The value of Non-Fungible Tokens or NFTs is increasing at a rapid rate, and it’s attracting the attention of many investors. According to statistics on Fortunly, consumers used approximately $41 billion worth of cryptocurrency on NFTs in 2021. If you have been keen on the latest trends in the crypto world, there’s no doubt you’ve come across news on how digital artists make money with NFTs and ways in which investors are building wealth by adding these tokens to their portfolio. And chances are, you’ve been trying to figure out how you can tap into non-fungible tokens to grow your wealth.
With vast sums of cash being spent on NFT marketplaces, identifying the best tactics to earn passive income through NFT investments can be frustrating. But that doesn’t mean you can’t succeed. All you need to do is research and find what works for you. Read on to learn practical ways creatives can make passive income with NFTs.
Understand What NFTs Are
Before investing in NFTs, you must learn what they are and how they work. Doing so helps you pick the right investment options and determine the best way to turn them into passive income. In simple terms, non-fungible tokens are digital assets stored in a distributed channel known as the blockchain. The best thing about these tokens is that no one can duplicate them. One way to think of non-fungible tokens is as digital substitutes of art collections in a private auction.
Each piece of collectible art is unique and has a distinct value. Likewise, each NFT is worth a specific amount and you can sell it for digital currencies like bitcoins and Ethereum, or fiat currency. Also, the process of transferring NFTs is like that of cryptocurrency, meaning it’s registered on the blockchain. By recording NFTs on the blockchain, you establish ownership. Typically, an NFT is tied to the owner’s original physical asset or digital work. Note that you can convert digital items into NFTs. For instance, you can turn tweets, Facebook posts, or Instagram photos into non-fungible tokens and sell them.
Create Digital Art And Sell As NFT
Over the last couple of years, creators have been selling NFT artwork for huge sums of money. For example, in 2021, Mike Winkelman, popularly known as Beeple, sold his NFT art for $69.3 million. This means you can create an NFT and sell for profit. The beauty of creating and selling NFTs is there is no limit to what you can create. You can develop or mint NFTs, such as memes, digital art, music, films, and audio. However, to make a profit from your art or music, you must learn how to create NFTs the right way.
When creating NFTs from scratch, you’ll want to choose a concept. For example, let’s say you love drawing flowers. Determine the type of flowers you’ll draw and make your art appealing so it attracts buyers on the internet. For instance, if you like drawing flowers or plants, invest time learning the tricks and tips of drawing a cartoon or realistic daffodil. If your artwork is attractive and looks professional, it will gain traction. After creating your art, save them as jpeg or PNG and convert them into digital assets. Create a crypto wallet, then list your NFTs on marketplaces like Rarible and Opensea for an affordable fee and price your digital asset wisely to earn high profits.
Consider Renting Out NFTs
One of the most practical ways to earn extra income with non-fungible tokens is by renting them out. For example, let’s say you have NFTs in high demand, like card trading games. Instead of selling the cards, you can lease them to players who need them to increase their chances of winning a competition. While renting out NFTs might sound complicated, it’s not. It works the same way people rent or lease real estate property and collect rent.
To rent out NFTs successfully, you need smart contracts that outline the terms of the lease agreement. As a landlord, you have the freedom to determine how long you’ll lease your NFT asset and the rate. You can also choose an NFT platform based on your preferences. The reNFT, for example, is a perfect place for leasing or renting NFT assets. Here you can set the maximum lending duration and daily prices ranging from 0.002 to 2 WETHs or wrapped Ethereum. One of the top benefits of renting NFTs is you get to earn a lot of cash without sacrificing ownership of your non-fungible tokens.
Tap Into NFT Royalties
Another interesting way to make money with NFTs is through royalties. Thanks to the technology powering non-fungible tokens, creators can enjoy long-term royalties by setting royalty rates for their digital assets. Think of it this way; when you sell your NFT and the buyer resells it multiple times, you still earn passive income. However, to enjoy NFT royalties, you must set the terms before selling your digital asset. For example, let’s say you impose a royalty fee of 15% for your digital art. Every time a new buyer purchases your original piece of digital art or music, you receive 15% of the total selling price.
In most cases, creators determine their royalty rates while developing NFTs. Since smart contracts used during the transaction of NFTs oversee the entire distribution of royalties, digital artists or creators don’t enforce their royalty terms or follow up payments manually. That’s because smart contracts automate everything.
Explore Investment Opportunities in NFT Startups
Investing in non-fungible tokens through startups selling them is another great opportunity to make money. This option is ideal for anyone who doesn’t want to develop their own digital assets or purchase non-fungible tokens outright. Many NFT companies have the potential to become successful in the crypto world. If you can take advantage of the opportunities they offer, you stand a chance to earn indirect income with NFTs without worrying about price volatility in the marketplace.
One way to invest in NFT companies is through venture capital funds. Make sure your preferred company invests in non-fungible tokens and cryptocurrency assets. Also, ensure you’re a certified investor to enjoy the benefits of being a venture capitalist. If this option doesn’t sound appealing, you can buy NFT exchange-traded funds, such as the defiance digital revolution ETF. This exchange-traded fund allows investors to invest in NFT, cryptocurrency, and blockchain stocks.
