How to make money with NFTs?
In the following, we will learn about NFTs and the best ways to make a profit with NFTs in 2022.
Non-fungible tokens or NFTs are attracted lots of attention among investors since 2021. They have been one of the most profitable blockchain-based assets. NFTs such as The Merge, sold for $91.8 million, and Everyday: The First 5000 Days by Beeple, sold for $69.3 million, even caused more changes in how the world estimated the profit of the digital collectibles.
But, do you need to spend so much money to gain profit from NFTs? The answer is a big no! Although lots of NFT artists and investors have made lots of fortune through creating NFTs, there are also other ways to take advantage of the market.
Before knowing how to get rich through NFTs, first, you have to know what exactly NFTs are. If you already know about NFTs so go to the next section.
What is an NFT?
Non-fungible tokens or NFTs are digital assets that cannot be changed or duplicated. Each NFT, therefore, is one-of-a-kind and worth a distinct amount.
An NFT, including a piece of art, music, videos, memes, or real estate properties, can be sold for cryptocurrency or fiat. All transactions regarding an NFT are recorded in a blockchain. This establishes the ownership of a specific NFT.
Each NFT is linked to the original owner’s digital or physical asset since any digital object can be converted into an NFT. Anyone can turn famous tweets, Facebook posts, Instagram photos, and more into NFTs and sell them.
The rarity and interest of investors are major factors that influence the value of NFTs. The rarer the NFT, the more valuable it is. On the other hand, the euphoric feeling of having exclusive ownership of an NFT is the other major driver of its value, meaning that although there may be copies of an NFT available on the net, there is only one owner for each piece.
How to make money with NFTs?
Although people can earn lots of profit by creating or trading NFTs in marketplaces, there are some more ways to make some money with the NFTs you may wish to own for a longer period so that you can still own the NFT and take some advantage with that. Here are some suggested ways to gain profit from NFTs in 2022.
1. Mint your own NFT
The most common approach to making money on NFTs is to mint your own NFT. Simply saying, minting refers to taking a digital asset (such as digital art or music) and putting it on the blockchain. After minting the asset in the blockchain, you can trade it on various NFT marketplaces and monetize your creation.
It is quite easy to mint NFTs. The process is relatively easy and similar in different marketplaces.
However, the enormous growth in the NFT market has caused intense competition among NFT creators. Therefore, you need to ensure that your NFTs stand out in the market. When you created your NFT and minted it on the blockchain, you just need to wait for an investor to buy it. Marketing plays an important role in your sale. Collections will be visible to potential investors only if they are promoted effectively.
When the NFT is sold, you will receive the sale price (minus the marketplace’s fee), and, then, can withdraw it to your crypto wallet.
2. NFT Trading
Another way to make a great fortune is through buying and selling NFTs in different marketplaces.
NFT trading process focuses on making big capital gains over the long term. The NFT market is not a good place for quickly getting in and outs. Investors who are interested in NFT trading often buy an NFT, hold it for a certain time and sell it for a rather good profit. Notice that holding an NFT in long term gives value to the digital asset or the collection.
This process requires much more patience and market knowledge to be able to purchase undervalued NFTs and sell them at the right time long after the purchase. This approach is so popular among experienced investors.
3. Rent out your NFT
We already noticed that NFTs are unique digital assets that can’t be copied. So, if someone needs your NFT for a certain amount of time, and you do not wish to sell it, renting out the NFT is the only possible way. The renting process for an NFT is just the same as renting a real estate property and collecting the rent. Renting an NFT refers to the process of loaning a digital asset to someone for a set amount of time in exchange for an agreed amount of Cryptocurrency or fiat money. Renting out is an effective way to earn money from NFTs without selling them or losing out on ownership.
4. make money with NFTs by Royalties
A smart contract behind each NFT not only gives the creator full ownership of a digital asset but also removes the need for a third party to the sale of the token. Besides, it considers a share of royalty to the creator even after the first sale. Therefore, the creator can earn passive lifelong royalties as long as someone buys the asset. The amount of the royalty is defined in the smart contract when the NFT is minted. This amount is fixed and permanent. This makes royalties an excellent choice for passive income for the NFT creator. As the result, royalties are worthwhile to consider when it comes to earning money from NFTs.
5. Play-to-Earn (P2E) NFT Games
Another approach to profit from NFT tokens is to take part in play-to-earn (P2E) NFT games. Nowadays, many NFT games apply P2E features, which allow players to generate rewards through playing games, winning a battle, or earning a collection of in-game rewards. In-game rewards are usually offered in the platform’s native token so that they can be spent on in-game items as NFTs or exchanged for other cryptos or fiat.
