How to make money with NFTs

Non-fungible tokens (NFTs) have recently been sur­roun­ded by just as much hype as their fungible coun­ter­parts, better known as crypto­cur­rency. Since NFTs are unique and can’t be rep­lic­ated, they can be used to generate large sums of money. In this article, we’ve got five quick, beginner-friendly options for you. Keep reading to find out how to make money with NFTs.

Thanks to some crazy news stories, NFTs are getting a lot of attention at the moment. The best example is the sale of Mike Winkel­mann’s work ‘Everydays: The First 5000 Days’ for around £56 million at Christie’s in 2021. This work is an NFT collage made from 5,000 digital images. And that’s just one example (albeit an extreme one!) of how you can make a lot of money with NFTs.

NFTs are perhaps best compared with works of art, col­lect­ors’ items, and other one-of-a-kind objects. Just like an original Picasso is unique and can’t be replaced, even by an exact replica, NFTs are by defin­i­tion one of a kind. The word is usually used to refer to digital objects, though strictly speaking an NFT is the digital ownership of a physical or digital artwork.

NFT creators turn digital goods into unique col­lect­ors’ items and objects that can be sold. However, when you buy an NFT you don’t get the work itself, but the right of ownership. Since NFTs are part of the Ethereum block­chain, you can check who the current owner of an NFT is in the trans­ac­tion history. Es­sen­tially, as cer­ti­fic­ates of au­then­ti­city, NFTs guarantee that a digital object remains non-fungible and can’t be forged. That’s where they get their value. It’s rather rare to sell an NFT for millions. But they do offer artists the chance to sell art online and make it possible for col­lect­ors, investors and auc­tion­eers to make a profit.

Auctions like the one at Christie’s for ‘Everydays: The First 5000 Days’ are actually rather rare. NFTs are usually bought and sold online through NFT mar­ket­places, which are like Amazon or eBay for NFTs. What you’ll find there are works of crypto art like songs, videos, GIFs, and drawings. They can take the form of physical works of art that have been uploaded as a file, or they can be purely virtual objects and artworks. Even books can be financed by and sold as NFTs, as in the case of author Elle Griffin.

Another form of NFTs are digital prop­er­ties in virtual meta­verses like The Sandbox Game, the third largest metaverse in the Ethereum block­chain. Other well-known NFT objects include Cryp­toKit­ties and Cool Cat NFTs, which are com­par­able to trading cards.

Well-known NFT mar­ket­places include:

• OpenSea
• Rarible
• Found­a­tion
• Mirror World

Some of these mar­ket­places are open for all buyers and sellers, whereas others are invite-only. Some sites feature a wide variety of NFTs, and others spe­cial­ise in specific forms, such as NFT art. NFT mar­ket­places use block­chain for making purchases and verifying trans­ac­tions. The block­chain is what houses data about ownership and rights of use. Payments are made in Ethereum’s crypto­cur­rency, meaning that you’ll have to buy some of it if you’re looking to create or sell NFTs. Crypto exchanges like Crypto, Gemini, and BitMart and crypto brokers like BSDEX and Toro are popular options for acquiring currency.

If you’re looking to trade in NFTs, you’ll first need to do the following:

While there are a few mar­ket­places that accept Bitcoin and Altcoins, most only accept the Ethereum currency Ether (ETH). So, if you’re looking to buy, sell, or collect NFTs, you’ll need an Ethereum-com­pat­ible crypto wallet. To make a wallet, you can use Coinbase, Binance, or Crypto. Al­tern­at­ively, you can create soft wallets for different cur­ren­cies. If you opt for a soft wallet, you’ll have to download special wallet software. However, online wallets are a better choice for beginners. With Coinbase Wallet or MetaMask, you can create a wallet for different cur­ren­cies.