Stake Non-fungible Tokens
The link between decentralized finance or Defi and non-fungible tokens provides many benefits. But the most notable perk is the ability to stake non-fungible tokens. When you consider staking NFTs, it means you’re depositing or storing your digital assets in a smart contract within Defi protocols to generate high profits. To stake your NFTs, you need to find platforms capable of maintaining their upkeep and guarantee a certain amount of reward for your digital assets.
When searching for platforms that allow investors to stake NFTs, you’ll come across a few that support many NFTs. Others will require you to purchase native non-fungible tokens so you can get incentives for depositing digital tokens. Typically, the value of incentives offered for staking NFTs is determined on the platform you choose to deposit your digital assets. Examples of platforms where you can stake NFTs include NFTX, Splinterlands, Kira Network, and Only1.
Become An NFT Trader
The beauty of NFTs is you don’t have to create and sell digital assets to make money. You can trade them like stocks in the exchange market. This step entails buying and selling a collection of NFTs at a high price to earn profit. While trading NFTs is a smart way to generate passive income, the process isn’t straightforward. If you choose to trade NFTs, you need to sell them at the right time to gain high returns.
Timing will depend on several factors, like what the digital assets are, the reason you bought them, and if there’s an interest for your collectibles in NFT marketplaces. You should also account for extra expenses like market listing rates, gas fees, and royalties the NFT owner will receive. With this in mind, do your due diligence on the internet and NFT platforms to determine the best time to sell your digital assets. But before you can start trading NFTs, remember, no two digital assets are the same. Some assets are worth millions, while others don’t have any value. So, examine your NFT item carefully to calculate the return on investment you’ll get.
Take Advantage of NFT Gaming
In today’s digital era, it’s possible to earn money playing video games. And with the availability of NFT based video games, you can generate passive income through non-fungible tokens. In short, there are video games that allow players to buy in-game items as non-fungible tokens. If you’re a video game fan or an aspiring investor, take advantage of this opportunity to increase your earnings.
Note that in-game NFT items are scarce for now, but trading them is an excellent way to make money. As NFTs gain more popularity, there’s no doubt NFT gaming cards and other accessories will be more accessible. Also, in-game NFTs will be more advanced than the usual trading cards and interactive non-fungible tokens like virtual art work. With that said, there will be plenty of opportunities to build wealth indirectly with NFT gaming.
Sell Licensed Collectibles
Remember, you can convert digital items like Facebook posts and photos into NFTs. Likewise, you can transform your physical collectibles into non-fungible tokens and sell them on NFT marketplaces. The trick is to store your physical items or collectibles in digital form on the blockchain. You can sell them at an average price like native digital assets or even higher rates depending on market demand.
The most popular licensed NFT collectibles so far are sports cards. But brands are tapping the opportunities NFTs provide with their licensed collectibles. The NBA is a perfect example of brands joining the NFT bandwagon. Recently, the NBA launched its NFT card collection in the market. Given NFT collectibles will continue to trend, now is a good time to transform your physical collections into non-fungible tokens and list them for sale.
Invest In NFT Liquidity Pool
Understanding everything about crypto liquidity pool is crucial if you want to provide liquidity for NFTs. In simple terms, a liquidity pool can be a collection of tokens and coins stored or locked by smart contracts. Note that smart contracts control the exchange process and NFT prices. This collection of crypto assets allows you to swap a digital asset for another even without a market order. Ideally, crypto users pool classified assets together to ensure they are available for swapping. If you’re a liquidity provider or invest in paired crypto assets, you can use the funds available in these NFT liquidity pools to trade NFTs or lend cryptocurrency.
Liquidity providers can also generate extra income from yield farming. This technique entails lending assets to get rewards. Another alternative to yield farming is liquidity mining, which involves staking or lending NFTs to receive rewards as fees charged for transactions. Remember, the rewards you get from liquidity mining or yield farming stay in the pool of paired digital assets so they can compound. Although storing your NFTs in liquidity pools helps you earn rewards, it’s not risk-free. Chances are, you could lose money if you keep assets in a pool and they don’t yield enough money. To avoid losing your investment, read the terms and conditions of the liquidity pool platform you choose to invest in.
It’s easy to assume NFTs are just a fad in the crypto world, but that’s not the case. Non-fungible tokens are here to stay as long as the wealthy continue splurging money on digital assets, including artwork, music, memes, NFT playing cards, and other collectibles. Currently, creating and selling digital assets, gaming, and swapping NFT collectibles are the most popular ways of making money with NFTs. However, there are other practical tactics you can implement to increase your income through non-fungible tokens. You can choose to trade NFTs in the crypto exchange market or earn passive income through NFT royalties. Alternatively, you can sell licensed collectibles, invest in NFT startups, stake NFTs, or leverage NFT liquidity pools.