Playing NFT games to make money has become a popular approach. P2E games provide numerous exciting opportunities to generate consistent income. A good example of a P2E game is Axie Infinity. The game requires its users to ‘battle’ other users and earn rewards. These in-game rewards are structured as NFTs. Therefore, the digital currency earned as rewards can be ‘reinvested’ into better items (or weapons and lands) which help users increase their performance.
6. NFT holding
The next working strategy to make money with an NFT is to invest and hold the NFT for a longer time. NFT holding was first popularized by retail traders during the GameStop short squeeze of 2021. This term describes an investment strategy where you simply do not sell your digital asset, regardless of what comes next.
Adopting the NFT holding approach comes with both pros and cons for investors. However, NFT holding can be a great way to make money with NFTs if it is applied strategically. For example, in 2017, the value of CryptoPunk NFTs was not going up. Punk investors could sell their NFTs or hold them for a longer time. Those investors who chose to hold their NFTs got huge rewards when prices skyrocketed in 2021.
However, this approach was not successful with some NFT collections. Investors need to consider the creator team and the community support if they think about holding an NFT for a long time.
7. Flipping NFTs
The other effective way to make money with NFTs is flipping. Flipping NFTs refers to the process of buying low and selling high and, as the result, producing a big income. The critical difference between flipping and other investment strategies is that it is a very short-term approach in comparison with NFT holding described above.
However, this strategy faces a big challenge: finding the best NFT to make money and then flipping it for a profit, since The competition in the market is high in the market. Therefore, investors who aim to flip NFTs need to consider numerous factors when researching how to flip NFTs for profit. One of these factors is the token’s utility as this will be one of the main reasons other investors would purchase it in near future. Community backing is another influential factor, as well as the development team behind the project. The visual appeal of the NFT is another essential factor to note because most investors are willing to display their digital art as their profile picture on social media or via a digital art gallery.
8. Staking NFTs
The combination of NFTs and decentralized finance (DeFi) protocols can offer to curtail advantages for NFT owners. Staking NFTs includes depositing, or “locking away,” non-fungible tokens into a DeFi protocol smart contract to create a yield.
Some platforms allow the staking of any NFTs, however, others require their users to buy native NFTs to gain staking token incentives (usually priced in the platform’s native utility token). Some platforms that facilitate NFT staking are: Kira Network, NFTX, Only1, and Splinterlands.
Just like when crypto holders stake their tokens, this approach helps validate transactions that occur on the network. Staking NFTs is mainly common in the P2E gaming sector, platforms such as MOBOX and Zookeeper.
Therefore, this approach can be the most optimal for those who look for making money with NFTs passively.
9. Adopt NFT-powered yield farming
Automated Market Markers (AMMs) are part of the decentralized finance (DeFi) ecosystem. They allow digital assets to be traded in a permissionless and automatic way by using liquidity pools. AMMs that are driven by NFTs are used by NFT owners to farm for yields. By combining different DeFi protocols, users can generate the highest possible yield from their digital assets.
NFT yield farming is much similar to the concept of staking, however, it is a more complex mechanism that is built on the Ethereum blockchain. NFT yield farmers usually move their digital assets from one lending market to another in search of the highest yields.
Typically, a yield farmer is required to lock their funds into a lending protocol such as Compound or MakerDAO to provide liquidity to funding pools, in which borrowers and lenders earn a share in the process.
10. Investing in new NFTs early
It is also proven that investors can earn good benefits by investing in the newly launched project. Investors can purchase promising new NFT projects while they typically offer the most viable entry prices.
You must know about Bored Ape Yacht Club, one of the most successful NFT collections that were launched in April 2021. 10,000 NFTs available in the collection were sold to the public for only 1 ETH. As this NFT collection became mainstream, now many Bored Ape Yacht Club NFTs are sold for over a million dollars.
Tamadoge, as another example, recently launched its crypto presale and sold more than $19 million worth of TAMA tokens. Since the Tamadoge ecosystem is centered on NFTs, the project seems to be promising in near future.
It is important to consider the roadmap and the team behind the new NFT collections or P2E games before buying a digital asset. Other important factors that investors should keep in mind include the supportive community of the project and its utility.
Conclusion
This guide aimed to discuss all you need to know about how to make money with NFTs. Considering the NFT hype going around, there should be tremendous return potential for NFT investors.
NFT owners are advised to study as much as possible to get the best idea before choosing an approach to add to their earnings from the NFT market. Also, they can ask for a professional consult to enjoy their safer incomes in the market.
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