Non-fungible tokens (NFTs) are entering the mainstream investor’s mindset — there’s no doubt about it. This crypto market niche is growing each day, having reached an eye-watering $23 billion trading volume in 2021. Everything points that this trend is going to continue in the following years, especially with the buildup of upcoming metaverses.
With that in mind, we wrote this article to help you understand what NFTs are and their implication as financial assets for the future. To this end, we explore five of the most popular ways to make profits with NFTs and how to approach each one of them. This should allow us to draw a conclusion of whether it is still worth investing in these digital assets in 2022.
What Is NFT?
NFTs are digital assets recorded in the blockchain, each one with unique characteristics. Their metadata contains a variety of attributes that allow us to differentiate them from each other. Additionally, they can be linked to a unique piece of artwork, video, or gaming item, increasing their appeal as collectibles. And in contrast to cryptocurrencies, they cannot be exchanged easily for one another, hence the term “non-fungible token.”
That said, NFTs inherit some essential properties from the blockchain technology they rely upon. For instance, their blockchain records serve as proof of ownership. As such, the user in possession of the private key is the only one that has control over their NFTs.
Moreover, due to the transparent nature of the decentralized ledger, users can trace back the origin of every NFT. This allows us to know exactly who created it and who currently owns it.
And finally, it’s worth noting that, just like digital currencies, NFTs cannot be counterfeit or duplicated. This gives them intrinsic collectible functionality, with the potential to increase in value in the future.
5 Ways to Make Money With NFTs
The uniqueness of NFTs and their collectible aspect has allowed investors to make considerable profits since their implementation. However, entering the NFT market can be quite daunting, given the fact that there are various approaches to making profits with them. These differ quite drastically from one another, so we compiled a list of the best ways to make money with NFTs available at the moment.
Collectible NFT Items
The first, and maybe the easiest, method of making money with NFTs is to start trading NFT collectibles. These can represent unique pieces of art, audio files, or limited edition avatars, among other things.
The process is quite simple. You will need to create a blockchain wallet that supports NFTs (e.g. Metamask) and venture into the dog-eat-dog world of NFT hunters on various marketplaces like OpenSea. Joining industry-related discord channels and forums will be an invaluable tool in finding up-and-coming NFT releases that can help you make big profits.
Once you have found a potentially profitable collection, purchase the NFTs (usually with ETH tokens) and try to sell them at a higher price.
NFT Games
A good way of making money with NFTs is by playing blockchain play-to-earn games like Axie Infinity. In these types of games, you will be able to purchase teams of creatures recorded as NFTs and participate in various quests.
Quests can be a great source of steady income, as you will receive crypto tokens and NFTs for your efforts. You will be able to sell either of these on the open market and start making profits just by playing a fun video game.
However, there’s a catch. The most profitable games will require a considerable upfront investment so that you can start participating in the game world.
Decentralized Assets
NFTs can be used to tokenize anything of value, not just digital art or gaming items. As such, NFTs are also used to define unique internet domains on the Ethereum Name Service, which can become quite valuable over time.
With the Web3 revolution taking place as we write these lines, decentralized domains will become increasingly important in the future. You can already purchase unique names and hope that you can resell them at a higher price at a later date.
Fashion NFTs
Leaders in the fashion industry, including Nike and Adidas, have already started launching their clothing NFTs. They created unique sneaker collections and hoodies that have a digital representation in various metaverses. While these have collectible value, they could become much more useful with the upcoming growth of the metaverse. And more fashion brands are joining the trend.
Your avatar will be able to wear these clothing pieces in the virtual world, making it stand out from the crowd. This fashion appeal will certainly push the prices of these clothing NFTs to the upside, giving a great opportunity for making profits.
Create Your Own NFTs
Finally, there’s the option where you can become an NFT creator yourself. You might create a piece of unique digital art and mint it as an NFT. While Ethereum remains the most popular platform to do this, you might find that the gas fees are too high for starting out. Fortunately, there are many blockchains such as Solana or Tezos that offer cheaper and faster minting solutions.
Additionally, you could create NFTs using some of the tools provided by various metaverses such as Decentraland or The Sandbox. These games allow creators to use beginner-friendly designer kits to mint unique cosmetic NFTs used within their virtual worlds. Once created, you can put them out for sale on their proprietary NFT markets.
Moreover, once you have sold your NFT, you can program it to receive royalties for each subsequent sale. It is quite a handy feature for making passive income from your creations.
Final Thoughts: Are NFT Tokens Another Hype or the Future of the Intellectual Property Market?
While some remain skeptical about this aspect of blockchain tech, it’s undeniable that NFTs can become a considerable stream of revenue if you know what you are doing. While some consider NFTs wasteful because of the energy required for transactions, there are already eco-friendly solutions that are emerging on the market.
Just keep in mind that investing in NFTs is far from being risk-free. It’s a speculation market where the price of NFTs can rise and fall considerably. Moreover, if demand for NFTs falls, you won’t be able to partially sell them and you can get stuck with worthless assets in your wallet.
All in all, if you are willing to take the risk, you might make some considerable profits with NFTs. You can pick one or several solutions provided in this article and get started right away.
