTs
- 5. NFT Games
1. NFT Staking
Staking is the main advantage of combining NFTs with decentralized financing (DeFi). You probably know by now that you get a so-called return when you use your cryptocurrencies for staking. Fortunately, staking is no longer limited to cryptocurrencies. Meanwhile, NFTs can also be staked and generate passive income. Staking means that you lock your digital assets for a certain period of time and receive a reward for doing so. This way, the entire system remains stable and you also profit from it.
The following platforms enable NFT Staking:
Sometimes, part of the NFT Staking rewards can also be paid out in governance tokens of the platform. Through these tokens, owners get voting rights to help shape the future development of the platform and its ecosystem.
The coins you earn from NFT staking can also be used for yield farming. You can learn more about the difference between staking and yield farming here.
2. Flipping NFTs
Another way you can earn money with NFTs is the so-called ‘NFTs flipping’. This refers to buying and selling NFTs to make a profit. Mostly, NFTs are bought cheaply when they appear new on the market and then sold at a higher price on the appropriate NFT marketplace.
So not only the owners of the NFTs can sell them for profit, but also those who trade them. Because for many crypto investors, trading NFTs is not really different from trading cryptocurrencies or even stocks. And many of them have already bought NFTs and resold them at a profit.
But trading NFTs is all about finding the right time to sell. This depends on the type of NFT, how useful it is, and whether there is any further interest in buying. This can already be found out by a short internet research and on the respective marketplaces. But how exactly you can find profitable NFTs, we explain here.
In addition, price increases and decreases in value must also be taken into account. And additional costs like gas fees, marketplace fees, and royalties to the original owner will eventually cut into your profits a bit as well. Also, realize that you’ll need to invest time and effort to make money selling NFTs. This includes extensive research and a deep understanding of the crypto market.
3. Renting NFTs
Renting NFTs is a great way to earn passive income. Especially if you already own assets that are in high demand.
For example, in some NFT card games, players can borrow cards from others to increase their own chances of winning. The agreements and terms between the two parties are run via so-called smart contracts. As a rule, users can determine the lending period and the lending fee themselves.
ReNFT is a platform that allows users to borrow or lend NFTs. Lenders set the maximum lending duration and a daily rate. This currently ranges from 0.002 to 2 Wrapped Ether (WETH). Limited NFT soccer cards can be rented on the FootballCoin platform to make profits in cryptocurrencies.
4. Profit sharing on resales of your NFTs
Did you know that creators of NFTs can earn money when the NFTs are resold on the secondary market? A certain percentage of the sale price goes back to the original owner each time the NFT is resold. This means that you, as the creator, can still earn passive income from your NFT after it is sold.
For example, if the royalty for a digital artwork is 10%, the original creator gets 10% of the sale price every time the artwork changes hands. On the NFT marketplaces, you can create your NFT while setting a custom royalty rate.
You don’t need any additional knowledge for the entire process, because everything runs through the NFT marketplace and the distribution of revenues is regulated via smart contracts. For you as the creator, this means that you don’t need to check payments or license compliance.
You don’t need any additional knowledge for the entire process, because everything runs through the NFT marketplace and the distribution of revenues is regulated via smart contracts. For you as the creator, this means that you don’t need to check payments or license compliance.
5. NFT Games
Video games that use NFT technology could be the future. Although none of the NFT games have yet become successful worldwide, the potential for NFTs in video games is huge.
Gamers are known to spend a lot of money on digital objects. Whether it’s gold in World of Warcraft or skins for Counter-Strike, these markets are worth billions of US dollars. If a major video game developer were to sell game items as NFTs, the effect on gaming and the blockchain ecosystem would be enormous.
However, the question of how to make money in blockchain games with NFTs is a bit more complex.
A large portion of the NFTs traded on the marketplaces are digital art. But there is also a significant portion of in-game NFTs. These can also be used within the respective games and platforms, as most of them are play-to-earn games where you get rewards in cryptocurrencies.
We expect many more projects to launch in this space in the coming years, but we have already seen phenomenal success from games like Axie Infinity, Plant vs. Undead, and CryptoKitties. NFTs in games offer far more possibilities than digital trading cards or virtual artwork. This is because video games use tokens that can be extremely complex and interactive.
So in-game NFTs are not just an expense for your hobby, but an investment at the same time. Play the game, use the NFTs to make profits, and simply sell them when you get tired of playing or want to play another game. It’s as simple as that.
Anyone can make money with NFTs
Now that you know how to make money with NFTs, you should be on the lookout for NFTs that you can stack, lend, or use as in-game objects in NFT games. But most importantly, invest in the right NFTs.
If you’re an NFT creator, you should start planning your next NFT collection now. And don’t forget to set an appropriate royalty rate for your digital artwork while you’re at it. And this is just the beginning of the NFT era. As the Metaverse takes over our digital lives, we expect to see many more opportunities and features on NFT marketplaces and platforms in the future.