You’ll need a wallet in order to carry out any crypto­cur­rency trans­ac­tion. Crypto wallets establish the identity of the buyer/seller and ensure that crypto trans­ac­tions are verified. You don’t store your crypto funds directly in the wallet. Instead, the wallet contains private and public keys for crypto trans­ac­tions. NFT mar­ket­places will normally indicate which wallets they support. One option for finding the right wallet for you is Ethereum’s wallet finder.

After you’ve set up your wallet, the next step is buying the crypto­cur­rency itself. You can either do this in your wallet or use a crypto­cur­rency mar­ket­place. If you opt for the latter, make sure the mar­ket­place is credible. Some popular platforms are Gemini, Binance, Coinbase, and Kraken.

Even if you’re only planning on selling NFTs, you’ll still need to buy some Ether. Platforms will usually charge a fee for creating NFTs or, to be more precise, for minting NFTs. There will also be trans­ac­tion fees for cryp­tomin­ing, called `gas fees´ in Ethereum. While some block­chains, like OpenSea, don’t charge you to mint NFTs, they still require you to have a certain minimum of crypto credits in order to publish your NFT on their block­chain.

Now you’ll need to choose the NFT mar­ket­place you want to work with. Some popular ones are:

• OpenSea
• Rarible
• Found­a­tion
• Mirror
• Larva Labs/CryptoPunks
• Atom­ic­Mar­ket
• FTX
• Nifty Gateway
• Binance
• SuperRare
• Atom­ic­Mar­ket
• BakerySwap

Once you’ve chosen your mar­ket­place, link your wallet to it. To do this, you’ll want to look for a button that says ‘Create’, ‘Connect Wallet’ or some variation of this. You’ll then use a QR code to connect the mar­ket­place and wallet.

You don’t ne­ces­sar­ily have to create NFTs yourself in order to make money with them. To buy and trade in NFTs, all you need is a crypto wallet and crypto coins. But if you do want to create NFTs yourself, there are some things you should first take into con­sid­er­a­tion. NTFs can be un­der­stood as cer­ti­fic­ates for unique objects, including physical artworks and objects, as well as virtual objects, real estate, and domains. NFT col­lec­tions are par­tic­u­larly suc­cess­ful and are com­par­able to owning a col­lec­tion of artworks, music or trading cards.

NFTs are created with smart contracts, which enable iden­ti­fic­a­tion and veri­fic­a­tion using block­chain addresses and token numbers. Anyone can create NFTs. The only re­quire­ment is that you’re the creator and owner of the object that you want to sell as an NFT.

To sell an NFT, you’ll first have to mint it. To do this, upload the file in the correct format and size. Then you’ll want to add a name, a de­scrip­tion and any ad­di­tion­al in­form­a­tion that might be relevant to potential buyers. Decide which crypto­cur­rency you’ll accept as payment and whether you want to sell it for a fixed price or at an auction. You’ll also need to decide whether you’ll receive royalties for each sale or whether the NFT will be freely available. Your NFT isn’t tied to any one mar­ket­place, so you also have the option of putting it on multiple platforms.

If you’re wondering how to make money with NFTs, the answer is that there are actually a number of ways. Below we’ll briefly discuss five different pos­sib­il­it­ies.

Flipping NFTs refers to the practice of buying an NFT at a low price and then selling it for a higher price. This doesn’t require creating NFTs yourself. For example: CryptoPunk Character 8348, one of a set of 10,000 NFT char­ac­ters, was bought for around £370 in 2017. In August 2022, it was worth around £140 million. Just like buying the work of up-and-coming artists, investing early in af­ford­able NFTs with growing value can lead to big profits. Buying domains as NFTs or digital artworks are great ways to start flipping NFTs.

