How to Make Money With NFT?
April 19 2022 - 5:47AM
Finscreener.org
NFTs have done something
extraordinary — they have transformed people’s need to own scarce
items and sheltered devalued creative artists on the blockchain by
protecting their moral and property rights. As such, the NFT market
has become a point where intellectual property and digital assets
intersect, carving out an industry that made
$17.6 billion in sales in 2021
only.
For that reason, NFT pessimists
shouldn’t be baffled to hear that Justin Sun, the founder of Tron
(CCC:
TRX-USD), bought
an
NFT art piece
for $6,000,000. After all, art is
known to reflect the present reality, and the one that weU+02019re
in right now is the
digital reality.
What Is NFT?
NFT is an acronym for a
non-fungible token that works like a certificate of ownership over
a digital item. By its very nature, an NFT is a blockchain product
in the form of a smart contract that once concluded, gets encrypted
into a token. Like
cryptocurrencies, NFTs
reside on the blockchain as immutable data units that you can
transfer or sell. However, NFTs aren’t minted in bulk like other
crypto assets. Instead, they are circulating as a unique piece or a
limited edition of rare collectibles, which gives NFTs a value of
scarcity for the associated work.
The first NFT was a
pixelated octagon
filled with pulsing shapes, built on
top of the Bitcoin blockchain in 2014. In the years to come, a
series of tokenized artwork would occasionally pop up on the
digital scene but without making any major financial impact.
Ultimately, NFTs found their real home on the Ethereum blockchain,
whose set of standards simplified the creation of such
tokens.
However, the real NFT frenzy
spilled when the world started feeling comfortable with blockchain
technology at the end of 2020. From that point on, NFTs became a
lucrative source of income for anyone who could create a .gif
document, .jpg image, game skins, video reels, and, surprisingly,
posts on Twitter (NYSE: TWTR).
How to Make Money With NFT?
You can’t trade NFTs in the same
way you can trade Bitcoin (BTC)
against Ethereum (ETH)
because no two identical NFT items exist at the same time. However,
you can sell an NFT token that you own at a very handsome price.
Apart from selling, you can buy or even create a piece of an NFT
and earn passive income in the following ways:
Rent/Lease an NFT
NFT rentals have created a
secondary economy within this industry because NFTs give a sense of
security to lenders — the asset stays safely locked in a smart
contract, not on the borrower’s computer.
The DeFi gaming industry, for
example, often requires an NFT character for a player to enter the
game or give the player a certain advantage in the game. So, the
players can borrow an NFT from you and pay you interest with the
reward they would receive for racing or fighting online.
However, NFT rentals go beyond
the gaming industry. You can also rent a parcel of
NFT real estate on metaverse-focused
platforms and earn some
extra income without a mouse click.
NFT Royalties
With a little business sense, you
can also negotiate a smart contract with an NFT dealer on the
secondary market and charge them royalty fees every time the NFT
changes its owner. For example, if the royalty for a piece of
digital artwork is set at 7%, you will receive that same percentage
each time the artwork is resold to a new owner. Consider that the
NFT price can skyrocket in no time or get resold for more than you
can imagine.
AMM Protocols
Finally, you can try your hands
at the increasingly popular AMM protocols and other DeFi infrastructures that make a great
match with NFT tokens.
You can either provide liquidity to these automated marketplaces
and earn new NFTs in return, or stake NFTs to get incentives in the
form of utility and governance tokens of that protocol.
Final Thoughts
The NFT mania isn’t accidental,
nor is it naive. Now that the general public spends most of the day
online, they can recognize a product that protects their ownership
interests in a trustless way.
And, if you’re wondering why people
are willing to pay a little treasure for your “unusable virtual
gadget,” the answer is pretty simple — for the same reason a
passionate NBA fan wants to have a pair of Nike (NYSE:
NKE)
sneakers signed by Michael Jordan, regardless of their
price.
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