Here are some important tips if you’re con­sid­er­ing trying your hand at flipping:

• Analyse trends and niches: Read up on niches and observe trends, so that you’ll know which un­der­val­ued NFTs might be worth more in the future. For example, keep an eye on which types of NFTs are gaining pop­ular­ity.
• Buy rare pieces: Rare NFTs and limited-edition col­lec­tions will quickly grow in value. Investing early in rare pieces will result in bigger profits down the line. You can check how rare an NFT is using tools like the Rarity Tool. Rankings on OpenSea and the frequency of trans­ac­tions can also indicate how rare an NFT is.
• Note the floor price: The floor price is the lowest price a seller is willing to take for an NFT. If you’re looking to spend as little money as possible, look out for the floor price. This will tip you off to the least expensive item in a col­lec­tion and an NFT’s flipping potential.
• Analyse high volume: Volume stands for the number of crypto trans­ac­tions that have taken place for an NFT or NFT col­lec­tion. This can give you in­form­a­tion about how much interest an NFT is garnering and how its value might increase. High volume indicates that you’ll be able to resell the NFT re­l­at­ively quickly.

One common piece of advice for selling NFT art is to offer NFT col­lec­tions rather than in­di­vidu­al NFTs. This could include col­lec­tions of char­ac­ters, music, or images. Col­lec­tions allow you to make more money at once while adding value for col­lect­ors. With a little bit of luck and patience, in­di­vidu­al NFTs from a col­lec­tion can generate huge profits, as we’ve seen with CryptoPunks and Cryp­toKit­ties. You should also analyse current niches and niches that have yet to be dis­covered.

Owning crypto shares and investing early in projects is a good way to make a profit without having to do very much. For example, those who invested in Cy­berKongz Genesis, a series of gorilla profile pictures, currently earn ten banana tokens a day. Banana tokens are the project’s crypto­cur­rency, which had a value of around £730 per token in August 2022.

Here are some other pos­sib­il­it­ies for making passive income from NFTs:

• Real estate: If you invest in digital real estate, such as The Sandbox Game or De­cent­ra­land, you can rent out your virtual property.
• Royalties: As an artist or creator of an NFT, you can get royalties for each sale of your work. Just make sure to specify this when you mint your NFT.
• : If you own valuable NFTs and store them long-term on a platform or in a protocol (known as ‘staking’), you can earn interest on them. For example, if you stake one of the 11,111 existing ‘Creepz’ on MOBOX, you can earn around £60 a day in interest (as of August 2022).

Block­chain games like Axie Infinity allow you to buy and sell objects, land, and char­ac­ters in the game. This works just like block­chains and NFTs, meaning you can make a profit by minting your own character or a series of char­ac­ters as NFTs. If the char­ac­ters grow in pop­ular­ity, their value will increase as well, even more so if the NFT col­lec­tion is rare. Axies and Mystic Axies from the game Axie Infinity are some of the most valuable NFT items on the market, having sold for as much as $1.1 million.

Why limit your NFT earnings to the digital world? As soon as an NFT col­lec­tion becomes popular, you can market it in the `real´ world. If you’ve created a popular NFT col­lec­tion with unique char­ac­ters, you can put them on t-shirts, shoes, bags, and phone cases. If you have a dedicated fanbase, you’ll want to look into smart mer­chand­ising and brand building.

The final method on our list is also the most complex: creating a new NFT mar­ket­place. NFT mar­ket­places function largely in the same way as online shops, so it’s best to approach this endeavor as if you were going to set up an online store, and then go from there. First, you’ll need to decide whether you want to create the mar­ket­place yourself or pay a company to do it for you.

Some important con­sid­er­a­tions when creating your own mar­ket­place include:

• Deciding on a target group (limiting the mar­ket­place to a niche or keeping it open for different NFTs)
• Choosing a block­chain network
• In­teg­rat­ing smart contracts in com­pli­ance with Ethereum standards
• Purchase and payment tech­no­lo­gies for wallets
• API in­teg­ra­tion for third party apps
• Security features for encrypted trans­ac­tions
• Common features for online stores and auction sites
• User-friendly UI/UX design
• Frontend design of the mar­ket­place
• Customer support